TPT January 2013

Global Marketplace

But, Mr Krauss pointed out, during the campaign Mr Obama “praised the oil and gas drilling frenzy in shale fields across the country over the last four years.” The president also offered no suggestion that he would increase regulation of hydraulic fracturing, “fracking,” the drilling technique embraced by the oil and gas industry but which some people believe contaminates water supplies. And he reiterated his commitment to seeking greater independence from foreign oil, supporting more offshore drilling in Alaska and the Gulf of Mexico. › Mr Krauss, who is chief of the Times ’s Canada bureau, wrote that President Obama’s re-election introduces some uncertainty as to ultimate approval of the extension of the Keystone XL pipeline from Canada to the US Gulf Coast. Environmentalists oppose the pipeline on grounds that refining and burning oil from Canada’s oil sands contributes to faster climate change. Mr Obama had delayed approval of the pipeline, but many industry observers predict that he will go along with the project during his second term since the pipeline builder, TransCanada, has modified its route to avoid a sensitive aquifer in Nebraska. › Obama administration officials have pledged to continue promoting solar, wind, and other renewable power sources, but it is as yet unclear what form that support might take. An early test will be the debate over the production tax credit for the wind industry, which expired with 2012. The industry says the tax credit is vital to the expansion of the wind industry in the US. The biggest change in Washington for energy policy may come with the retirement of Senator Jeff Bingaman of New Mexico, a Democrat friendly to oil interests, and his probable replacement with Ron Wyden, a liberal Democrat from Oregon, as chairman of the Senate Energy and Natural Resources Committee. Wrote Mr Krauss, “Senator Wyden has been more critical than Senator Bingaman of fossil fuels and nuclear power, and he is considered a stronger backer of renewable fuels, in part because Oregon relies on wind and hydroelectric power for its electricity.” A couple of state ballot measures with important implications for energy policy were also put to the vote on 6 November: › In Michigan, voters defeated a proposed amendment to the state constitution that would have required Michigan to get 25 per cent of its power from renewable sources by 2025. The Sierra Club and other environmental groups had made the proposition a high priority, arguing that it would help stem climate change and promote alternative energy businesses and employment in the state. But the measure drew strong opposition from business groups and the governor, who argued that a commitment to the goal at the state level was impractical since Michigan gets only a tiny fraction of its power from renewables. O ther portents of the energy future

Energy Whither the American energy industry in the second term of a pragmatist president committed to renewable power? “Some of the sharpest disagreements between President Obama and Mitt Romney during the campaign were over energy policy, and the president’s re-election could be viewed as a defeat for the coal industry and a win for renewable energy, with a murkier outlook for oil and gas drillers.” Writing in the New York Times shortly after election day in the US, Clifford Krauss took note of the major energy-related initiatives of Mr Obama’s first term, all intended to reduce the country’s dependence on carbon-intensive fossil fuels and mitigate their impact on global climate: tighter air pollution regulations on power plants; tens of billions of dollars in loans and other federal support for renewable power; and the negotiation of higher fuel economy standards with the auto industry. Mr Krauss then considered what a reinvigorated Obama administration might mean for the US energy sector. Here, briefed down, are his most pertinent projections (“For Oil and Gas Companies, an Expectation of Higher Taxes,” 8 November): › Against expectations, President Obama carried both Virginia and Ohio, the two coal-producing swing states. Analysts say that a second Obama administration is likely to continue restrictions on mountaintop mining and press forward with regulations that effectively block new coal-fired generation plants that do not include carbon capture and sequestration. › The future is less clear for oil and gas companies. President Obama has repeatedly criticised the roughly $4bn worth of tax credits and deductions that oil and gas producers receive annually. The pressure on the government to reduce the national budget deficit, coupled with the industry’s political support for Mr Obama’s opponent, suggests that at least some of the tax breaks could disappear.

President Obama favours greater use of renewable energy

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January 2013