Can the Nat Gas Act be a Political Panacea for rising crude oil prices?
Rising gasoline prices, often sparked by instability abroad, typically cause the issues of energy security and oil dependence to gain more attention among lawmakers. While our nation has long lacked a national energy policy, rising gasoline prices can sometimes result in Congressional action. Thus, today’s rising gasoline prices would seem to make this current moment ripe for bipartisan action.
Yet, a wide chasm exists between most Congressional Republicans and the Obama Administration on energy policy. Republicans are advocating for ratcheting up domestic production through authorizing more onshore and offshore exploration and production. These proposals include rehashing politically-charged proposals such as authorizing drilling in the Arctic National Wildlife Refuge and in the outer continental shelf. Some Democrats are urging that the Obama Administration release crude oil from the Strategic Petroleum Reserve. For its part, the Obama Administration is attempting to forge a middle path by approving more permits for offshore development in the Gulf of Mexico, while also arguing for increased investments in clean energy technologies. Given these differences between Republicans and Democrats, comprehensive energy legislation likely faces a very difficult path to passage.
If gasoline prices continue to rise, pressure will, however, mount on the Republican-led House and the Obama Administration to pass some type of legislation. Currently most of the attention politically is focused on the effect rising gasoline prices are having on President Obama’s approval ratings and how it might affect his reelection prospects in 2012. Republicans, though, also face political peril if they fail to act as the Obama Administration and Democrats are attempting to tie Republicans to major oil companies. Specifically, Republicans could face increased public backlash for their support for tax incentives for oil and gas development, particularly when many of the majors are expected to announce strong quarterly profits over the next several weeks.
Given this political context, the Nat Gas Act could gain serious consideration as Democrats and Republicans attempt to find consensus on energy policy. This bipartisan legislation – introduced several weeks ago by Representative John Sullivan (R-OK), Representative Dan Boren (D-OK), Representative Kevin Brady (R-TX) and Representative John Larson (D-CT) -- would provide tax incentives for the production of natural gas vehicles and for the installation of natural gas fuel pumps, among other provisions. Two of the bill’s most vocal proponents include T. Boone Pickens and President Obama, who has touted it in several recent speeches on energy policy. The bill already has 178 cosponsors that are as diverse as members of the Republican Study Committee and Representative Diana DeGette (D-CO), who has advocated for enhanced federal oversight over hydraulic fracturing. Senator Robert Menendez (D-NJ) and Senator Orrin Hatch (R-UT) are reportedly working on introducing a companion bill.
Despite the rosy forecasts for the bill’s prospects some significant hurdles still remain. The bipartisan political support for the bill also existed in the previous Congress, yet disputes over how to offset the incentives resulted in the bill stalling. The current legislation does not provide for any offsets and reaching a compromise on either spending cuts or revenue raisers will be difficult. Another issue will be whether critics of hydraulic fracturing might attempt to use this bill as an opportunity to add provisions to increase the federal government’s authority over the practice. Moreover, major accidents or incidents connected to new shale gas development could temper Democratic and Administration support for this legislation.
Nonetheless, the existing political climate does seem to suggest that that Nat Gas Act could be that political panacea that could allow both Republicans and Democrats to claim to voters that they are addressing rising gasoline prices.
What now on Climate Legislation?
While faint glimmers of hope remain alive that the Senate will pass climate change legislation this Fall or during a lame duck session of Congress, most observers anticipate that cap-and-trade will have to wait for the future in terms of federal action. Two particularly interesting perspectives on the “What Now” question have emerged in the past week that deserve attention and analysis.
Megan McGowan suggests http://solveclimate.com/blog/20100818/are-moderate-republicans-obamas-leadership-keys-federal-climate-law that a lack of Presidential leadership and no support from moderate Republicans are to blame for failures on cap-and-trade legislation and these dynamics will need to change for future success. The article quotes Republicans and environmentalists who think Obama needs to stop listening to nervous political advisors, get out of listening mode, get bipartisan agreement on principles, lock the door with moderates and come out when there is a deal. Similarly, McGowan notes the reality of climate change and the likely change of margins in the next Congressional session will require moderate Republicans to come to the table, as simple party opposition will no longer be a politically feasible position.
