Tag Archives: energy policy

Restore the Quorum

25 Jul

Frustration over the lack of any appreciable progress in Washington is at an all-time high. It’s especially egregious considering the same political party presently controls the executive branch and both houses of the legislature.

Conservative leaning policies were expected to be the order of the day. Many Americans, desperate for a government that worked, cast their votes in unconventional fashion hoping to shake the status quo. Instead, gridlock, confusion, and rancor still occupy every nook and cranny of government. Clearly, the November shake up wasn’t hard enough.

JPMorgan Chase CEO, Jamie Dimon, seldom seen as the "average Joe" on Main Street, reflected people’s frustration when he recently opined, “[He’s] tired of listening to the stupid s_ _ _ we have to deal with in this country.” He went on to say the situation has hurt the American economy which, because of “stupidity and political gridlock”, only grew at 1.5 to 2 percent since the Great Recession.

Blame for the quagmire extends in all directions. Republicans blame Democrats for obstructing the president’s agenda. The Democrats point fingers at the President for dilly dallying in nominating people to fill open positions. All the while, Washington’s crisis du jour diverts critical attention from serious day-to-day business. The results speak for themselves:

 SENATE CONFIRMATION OF APPOINTEES *
 Nominated  Confirmed  Failed

 Avg. Days to Confirm
Trump

197

 48 4

44
Obama

356

 149 5

37
W. Bush

296

 149 2

27
Clinton

256

 196 4

28
HW Bush

243

 144 1

30
Source: Center for Presidential Transition

* Excludes non-civilian & judiciary positions   

   As of mid-July, of first year

A prime example of the resulting gridlock is the unprecedented existence of the lack of a quorum of commissioners at the Federal Energy Regulatory Commission.

FERC, among other things, regulates the transmission and wholesale sales of electricity and natural gas in interstate commerce, and regulates the transportation of oil by pipeline in interstate commerce. FERC also reviews all proposals to site, construct and operate natural gas pipelines, storage and LNG terminals, and issues licenses to non-federal hydropower projects.

The agency is composed of up to five commissioners who are appointed by the President and confirmed by the Senate. The President appoints one of them to be the chairman and no more than three commissioners may be from the same party.

FERC employs extensive technical and environmental expertise and has developed a deep body of energy regulatory jurisprudence. As a result, it’s uniquely positioned to oversee the implementation of energy policy and review and permit new energy infrastructure

Three commissioners (a “quorum”) must be seated for FERC to meet and issue major decisions. While there is some limited ability for certain matters to be delegated for handling by FERC staff, the significant issues must wait until a quorum is re-established.

Despite the importance of FERC in implementing many of the energy, environment, commerce, and infrastructure related policies of the new administration, the agency has been hamstrung for the past six months.

The quorum was lost in February after then chairman, Norman Bay, a democrat appointed by President Obama, resigned. A few months later, another of the two remaining commissioners left FERC.  The last remaining commissioner, acting chairman, Cheryl LaFleur, has vowed to continue through her term and has been performing yeoman’s work keeping FERC functioning during these difficult circumstances.

The impacts from the lack of a quorum are real and acute. According to a recent report by Bloomberg, more than $50 billion in energy projects are awaiting FERC action. The Interstate Natural Gas Association of American stated that at least one dozen interstate natural gas pipeline projects amounting to $14 billion in total costs are bottlenecked. In addition, critical policy issues such as those related to electricity market restructuring reforms cannot be fully addressed.

Help is on the way, but it’s as if its taking the New York subway to get here…fits and stops and no guarantee when it might arrive. President Trump has nominated three Republicans and is soon expected to nominate a Democrat appointee. Two of the Republicans have completed their confirmation hearings, but have yet to receive a Senate vote of approval.

Our dysfunctional government has reached a critical level. Gridlock and delays threaten the nation’s path to energy security, economic growth, job creation, infrastructure investment, and environmental progress. Six months was more than enough time for the president to nominate and the Senate to confirm the FERC commissioner appointments.

There is no reasonable excuse not to restore the quorum at FERC before the summer recess. All that is asked is for the Senate and the administration to do its job so that the American people can do their jobs.

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No Energy Behind Empowering States

12 Oct

Legislation was introduced in the U.S. Senate last month entitled, “Empower States Act of 2012,” (S.3573) calling for the recognition of the states’ primacy in certain matters pertaining the management of hydraulic fracturing operations.

Introduced by Senator John Hoeven, R-N.D, and co-sponsored by Senator Lisa Murkowski, R-AK, the bill is intended to ensure a states-first approach to managing hydraulic fracturing operations and promote fair and effective regulation.

