At Metro Center, the connection between jobs and the energy industry

The American Petroleum Institute has a new ad campaign up and running, “I’m one,” complete with signage in the Metro Center station in the Washington Metro.

That’s Frederica C. smiling at us in the sign above, appreciative of her job as a marketing manager supported by the oil and gas industry.

You can see all 25 API Metro ads by scrolling down here.

It’s a timely campaign, given the expected comments about energy and jobs President Obama will make in his State of the Union address Tuesday.

American Petroleum Institute, “API response to commission report: ‘We’ve made progress to improve safety’“:

API Upstream Director Erik Milito said the group is still in the process of reviewing the commission’s report but is pleased the commission is recommending increased funding for the federal agency responsible for inspecting and monitoring offshore activity. However, he said API is deeply concerned that the commission’s report casts doubt on an entire industry based on its study of a single incident.

“This does a great disservice to the thousands of men and women who work in the industry and have the highest personal and professional commitment to safety,” Milito said.

Dan Kish, Senior Vice President at the Institute for Energy Research, “IER: BP Spill Commission Was Flawed From the Start“:

This commission has had problems from the beginning – it has seemed to prioritize creating political cover for the Obama Administration over working towards becoming a fact-finding body. That’s because it’s full of politicians, activists and opponents of offshore drilling. The public needs to know that the Macondo spill was an isolated incident that tragically differed from the oil and gas industry’s history in the Gulf: 60 successful years that generated 50,000 successful wells.

Washington Examiner editorial, “Oil spill antidote: More federal bureaucracy“:

It wasn’t hard to predict the sort of recommendations to expect from the seven-member National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling when President Obama appointed Natural Resources Defense Council President Frances Beinecke, Union of Concerned Scientists board member Fran Ulmer and five other Democratic donors to the panel. All seven oppose offshore oil and gas activity and are environmental movement stalwarts. … (continue reading…)

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling today released its final report making numerous recommendations, including an increase in the current $75 million cap on liability for offshore drilling accidents. The oil spill dommission did not recommend a specific figure for the higher cap, leaving that decision up to Congress.

Manufacturers believe that a substantial or unlimited cap increase is not the solution. Before taking any action, Congress should take a close look at the impact of any cap increase on the industry. Any substantial increase to the liability limit will inevitably lead to higher insurance rates, making operations in the U.S. waters potentially so expensive as to drive producers out of the Gulf overseas. Smaller independent operators, in particular, would suffer competitively. (See this American Petroleum Institute paper, “Impacts of Increased Liability Limits on OCS Operations.”) The result would be to continue an unofficial moratorium on offshore drilling.

Last session, there were discussions of an unlimited liability, while several Senators introduced legislation to raise the cap 13-fold, to $10 billion. Despite intense pressure to act, Congress ultimately passed very little legislation last year in response to the Deepwater Horizon spill, largely out of concern about further damaging the Gulf region’s economy. Those concerns remain valid.

As the Manufacturers have stated before, any delay in off-shore drilling will have a significant economic impact on manufacturers and other industries throughout the Gulf Coast and the nation.  The nation cannot afford increased job loss, especially during a time when the unemployment rate is as high as 9.4 percent.  Additionally, any further delay will have considerable impact on the domestic oil supply where it will drive up the cost of energy and create uncertainty in oil supply because companies will have to go abroad for drilling.

The Environmental Protection Agency in October postponed its announcement of new federal ozone limits, avoiding the politically damaging reports before Election Day. Yet another report about the EPA’s plans to crack down on economic activity would not have helped the Administration’s prospects.

The EPA’s proposed rule could drop the National Ambient Air Quality Standards for ozone from the 75 parts per billion limit established by the Bush Administration in March 2008 to as low as 60 ppb.

The economic impact of the EPA’s proposal is one of the most under-reported stories in the United States today. Thankfully, at least one newspaper, The Sarasota Herald-Tribune, has taken advantage of the EPA’s delay to examine what the rules could mean to the local economy.

We could quibble with the article, but at least the paper is trying to explain the impact of the EPA’s threat. From “Air rules could force changes here“:

New federal air quality rules, expected in the coming weeks, will likely trigger a wave of emission controls on industries in Southwest Florida, and the possibility of motor vehicle inspections….[snip]

Southwest Florida’s air quality barely meets current U.S. Environmental Protection Agency standards, and with those thresholds set to rise, the region will be forced to put better curbs on air pollution.

