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Energy Debate Still in Hands of Obama, Divided Congress

By a narrow margin, voters last Tuesday elected President Obama to a second term in office, and kept Republicans in control of the House of Representatives and Democrats in the majority in the Senate. By maintaining the status quo in Washington, DC, this may ensure that the stalemate over energy policy will continue for another four years.

In a victory speech in Chicago early Wednesday morning, Obama said he would reach out and work "with leaders of both parties to meet the challenges we can only solve together: reducing our deficit, reforming our tax code, fixing our immigration system [and] freeing ourselves from foreign oil. We've got more work to do."

Obama captured 303 electoral votes to Republican Mitt Romney's 206, with Florida still undecided on Friday (Romney conceded the state). The Democratic incumbent had 50% of the popular vote to Romney's 48%. Obama said he looked forward "to sitting down with Gov. Romney to talk about where we can work together to move this country forward."

The two presidential candidates had clashed over energy issues during the campaign season (see NGI, Oct. 22; Oct. 5). While both said they would promote an "all of the above" energy strategy, Romney said Obama's plan favored renewables and Obama said the challenger's plan focused solely on oil and gas.

In his acceptance speech for the Democratic nomination in September, Obama said Democrats were offering the nation a "better path" on energy -- one that would continue to focus on renewable energy, develop abundant natural gas supplies, give producers more access for domestic onshore oil and gas exploration, reduce foreign oil imports and cut carbon pollution (see NGI, Sept. 10). At the same time, he said he would "not let oil companies write this country's energy plan, or endanger our coastline, or collect another $4 billion in corporate welfare from our taxpayers."

In the days leading up to the presidential election, one poll found that more voters preferred the energy policies espoused by Obama than Romney.

Natural gas was the one fossil fuel that found favor with Democrats. "We will continue to advocate for the use of this clean fossil fuel [gas], while ensuring that public and environmental health and workers' safety are protected," the Democratic National Committee (DNC) said in its platform on energy. It further stated that "we support more infrastructure investment to speed the transition to cleaner fuels in the transportation sector. And we are expediting the approval process to build out critical oil and gas lines essential to transporting our energy for consumers." But "harnessing our natural gas resources needs to be done in a safe and responsible manner," the DNC said.

"The natural gas pipeline industry looks forward to working with President Obama and the new Congress to ensure that legislation and regulation does not hinder the development of natural gas and the pipeline infrastructure needed to transport this abundant, clean-burning domestic fuel," said Don Santa, CEO of the Interstate Natural Gas Association of America (INGAA). "We appreciate President Obama's repeated statements about the benefits of natural gas to the nation's economy and consumers."

American Petroleum Institute CEO Jack Gerard said energy was "a big winner in this election," and offered Obama advice on the legislative agenda for his second term.

"Right off the bat, the president can approve the Keystone Pipeline and put thousands of Americans to work immediately. He can acknowledge the effective role states are already playing in regulating oil and natural gas production and avoid the temptation to impose duplicative and unnecessary regulations on hydraulic fracturing. By following through on his own executive order to eliminate overly burdensome regulations, he can rein in EPA's [Environmental Protection Agency] plans to impose regulatory burdens that could cost businesses hundreds of billions of dollars and chill economic growth."

Obama's reelection "brings more good news than bad" to the natural gas industry, former secretary of the Pennsylvania Department of Environmental Protection John Hanger wrote in a column published Wednesday by Business Insider. Obama's policies will result in increased demand for natural gas, "and right now the most pressing need for the gas industry is to sell more product," Hanger wrote. But the industry will be in a fight with Obama over tax policy, he said. "Tax breaks for the oil and gas industry will be under siege, pressured by a President who ran against them and by the fiscal condition of the nation."

Virginia Lazenby, chairman of the Independent Petroleum Association of America, said members had "serious concerns" about energy policies the Obama administration implemented in its first four years.

"Right now, more than 12 federal agencies seek to regulate oil and natural gas development, a jurisdiction that the states have historically and successfully regulated," Lazenby said. "One-size-fits-all regulations from Washington that duplicate what regulators are doing at the state level threaten new supplies of energy and make it next to impossible for independents to operate on federal lands, both onshore and offshore."

American Gas Association CEO Dave McCurdy struck a more upbeat tone following the election.

"It is only through smart, efficient policies and coordination with policymakers at all levels that we will be able to meet our nation's energy goals, and there is no doubt natural gas has a significant role in our energy future. The President has advanced policies to help realize the realities of what this domestic fuel can do for our nation, but there is still significant room for greater use of natural gas to help meet our nation's energy goals," McCurdy said.

Enbridge Inc. CEO Al Monaco said he doesn't think the second Obama administration will bring much change to the U.S.-Canada energy relationship.

"The reason for that is if you look at the fundamentals in the U.S. and Canadian market for crude oil, we're seeing a huge expansion in the volume that's coming forth in new production and so forth. So I think it's in everybody's interest to get new infrastructure built," Monaco said during a conference call Wednesday. "And I think that's been the Obama administration's view to this point. And I think we'll see that going forward."

Reports that Obama may shake up his energy cabinet are making the rounds in Washington, DC, but it's unlikely there will be any major change in energy policy if this occurs.

"We've heard various rumors about existing cabinet secretaries leaving, but I don't think anything is final until a resignation is announced," said Cathy Landry, a spokeswoman for INGAA.

Even if there are major departures, "it's unlikely to influence policy in any major way. The president/White House sets the overall agenda for an agency. Sure, there may be differences in the way a department is managed or even how a regulatory issue is handled, but the general policy still is set in coordination with the policies laid out by the president and his senior staff," she said.

Those said to be most likely to leave soon are Energy Secretary Steven Chu and Environmental Protection Agency (EPA) Administrator Lisa Jackson, according to published reports.

Former Sen. Byron Dorgan (D-ND) or perhaps retiring Sen. Jeff Bingaman (D-NM) might be on the short list to replace Chu, The Washington Post reported. Ernie Moniz, director of energy initiatives at the Massachusetts Institute of Technology and an Obama energy adviser, might also be considered.

Chu proved to be an embarrassment to the Obama administration when the Department of Energy approved a loan guarantee of $535 million for Solyndra, a manufacturer of solar photovoltaic systems, months prior to the company announcing in October that it was filing for bankruptcy.

The EPA run by Jackson has been a thorn in the side of oil and natural gas interests. This year, the agency was forced to withdraw orders against three producers for alleged groundwater contamination after EPA had erred in its investigations (see NGI, April 9). The agency also issued a final rule this year aimed at eliminating air pollution from oil and natural gas production facilities with compliance extended until 2015. But the EPA's estimates of air emissions from oil and gas are widely disputed by industry, causing industry to question the accuracy of the rule.

Jackson's successors could be current deputy EPA administrator Robert Perciasepe; current top EPA air pollution official Gina McCarthy; or Clinton White House aide Ian Bowles, who ran the energy and environmental department in Massachusetts, The New Jersey Star Ledger reported.

When asked if Interior Secretary Kenneth Salazar planned to stay for Obama's second term, Interior spokesman Blake Androff told NGI, "The secretary remains focused on the job at hand, implementing the president's vision for energy security in the United States." Like Jackson, he has taken steps that have blocked development, such as limiting permitting and access to public lands for oil and gas production (see NGI, July 2).

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