The bill was read and referred to the Committee on Environment and Public Works. In light of a Democratic Senate, it has no chance of becoming law.

The preamble recognizes that states, such as North Dakota that regulates oil and gas production, have comprehensive laws and regulations ensuring safe operations and protecting drinking water. Furthermore, the EPA already gives states that maintain regulations protecting human health and the environment the right to control hydraulic fracturing. So, why this bill?

Proponents of the bill, including the American Petroleum Institute, contend that it merely restates the authority of the states to regulate this drilling activity and provides “certain, effective, and fair” rules for hydraulic fracturing.

Those who oppose it claim the bill is intended to fence the EPA out of the oil patch by erecting barriers such as the submittal of a “statement of energy and economic impact” before enacting new regulations and directing that judicial review be done “de novo” with preference to district courts within the state or the District of Columbia.

These are the classic arguments in the debate of federalism. On the one hand, those closer to an activity are best able to regulate it. Alternatively, activities affecting the greater public interest are best overseen at the federal level.

I’m ambivalent regarding this legislation.  Clearly, I support increased domestic energy production undertaken in a responsible manner. Yet, I believe that the nature of energy production, along with similar activities such as infrastructure development, is characterized by broadly dispersed public benefits and localized impacts.

States with a history of supporting extractive energy production have developed a solid track record of regulation. There is little outright reason to fear that they will neglect or abuse laws protecting our health, safety, and the environment. Yet, energy is also a national issue affecting our economy and security. The Balkanization of energy matters, including this legislation, is not in our best interest.

Unfortunately, a solution lies somewhere in the middle. Currently, our greatest national deficiency is that we have no guiding energy policy. Worse yet, we don’t have a bipartisan political environment to effect one. As a result, Congress spends time and resources drafting legislation having virtually no chance of passage and neither adding to our energy supplies, nor protecting our health and environment. We must do better.

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Why not a “Lewis and Clark Project” for Energy?

19 Sep

It amazes me to hear people talk about “drill here, drill now, pay less” or support an “all of the above” energy strategy, yet when asked, “drill where to find what?”, the response is oftentimes a blank stare or a generic, “on federal lands.”

Many people would be surprised to know that regarding our “frontier” regions, those outside of the traditional oil and gas production areas of the Gulf of Mexico, southern offshore California, and onshore continental US, we have precious little actual geological and seismic data to precisely estimate the extent of our resource base.

Although, the U.S. Geological Survey, a scientific bureau within the United States Department of Interior, does a remarkable job assessing domestic energy resources, much of its analysis and assessment is based upon scant, decades old data that possesses a high degree of uncertainty.

The complicated scheme of describing our estimated resource base combines statistical assessment, technological capability, and the economics of production only to baffle the public and confuse government officials tasked to divine an energy strategy.

If we are going to make sound decisions about our energy future, we sorely need credible, scientifically reliable data about the country’s resource base. The data gathering should not only include oil & gas, but also coal, uranium, water, wind, and geothermal resources.

That’s why Governor Romney’s proposal to conduct a comprehensive survey of America’s energy reserves makes so much sense. It should be promoted as a “Lewis and Clark Project” to gather much needed technical information about what lies beneath our onshore and offshore property.

In the closing days of the 18th century, Napoleon Bonaparte began maneuvering to restore France’s territories in North America. By late 1802, Spain transferred its territory west of the Mississippi along with the shipping rights through New Orleans back to France. American access to the port’s warehouses became a critical commercial issue for the United States.

In 1803, President Thomas Jefferson dispatched Secretary of State, James Madison, to join U.S. Minister to France, Robert Livingston, in negotiations to purchase New Orleans along with all or part of Florida.  Their ultimate objective was to secure U.S. rights to access the Mississippi River and the port. They were authorized $10 million for the purchase.

As conditions changed and war with the British appeared likely, Napoleon reconsidered France’s place on the continent.  When Madison arrived in France in April, 1803,  the deal the French presented was for the sale of all of Louisiana – 827,000 squares miles, twice the area of the U.S.  Although taken aback, by April 30th, Madison and Livingston reached an agreement to purchase the Louisiana territory, including New Orleans, for $15 million — well in excess of the initial authorization.

The official announcement of the Louisiana purchase was made in Washington on July 4, 1803. The Senate ratified the treaty sale on October 20th and the U.S. took formal possession of the territory in December, 1803.

What is most fascinating, however, is the fact that in January, 1803, before he even knew how the French would react to Madison’s misson, Jefferson was preparing for the future. In a confidential letter to Congress, dated January 18, 1803, Jefferson requested an appropriation of funds for the exploration of the continent “for the purpose of extending the external commerce of the United States” and to “incidentally advance the geographical knowledge of our own continent.” That letter secured $2,500 from Congress to cover the costs of the venture we now know as the, “Lewis & Clark Expedition.”