Or businesses could relocate to a region that doesn’t face the additional limits. Or move to another country all together.

The Herald-Tribune cites the joint National Association of Manufacturers and American Petroleum Industry’s study conducted by the Manufacturers/Alliance MAPI, “Economic Implications of EPA’s Proposed Ozone Standard (ER-707).” The study reported that reducing the ozone standard to 60 parts-per-billion could destroy 7.3 million U.S. jobs and reduce the Gross Domestic Product (GDP) by $687 billion in 2020. (More from API.)

And even more than the Bush Administration’s limits, the EPA’s latest proposal has thin scientific justification and could even be counterproductive when it comes improving the health of the U.S. populace.

The EPA’s jobs-killing plan is likely to be announced in January, perhaps during one of the slow news periods to avoid a sharp political backlash. In the meantime, other papers could follow the Herald-Tribune’s example and try to inform their readers about the impact of the ozone rules. The NAM stands ready to help with those explanations.

The American Petroleum Institute today hosted a panel discussion with three economists, Dave Crowe of the National Association of Home Builders (NAHB), John Felmy of API and David Huether of the National Association of Manufacturers (NAM).

API’s Jane Van Ryan has a report at the EnergyTomorrow blog, “Economists: Higher Taxes Could Harm Economic Recover.” Excerpt:

David Huether of NAM predicted that the “economy will be stuck in low gear for the second half of this year,” citing low consumer confidence and uncertainty over government policies. Although U.S. exports are up and 145,000 jobs were created largely in the first four months of 2010, economic growth is “lackluster.” Huether also cautioned that since manufacturers compete globally, “The last thing the government should do is add costs, raise taxes.”

API’s John Felmy also warned about government actions. “Policies are being proposed that drain money from the industry,” he said, referring to the administration’s plan to increase taxes on the oil and natural gas industry by $80 billion. John also said the failure to pass tax cut extensions could have a negative impact on small oil producers whose wells produce 2 barrels a day or less and provide jobs for about 125,000 workers. He said higher taxes, as well as the de facto offshore moratorium, could adversely impact domestic oil and natural gas supplies, energy security and job creation.

Right before breaking for its six-week August recess, the House of Representatives voted to pass a bill that, if it became law, would raise the cost of energy and drive out energy producers from the Gulf of Mexico and other offshore sites.

From all that we hear, the Senate will have a difficult time moving on any “energy” bill this week, especially with any language to eliminate the liability cap on accidents from offshore activities. Unlimited liability would disadvantage smaller domestic energy producers.

The House-passed bill is H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act. It passed by a vote of 209-193, with 30 members not voting, nine Democrats and 21 Republicans. Those 30 members could have defeated the bill, but plane reservations had been made.

The bill did include a good amendment sponsored by Rep. Charlie Melancon (D-LA) to lift the Obama Administration’s moratorium on deepwater drilling for rigs that meet safety requirements.

The National Association of Manufacturers issued a statement, “Manufacturers: House Energy Bill Is Setback for America.”

The American Petroleum Institute issued a critical statement from API President Jack Gerard after the vote, “API says House-passed spill bill anti-jobs, anti-consumer, anti-energy.” Excerpt:

The House bill passed today will kill jobs, threaten our fragile economic recovery and place our energy security at risk. This is an anti-jobs, anti-consumer and anti-energy bill. Instead of addressing the risks of offshore development by improving safety and establishing a robust system for covering the costs of possible future accidents, this bill effectively bans development and sends thousands of workers in offshore communities to the unemployment lines.

Senate Majority Leader Harry Reid (D-NV) introduced the long-awaited “energy bill” on Tuesday, legislation that has no cap-and-trade, no utility-only CO2 limits, nor any renewable energy portfolio standards. All to the better…

The legislation is being called “Clean Energy Jobs and Oil Company Accountability Act.” (Reid statement, bill summary, text.)

The Wall Street Journal’s coverage of the bill is straightforward, “Energy Bill Would End Oil Claims Cap“:

WASHINGTON—A draft energy bill unveiled Tuesday would eliminate the cap on damage claims oil companies must pay for spills, and offer new federal subsidies for natural gas and electric vehicles. But the proposal by Senate Democrats faces an uphill fight….

