The natural gas industry was surprised Wednesday when President Obama cited natural gas as an issue that both Republicans and Democrats could find common ground on in the 112th Congress.

"We've got, I think, broad agreement that we've got terrific natural gas resources in this county. Are we doing everything we can to develop those?" the president said at the White House.

"We had no forewarning" that Obama would say this about natural gas, said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America. "It certainly was a positive signal that he shows interest in natural gas." Range Resources CEO John Pinkerton echoed the sentiment, saying "I'm thrilled that our commander in chief...used the words 'natural gas' in a speech. It's been a long time coming."

However, "the question now will be whether their policies support that statement; so far they haven't," Fuller said. As examples, he cited the delay in approving drilling permits in the Gulf of Mexico, the drilling moratorium, plans to increase taxes on industry, and possible action by the Environmental Protection Agency (EPA) to expand regulation of hydraulic fracturing.

Obama's statement was "very short and not very precise," leaving a lot of room for interpretation, Fuller said.

As Republicans took control of the House and gained more Senate seats in Tuesday's elections, shifting the balance of power in Washington, DC, Obama said he would be willing to compromise on several issues, such as energy, to get legislation passed into law during the 112th Congress.

In addition to an agreement on natural gas, "There's a lot of agreement around the need to make sure that electric cars are developed here in the United States, that we don't fall behind other countries. Are there things that we can do to encourage that?" Obama asked.

"There's been discussion about how we can restart our nuclear industry as a means of reducing our dependence on foreign oil and reducing greenhouse gas [GHG] emissions...We were able, over the last two years, to increase for the first time in 30 years fuel efficiency standards on cars and trucks. We didn't even need legislation," he said.

"I think there are a lot of Republicans that ran against the energy [and climate] bill that passed in the House last year. And so it's doubtful that you could get the votes to pass that through the House this year or next year or the year after. But that doesn't mean there isn't agreement that we should have a better energy policy. So let's find those areas where we can agree," Obama said.

Obama was asked if he supported the EPA regulating GHG emissions if Congress fails to pass some kind of climate change legislation. "With respect to the EPA, I think the smartest thing for us to do is to see if we can get Democrats and Republicans in a room who are serious about energy independence and are serious about keeping our air clean and our water clean and dealing with the issue of greenhouse gases," he said.

"The EPA is under a court order that says greenhouse gases are a pollutant that fall under their jurisdiction. And I think one of the things that's very important for me is not to have us ignore the science, but rather to find ways that we can solve these problems that don't hurt the economy, that encourage the development of clean energy in this country, that, in fact, may give us opportunities to create entire new industries."

But in the end, he said, "I think it's too early to say whether or not we can make some progress on that front. I think we can. Cap and trade was just one way of skinning the cat; it was not the only way. It was a means, not an end. And I'm going to be looking for other means to address this problem.

"I think the EPA wants help from the legislature on this. I don't think that the desire is to somehow be protective of their powers here. I think what they want to do is make sure that the issue is being dealt with."

From the victorious Republicans, however, there was not much talk of compromise, on energy or anything else. Political operatives see the GOP control of the House committee chairmanships as paving the way for oversight hearings on recent EPA actions and the administration's handling of offshore drilling following the oil spill in the Gulf of Mexico (see Daily GPI, Nov. 4).

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