Modern parallels can be drawn between the Lewis & Clark Expedition and our current need to survey our energy resources today. As in the early 1800’s, we have a notional understanding of our frontier regions. We are in the early stages of assessing those resources, especially regarding federal offshore properties. Development and production in most of these regions is many years, if not decades, away. However, paraphrasing Mr. Jefferson’s letter to Congress, today we must “advance the geologic knowledge of our own continent.”

A “Lewis and Clark Project” managed by the USGS to evaluate our nation’s energy resources is long over due.  If we are going to address our energy situation and craft a rational energy policy, we need to have reliable information about our options. This includes credible data about our energy resource base: oil, gas, coal, uranium, geothermal, water, and wind. Putting off this important survey program will not only delay our ability to access these resources when we need them, but also drive up the cost because the risks associated with investments made on highly uncertain assessments is greater than those made on high quality assessments. Likewise, revenues to the government generated from bids on federal production leases would likely be higher if bidders had better knowledge about what the lease may contain.

The “Lewis and Clark Project” may also assist in determining where we should not proceed with energy development. For example, a National Marine Sanctuary System with 14 established sanctuaries exists today. Geologic and seismic data collection from “Lewis and Clark” could be coordinated in partnership with ongoing NOAA activities surveying met ocean and benthic environments to identify highly sensitive areas or support protective zones to avoid or mitigate impacts from possible future development activities. Understanding where and how to develop resources is as important as knowing what lies below the surface.

An initiative such as the “Lewis and Clark Project” should be something everyone can agree to support. This country faces tremendous challenges in deciding how to pursue energy development. A rational, well conceived energy policy is long over due. Adding to our knowledge in order to guide sound policy decisions should be a bipartisan priority.

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Energize the Presidential Campaign

28 Aug

It’s late-August and we’ve entered two weeks of national party conventions with no hope of redemption from presidential politics during the next 70 days. Both sides are desperately trying to define the other through massive expenditures on attack ads, legions of surrogates, and talking heads spouting profundities regarding the other candidate’s treatment of a family pet or use of marijuana back in high school.

Too bad that, “we the people,” know so few details of either candidate’s proposals to lead us through the next four years. This is especially true regarding energy. Granted, this past week has seen both Messrs. Obama and Romney offer some time on the stump to energy, but neither has articulated a well-defined proposal for a national energy policy.

Energy affects every aspect of our lives. Plentiful, affordable, reliable energy supplies are fundamental for a healthy, growing economy, job creation, mobility, and national security. If combined with intelligent, cost-effective efficiency standards and innovative, long-term policies promoting private investment in new energy infrastructure and research, we could find ourselves on the path to real energy security.

The energy proposals of both campaigns, however, are discouraging. President Obama, not surprisingly, combines the issue under the banner of “Energy and Environment.” Governor Romney offers a more focused series of energy proposals under three broad categories: “Regulatory Reform,” “Increasing Production,” and “Research and Development.”

President Obama’s position is a series of grand, sweeping remarks about clean energy, clean jobs, and the, “All of the Above” energy strategy. More lines of text are devoted to environmental protection, including something called, “America’s Great Outdoors,” than to energy.  The positions are underscored with a pronouncement to, “make sure we never have to choose between protecting our environment and strengthening our economy.”

Governor Romney highlights his energy initiatives in 14 succinct bullets. They range from reducing regulatory delays, expanding resource production on federal property, to funding long-term energy research. It’s a fairly good smattering of short-term strategies until he succumbs to political temptation and includes the hackneyed slogan “energy independence” by 2020.

As a result, both candidates offer little more than poll tested, political positions reflecting the will of their respective base. Neither side has posited a serious, clear-eyed vision of an effective national energy policy. Sadly, a vote for either candidate is simply going to ensure the status quo.

The nature of our energy challenges dictate that the policy be bold, well reasoned, and long-term in perspective. In other words, no politically expedient, short-term gimmicks.

Energy is a complex topic. There are no quick and easy fixes. “Drill baby drill,” “all of the above,” or “energy independence” are politically charged chants that don’t begin scratch the surface of the energy enigma. Sadly too, the political arena is probably the worst place to attempt to craft effective, long-term solutions.

Energy is international in scope. All nations, to varying degree, are interdependent. Whether it’s in the form of liquid petroleum products, natural gas, coal, uranium, renewables, or electric power, energy is fundamental to every nation’s existence and capability to thrive. In one form or another, energy is bought, sold, or traded in open international markets every day.

