Tag Archives: oil

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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Mr. President…Congratulations! You’ll need more energy this term.

10 Nov

 

Congratulations Mr. President. You pulled off an incredible election win, defying the pundits and earning another four years in the White House.

Let’s face it though, your election win is historic because it was the most money ever spent to maintain the status quo. The operation of the Constitution through the Electoral College gives the appearance of an impressive victory, but the popular vote belies that result. You weren’t handed a mandate and you face virtually the same hopelessly deadlocked Congress. Wall Street isn’t exuberant either.

Nevertheless, savor the moment. But, you’ll need to keep the victory lap short.

Clearly, your most pressing agenda item is the dreaded “fiscal cliff.” You’ll likely be spending a good deal of time ensuring that our financial problems don’t morph into another Greek-style economic crisis. Along the way, you’ll probably attempt to implement some spending cuts and tax reforms, tweak Obama care, face down the Iranians, strike a few more al-Qaeda, and keep China and Russia in check . If you stop to think about it, the global financial collapsed you faced on your first day on the job back in January 2009, looks like just another day at the office.

So where can you boost the energy level, build a few bi-partisan bridges, and increase the prospects for a successful encore term? Try energy. No, not one of those caffeinated drinks so popular with the millennials. (By the way, don’t let Sasha or Malia get a taste for those.) Real energy.

OK, energy wasn’t your strong suit during the first term. You promised to stop the rise in sea level, create a green economy,  implement Cap and Trade, support carbon-free technologies, promote clean coal, unleash the hounds of enforcement at EPA, and promote zero emission electric vehicles.

What you ended up with was spending a few billion dollars on Solyndra, EnerOne, Tesla Motors, et. al., a green job drain to countries such as China and Sweden, Cap and Trade buried by the economy and Congress, threats to bankrupt new coal-fired power plants, about 10,000 Chevy Volts sold, the BP blowout, and a few million homeless residents living without power on the New Jersey and New York shoreline. But that one doesn’t count because it was caused by an errant hurricane, not an anthropogenic rise in sea level.

Yet, believe it or not, energy could be a bright spot this time around. Take advantage of what’s happening in the sector and reach across the isle. I’ll bet that you’ll find more than a few hands extended to you. While you don’t have the budget or political clout to inaugurate grand programs, you can achieve some near-term wins and lay the foundation for realistic future advances. Besides, working families and businesses will thank you for keeping their utility bills and gasoline budget in check.

What’s behind this vision? For starters, domestic oil and gas production has rebounded as a result of hydraulic fracturing. There is a real prospect to import less foreign oil as a result. Jobs of all kind are being created to support the boom in domestic production. The new supplies have driven down the price for natural gas spurring private sector investment in more affordable alternatives to diesel and gasoline. Finally, because it’s displacing coal in power generation, cleaner burning natural gas is reducing the country’s Green House Gas (“GHG”) emissions despite the defeat of Cap and Trade.

So, what should the second Obama Administration do to capitalize on this situation? The fiscal cliff, stubbornly high unemployment, and anemic GDP are casting dark clouds over every aspect of this term. Energy is no exception. Just remember three simple words: Plentiful, Affordable, Reliable.

Start by recognizing that now is not the time to press Congress for climate change programs, a new carbon tax, Cap and Trade, or spending on green washed programs of any type. You need not abandon your long-term desire heal the planet, but the first order of business is to heal the economy. Besides, you have breathing room on GHG emissions since they are currently headed in the right direction, even though it’s for all the wrong reasons. Don’t ever forget that working families and businesses are paying for those GHG reductions with job losses and budget cuts.

Continue exploiting natural gas. It’s creating more jobs than any other business sector, bringing down the cost of heat and light, providing a sustainable competitive advantage to domestic chemical and fertilizer producers, driving private sector investment as an alternative vehicle fuel, and is the most effective means of implementing real progress on reducing CO2 emissions today.

Develop domestic oil. Just as with natural gas, hydraulic fracturing in oil production could yield massive changes in how we meet our demand for oil. Other technological advances promise to unleash vast quantities of shale oil that some estimates place at nearly 5 times greater than the reserves of Saudi Arabia. Don’t deny the country the benefits of access to our domestic resources by limiting exploration and production to private lands.  Pursuing your “all of the above” strategy should include “all that’s below.”

Stop unnecessary regulatory initiatives that create duplicative, burdensome barriers to growth. To be sure, government regulations are needed to protect public health, safety, and the environment. With the advances in extractive technologies such as hydraulic fracturing and shale oil recovery, regulations must evolve to be effective. Since many oil and gas industry accidents are low probability, high impact events, the industry is subject to the most comprehensive regulation and oversight imaginable. These are oftentimes administered at both the federal and state level. That’s why intelligent regulation, not simply more red tape should be the rule.

Obviously, these changes in our energy supply picture will provide significant national security advantages at a time when the global neighborhood isn’t becoming a friendlier place for the US. But energy independence is a political statement not a policy. Look, instead, to increasing our energy stability and security. Take a North American rather than a parochial US view of our national energy security.

Canadian oil is as secure as our own production and we should do our best to ensure that our neighbor prefers doing business with us. Likewise, a North American view recognizes that the Eagle Ford shale formation in Texas doesn’t stop at the Rio Grande river. Similarly, Mexico shares the Gulf with us and they have yet to adequately develop their offshore resources. Rather than looking for ways to build a bigger fence, we should be working with Mexico to build their energy industry. If oil and gas production can create jobs and support the economies of the US, Canada, and Mexico, a fence may become superfluous.

Finally, promote the energy initiative that yields the biggest return on investment of any energy source or program – efficiency. Intelligent conservation and efficiency measures such as home insulation, white roofs, or efficient light bulbs aren’t exciting or attention grabbing, but yield immediate and sustainable results today. Besides, you can’t argue with the saying, “a gallon saved is a gallon not imported.”

The good news, Mr. President, is that you still have some very good energy options to pursue. Even in the face of our severe fiscal and economic challenges, energy can make inroads to economic recovery and national security. Take advantage of the plentiful, affordable, reliable energy supplies available today, champion intelligent regulation, and promote energy efficiency. While these may not be seen as significant legacy initiatives, sometimes leadership demands a steady hand and a workmanlike focus on the fundamentals. That’s exactly what this nation’s working families and businesses could use right now.

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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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