Energy Blog

Energy Blog

US Chamber of Commerce Blog

Thomas J. Donohue 2017 State of American Business

In this time of transition for our country, the business community is optimistic about the year ahead—and realistic about the hard work required to make that optimism a reality. We’re optimistic because we see a once-in-a-generation opportunity to enact major reforms that could transition America from a low-growth to a high-growth economy, creating millions of new jobs and benefiting every American. The U.S. Chamber of Commerce’s priority for 2017 is to advance the policies and reforms required to foster this dynamic economic growth.

We are focusing on growth because it’s good for everyone. It’s good for Democrats and Republicans, businesses large and small, workers at every wage level, and for a government in desperate need of more revenue to fund its programs and pay down its debt. It’s the unifying goal our nation needs after a divisive political season.

The decisions policymakers face often come down to a choice between growth and some other priority. Too often in recent years our leaders have chosen against growth. The effects are clear. Today we remain mired in the slowest economic recovery since the 1940s, with annual growth rates hovering around 1% to 2%. These rates will never be enough to create jobs for the millions of unemployed or underemployed Americans, fuel a badly needed resurgence in business startups, or support a stable social safety net for an aging society.

We are focusing on growth because it’s good for everyone. It’s good for Democrats and Republicans, businesses large and small, workers at every wage level.

The Chamber’s message to policymakers and incoming leaders is simple: Choose growth. Judge each proposal on the basis of whether it will speed or impede the expansion of our economy. And all our leaders must keep in mind the true stakes of their choices. A growing economy is not just about numbers; it’s about people. Americans are united by the common desire to leave their children with a better life than the one they were born into. But that sort of upward mobility—the basis of the American Dream—cannot be achieved in a stagnant, shrinking, or sluggish economy.

I will be detailing the Chamber’s growth agenda in the annual State of American Business speech this week. I will also outline some of the specific policy proposals discussed in the speech in next week’s column. Throughout the year, the Chamber will continue to call on our leaders in government and business to join in uniting our country around the common cause of stronger, faster, and more broadly shared economic growth for all.

Sean Hackbarth  Tim Rue/Bloomberg.Oil tankers anchored near the Port of Long Beach, Calif. Photo credit: Tim Rue/Bloomberg.

Good things happen when American innovation combines with a good energy policy.

The United States could become a net energy exporter by 2026, according to the Energy Information Administration:

The United States is projected to become a net energy exporter over the next decade due to rising natural gas exports and falling petroleum product imports, the U.S. Energy Information Administration said on Thursday.

While the United States has been a net energy importer since 1953, declining energy imports and growing exports that started over the past year will allow that trend to switch by 2026, the EIA said.

The U.S. is already a net exporter of natural gas.

The change in U.S. energy imports has been impressive. According to the Institute for 21st Century Energy the U.S. imported 30% of its total energy demand in 2005. That’s shrunk to 10% in 2016.

022855_energyexplainer_energyimports_atf_800x500px.jpg  30% in 2005; 10% in 2010.Percentage of energy imported by the United States: 30% in 2005; 10% in 2010.

As a result, U.S. energy security is at its strongest point in 20 years.

Credit for this positive outcome goes to fracking. The innovation of combining hydraulic fracturing with horizontal drilling and state-of-the-art information technology allows energy that was once trapped deep below the surface to now be safely produced.

As a result, oil and natural gas production has skyrocketed, with the U.S. as the world’s top producer of oil and natural gas since 2012.

eia_top_oil_natgas_countries_2015.png  2008-2015.EIA: Estimated petroleum and natural gas hydrocarbon production in selected countries: 2008-2015.Source: Energy Information Administration.

EIA doesn’t expect this energy boom to let up: “Total energy production increases by more than 20% in the Reference case from 2016 through 2040, led by increases in crude oil and natural gas production.”

On the policy side, in 2015 Washington wisely lifted the dated crude oil export ban. Now, both oil and natural gas exports are feeding hungry world markets.

However, there’s plenty more policy improvements that should be done to accelerate this energy revolution. For instance, better regulations that opens more areas—both on and offshore--to be safely developed as well as stream lined permitting processes for energy infrastructure (like liquefied natural gas facilities and pipelines) can continue this momentum.

A new administration along with an allied Congress can mean a much-needed reset in U.S. energy strategy--one that embraces our abundant energy resources.

Sean Hackbarth An oil platform off the coast of Port Fourchon, LA.An oil platform off the coast of Port Fourchon, LA. Photo credit: Derick E. Hingle/Bloomberg.

Just before Christmas, President Barack Obama went all Grinch on American offshore energy development.

On his way out of office, he gave a hollow and solely symbolic gift to “keep it in the ground,” anti-energy zealots by blocking offshore oil and natural gas development off the Arctic and Atlantic coasts:

Obama used a little-known law called the Outer Continental Shelf Lands Act to protect large portions of the Chukchi and Beaufort seas in the Arctic and a string of canyons in the Atlantic stretching from Massachusetts to Virginia. In addition to a five-year moratorium already in place in the Atlantic, removing the canyons from drilling puts much of the eastern seaboard off limits to oil exploration even if companies develop plans to operate around them.

The president placating environmental extremists didn’t sit well with energy advocates, like Karen Harbert, president and CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy:

This administration’s seeming focus on appeasing special interests at the expense of America’s energy security at this late date is inexcusable. This 11th hour decision to attempt to permanently withdraw areas of the Arctic and Atlantic coasts from ever being considered for offshore exploration is the latest example of their anti-growth agenda that places extreme fringe interests over America’s best interest.

Congress did not intend for the president to be able to exploit a rarely used, 24-word provision to make entire seas off-limits from energy production.

But before energy opponents pop the bubbly in celebration, just as President Obama locked up these areas to development, President-elect Donald Trump could unlock them [subscription required] once he takes office [emphasis mine]:

Christopher Guith at the U.S. Chamber's Institute for 21st Century Energy argues that Trump can rescind the decree with the stroke of a pen. That would likely prompt a lawsuit from environmental groups, with the battle playing out in courts.

Guith argues that if Obama had really wanted to keep rigs out of these areas, he should have cited the Antiquities Act in his decision. His predecessor, President George W. Bush, easily reversed an earlier decision by his own father to temporarily restrict offshore oil and gas activity under the 1953 act, Guith notes.

Industry could issue a challenge against the Obama administration's move, but by the time it reached the courts, the Trump administration would be in office and in the position to defend Obama's decree, which it wouldn't. Rather than prompt that delay, industry groups appear for now to be content to wait for Trump to assume office to see if he'll repeat Bush's move and repeal Obama's declaration.

"There is the very real likelihood of a legal challenge that would ultimately fall on the Trump administration," Guith argued. "But probably the easiest part of all of this is that, in spite of all the hand-waving, all it takes is another presidential memorandum where President Trump would say, 'I am reversing the withdrawal,' and it's done."

Unfortunately, the Obama administration has given generously to “Keep it in the ground” fanatics in 2016:

In March, the Interior Department flip-flopped and scrapped plans to lease areas of the Atlantic coast to energy development. In November, it did the same in the Arctic Ocean. In July, the Interior Department unnecessarily raised the regulatory barriers to offshore energy development in the Arctic. A few weeks ago, an Obama political appointee refused to issue an Army Corps of Engineers easement to finish the Dakota Access Pipeline—even though the Corps approved the project this past summer.  

On his way out the door, President Obama, who once touted an all-of-the-above energy strategy, continues to abandon the energy abundance that powers our country.

Let's hope for better in 2017.

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Does America need an "All of the Above" energy strategy? Find out here. This Chamber Explainer will get you up to speed.