Considering our country’s energy demand, its supplies, and all of the economic, physical, and self imposed restrictions associated with them, we can only aspire to energy “stability” or “security.” Absent the introduction of a disruptive technology, we cannot truly be “independent.”

Our energy policy must support the economic and security interests of the nation. It must be an unambiguous, broadly inclusive, high-level pronouncement to guide, not prescribe, how we meet our energy needs.

It must be based upon clear, scientific logic and the application of sound engineering principles. While many technologies may be possible, only those that are operationally and financially sustainable and can deliver the desired results will ultimately be accepted in the market. Intermittent renewables certainly have their place, but are in no way substitutes for our existing carbon and nuclear fueled technologies used to meet base load demand.

The massive scale of energy dictates long planning and utilization timeframes. Whether it is the liquid fuels providing our mobility, solid and gaseous energy supplies for heat and power generation, or the infrastructure to deliver them all, decisions made today will be with us well into the latter half of this century.

Finally, it must recognize that there is absolutely nothing in this world that is risk free. Choices and trade offs are inevitable. Rational, fact-based decisions of policy makers supported by the analysis of subject matter experts is required.

It’s likely too late in the silly season to expect that either presidential campaign would embrace this reality. Even more unlikely that the political hacks would allow them to publicly admit it. But, wouldn’t it be refreshing if they did? That would energize the electorate this year!

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The case for a National Energy Policy

4 May

To remove any and all doubt of the urgent need for a rational energy policy, watch this clip.

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Enough said.

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Searching for a silver bullet; never firing the gun.

29 Jan

Maybe I’m cynical, but while I was heartened to learn that President Obama highlighted domestic natural gas in his State of the Union address, his campaign to promote an “All of the Above” strategy with the tag line, “Built to last,” appears eerily reminiscent of the last thirty years of Presidential initiatives to address our energy situation.

Presidents and their staffers are very good at crafting an image or brand around their energy policy. Jimmy Carter had his cardigan sweater. George W. Bush lamented our, “addiction to oil.”  Mr. Obama, until last week, was the “green” President: green economy, green jobs, green investments…until they turned red. Now, he is for “all the above” under a “blueprint for an economy that’s built to last.” (I guess speaking in automotive slogans is an aftereffect of the GM bailout.)

Unfortunately, it’s clear that we still lack a rational energy policy, just as we have over the past three decades. To be fair, energy is not a simple issue. It has implications throughout our daily lives, business and the economy, the environment, and national security. Compounding this complexity, energy is by definition, remarkably political in nature. On one side sit the pro energy interests (“drill baby drill”), on the other, the green movement fervently convinced energy is causing worldwide destruction. The majority in middle simply want a stable job and a decent living along with gasoline prices that don’t necessitate a second mortgage.

So what’s a politician do when he has to maneuver between such a political Scylla and Charybdis?  First, deflect the issue by identifying an expedient target. Be certain to be seen standing up for your constituents and publicly denounce the bad guy (think CEO’s of energy companies).  Next look for a silver bullet, no matter how ineffective, to calm fears and give the impression that you’re solving the problem. Finally, coin a catchy slogan so people will remember you in the voting booth.

The public flogging of energy company CEO’s feels good, but that’s been done so often recently that it’s loosing populist appeal. Silver bullets rise and fall faster than GOP presidential contenders. Ethanol, first and second generation cellulosic biofuel, algae derived bio-diesel, electric battery vehicles. Each an interesting concept, but none even remotely capable of addressing our challenges.  Silver bullets are attractive, but notorious for misfiring.

All this leads me to wonder, ” Will be ever get to actually fire the gun?” Why aren’t we defining our energy strategy by means of a classical engineering or business decision model, just as we did to develop the existing pipelines and utilities, our electric transmission grid, and cellular phone and internet access?  That is, let  government lay out the problem, clearly define the rules, and identify the objectives.

Our national energy policy should be defined in three broad parameters. It must lead to plentiful, affordable, reliable energy. Do so in compliance  with all applicable regulations, codes, and standards to protect our health, safety, security, and environment. Continue to support basic research that will lead to new applications, but don’t allow government to play venture capitalist and attempt to pick winners and losers.

Let’s stop trying to identify the silver bullet. Unleash the power of industry and this country’s innate  entrepreneurial spirit to generate multiple options. Test them and let them compete and in the marketplace. The choice of options that best meets our objectives will soon be clear.

A national energy strategy that guides the development of a bandolier of bullets–oil, natural gas, clean coal, nuclear, renewables, efficiency, etc.–will support a gun capable of firing well placed rounds that actually hit the target.

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