By Ed Burke, Dennis K. Burke Inc.
In January, a group of U.S. Senators announced their creation of a new Climate Action Task Force to put the climate change issue front and center.
Meanwhile, the president of the American Petroleum Institute pledged that the trade group would flex its muscle in the 2014 elections as it calls on lawmakers to support “pro-growth energy policies.”
Outlining the labor organization’s policies for the coming year, the head of the AFL-CIO said they don’t support lifting the ban on exporting crude, but they do support the construction of the Keystone XL oil pipeline.
And, in a major break with the administration, a group of the nation’s leading environmental organizations announced that it will no longer support the President’s “all of the above” energy policy.
So, how big of a role do you think energy policy will play in the mid-term elections?
In January, the President issued a Presidential Memorandum establishing a Quadrennial Energy Review. “Affordable, clean, and secure energy and energy services are essential for improving U.S. economic productivity, enhancing our quality of life, protecting our environment, and ensuring our nation’s security,” announced the President. “Achieving these goals requires a comprehensive and integrated energy strategy resulting from inter-agency dialogue and active engagement with stakeholders.”
The initial focus of the review will be on the nation’s infrastructure for transporting, transmitting, and delivering energy. The memorandum added that our current infrastructure is increasingly challenged by changes in energy supply, markets, and patterns of end use; issues of aging and capacity; impacts of climate change; as well as cyber and physical threats. The first Energy Review Report would serve as a roadmap to help address these challenges.
The inter-agency task force will develop an integrated review of energy policy that integrates stakeholder perspectives and build on the foundation provided in the Administration’s Blueprint for a Secure Energy Future of March 30, 2011, and Climate Action Plan released on June 25, 2013.
The task force will also offer recommendations on what additional actions it believes would be appropriate to address the nation’s energy challenges and opportunities. The first report is expected in January of 2015.
Although the Energy Review could bring us closer to a realistic energy policy, many believe this could also be a tactic to delay decisions on crude exports and the Keystone XL pipeline.
Crude Oil Exports: There’s been a lot of controversy over the 40-year-old ban on exports of U.S. crude oil. With the U.S. expected to become the world’s leading oil producer in 2015, oil companies point out that the scenario is very different from when the ban was enacted in 1975.
While there’s no doubt that exporting crude oil would be a great boost to the U.S. economy and reducing the trade deficit, there is a lot of disagreement as to which direction domestic oil prices will go in the long-term.
Pipeline Progress: After five years and 15,000 pages of documents, a TransCanada spokesman said he wouldn’t want to speculate when there would be a decision on the Keystone XL Pipeline by the State Department.
The renewed lobbying on the pipeline comes as TransCanada begins shipping oil from the pipeline’s 485-mile southern leg running from Cushing, Oklahoma to the Gulf Coast. Once up to full speed, the southern pipeline will be capable of moving 830,000 barrels a day. That’s about 4 percent of daily U.S. oil consumption.
The Keystone comes online at a time when U.S. pipeline capacity is stretched thin from the oil shale booms in Texas and North Dakota.
The $2.3 billion southern leg didn’t require State Department approval because it does not cross a U.S. border. The northern segment would run 1,179 miles from Alberta, Canada to Steele City, Nebraska. The pipeline would connect to Cushing through an existing 298-mile spur.
The State Department’s review is expected to come after the President’s State of the Union address, with a final decision coming after that.
Final Rule on Tier 3: In February, the EPA is expected to release its final rule on the Tier 3 standard. Starting in 2017,
Tier 3 would lower the sulfur content in gasoline, and set new vehicle emissions standards for passenger cars and light trucks.
Changes in Renewables: The tax credits for biodiesel and cellulosic biofuel expired at the end of 2013, but like a bad penny, they keep coming back. In the past, these credits were extended retroactively.
EPA is expected to release its final rule soon on volume requirements for the 2014 Renewable Fuel Standard (RFS). EPA has proposed reducing the 2014 volume obligations from 18.5 billion gallons to 15.21 billion gallons of renewable fuels and 2.2 billion gallons for advanced biofuels. EPA says the volume reduction will hold ethanol blends in gasoline at the current E10 level.
The proposal would be the first time EPA has used its waiver authority to lower the overall RFS volume mandate requirements.
New Opportunities: As America deals with its new role in the energy market, I think we can all agree that abundant energy is a good problem to have.