An alternative “what now” analysis comes from Michael Brune, the new head of the Sierra Club, the nation’s largest conservation organization. In an interview with Yale Environment 360 http://e360.yale.edu/content/feature.msp?id=2303, Brune suggests the path forward is a multi-pronged attack on climate change. This alternative path would put less emphasis on one-single bill and moderate deal-making, and emphasize:
· Less environmental ngo-corporate collaboration on cap-and-trade policy replaced in part by a more adversarial approach until corporations make clear commitments to change their operations and public policy positions.
· Grassroots campaigns to prevent the building of new coal-fired power plants,
· Public support for EPA actions to reduce pollutants in the air,
· Scaling up renewable energy support, and
· Scaling up production and demand for natural gas.
Both perspectives share a common goal of creating political space in Washington, D.C. to create meaningful action on climate change. At the core of McGowan’s article is an implicit deal-making that involves grand concessions to traditionally intensive ghg sectors such as coal and oil, whereas there is likely less room for such concessions in the path suggested by Brune. It remains to be seen if a political path forward can accommodate both perspectives.
A Time for Action
President Obama's first Oval Office address was highly anticipated, as there is mounting criticism of the Administration's management of the BP oil spill. Supporters of climate and clean energy legislation eagerly gathered around their televisions in hopes that the President would provide the much needed road map detailing how this tragedy should transform American thinking on energy policy going forward.
However, many were left disappointed as the President did not answer some key questions nor did he set forth specific expectations for the Senate's summer session. There was considerable rhetoric about the country's oil addiction and the need for compelling and immediate clean energy legislation, but President Obama offered few specifics, although he seemed to provide some support for combining elements of several bills. However, the President, did not go so far as to mention a price on carbon, raising the tax on gasoline, or placing a cap on greenhouse gas emissions.
While the President's remarks could be seen as a big blow to Senators. John Kerry (D-Massashusetts) and Joe Lieberman (I-Connecticut), co-authors of a Senate cap-and-trade bill, in a joint statement they said that Obama has joined their fight.
"There can be no doubt that the president is rolling up his sleeves to ensure we establish a market mechanism to tackle carbon pollution, create hundreds of thousands of new jobs each year, strengthen energy independence, and improve the quality of the air we breathe," the two senators said.
In addition to the Kerry-Lieberman package, other legislative potentials include the Energy and Natural Resources Chairman Jeff Bingaman's (D-New Mexico) bill (S. 1462) which includes a renewable energy standard; a more ambitious renewable energy target found in bill co-sponsored by Senators Amy Klobuchar (D-Minnesota) and Senator Snowe (R-Maine) S. 862, an alternative to the traditional ideas on pricing carbon (S. 2877) from Senators Maria Cantwell (D-Washington) and Susan Collins (R-Maine); and a bill (S. 3464) promoting energy efficiency from Senators Richard Lugar (R-Indiana) and Lindsey Graham (R-South Carolina).
Prior to the speech, Senator Lieberman indicated that he hoped President Obama would emphasize the need for a market mechanism for pricing carbon.
"The truth is, trying to make America energy independent without creating a market mechanism to price carbon, would be the equivalent of President Kennedy launching our national effort to put a man on the moon without building a rocket," Lieberman said. "It's that important, and any alternative legislation being proposed -- including some that has some good stuff in it -- that doesn't do something to price carbon, will not unleash the billions and billions of dollars in the private sector that are waiting for that signal to put their money into clean alternative energy sources for our society."
The President stated that "the one approach I will not accept is inaction." The President is correct in this regard, as there has been a lot of talk for a long time. Yet, some specifics from the White House would be useful right now.