Mr. Reid’s draft bill would lift the current $75 million cap on economic damages paid to residents and small businesses by oil companies after oil spills. It would also provide various subsidies to encourage the production and purchase of natural-gas and electric vehicles. A new program would encourage homeowners to make energy efficiency upgrades.

The measure’s estimated $15 billion cost would be financed by raising the per-barrel surcharge that oil companies contribute to the federal Oil Spill Liability Trust Fund.

Jack Gerard, president and CEO of the American Petroleum Institute, reacted to the bill with a critical statement, “Senate Energy Bill Threatens Jobs, Economic Growth“:

[The] liability provision sticks out as a jobs killer. Requiring an unattainable level of insurance coverage for domestic energy producers on the Outer Continental Shelf will force the vast majority of American companies out of U.S. waters, according to insurers. 

This would cut domestic production, kill American jobs, slow economic growth and cost billions in federal oil and natural gas revenues.

The Journal also refers to the concerns that the bill’s goal of switching transportation to natural gas, coming at the same time that environmental groups and some politicians are calling for increased regulation of hydrofracturing, could produce a price spike as demand outstrips supply. This release last week from the energy consumers explains the objections, “Coalition of Consumers Urges Senate Not to Legislate Natural Gas Demand in Energy/Climate Bill.” (continue reading…)

From the Department of Interior, “Secretary Salazar Issues New Suspensions to Guide Safe Pause on Deepwater Drilling“:

WASHINGTON, D.C. – Secretary of the Interior Ken Salazar today directed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) to issue new suspensions of deepwater drilling on the Outer Continental Shelf (OCS), saying a pause is needed to ensure that oil and gas companies first implement adequate safety measures to reduce the risks associated with deepwater drilling operations and are prepared for blowouts and oil spills.

Shallow water drilling activities that use different technologies do not present the same type or level of risks as deepwater drilling operations and can continue to move forward if operators are in compliance with all safety and environmental requirements, including new safety and environmental requirements implemented through recent Notices to Lessees. Production activities in federal waters of the Gulf are not affected by the deepwater drilling suspensions.

“More than eighty days into the BP oil spill, a pause on deepwater drilling is essential and appropriate to protect communities, coasts, and wildlife from the risks that deepwater drilling currently pose,” said Secretary Salazar. “I am basing my decision on evidence that grows every day of the industry’s inability in the deepwater to contain a catastrophic blowout, respond to an oil spill, and to operate safely.”

American Petroleum Institute’s President and CEO Jack Gerard issued a statement criticizing the latest moratorium. Excerpt:

It is unnecessary and shortsighted to shut down a major part of the nation’s energy lifeline while working to enhance offshore safety. The new moratorium threatens enormous harm to the nation and to the Gulf region. It places the jobs of tens of thousands of workers in serious and immediate jeopardy and promises a substantial reduction in domestic energy production. No certain and expeditious path forward has been established for a resumption of drilling.

The 33 now idle deepwater drilling rigs in the Gulf have passed thorough government inspections and are ready to be put back to work. The industry has been working extremely hard on all fronts to enhance safety – and will continue to do so. And the government has already imposed significant, additional safety requirements that are supported by the industry. A resumption of drilling would proceed only under the most intense and vigilant oversight.

From President Obama’s televised address last night:

Each of us has a part to play in a new future that will benefit all of us.  As we recover from this recession, the transition to clean energy has the potential to grow our economy and create millions of jobs -– but only if we accelerate that transition.  Only if we seize the moment.  And only if we rally together and act as one nation –- workers and entrepreneurs; scientists and citizens; the public and private sectors.  

Jonah Goldberg, National Review, “Oil: The Real Green Fuel“:

If you remove the argument over climate change from the equation (as even European governments are starting to do), one thing becomes incandescently clear: Fossil fuels have been one of the great boons both to humanity and the environment, allowing forests to regrow (now that we don’t use wood for heating fuel or grow fuel for horses anymore) and liberating billions from backbreaking toil. The great and permanent shortage is usable surface land and fresh water. The more land we use to produce energy, the less we have for vulnerable species, watersheds, agriculture, recreation, etc.

From the American Petroleum Institute, the summary of a paper released last November:

America’s Oil and Natural Gas Industry Supports Over 9 Million Jobs
Everyone is touched by America’s oil and natural gas industry. How so? Farmers use fertilizer made from natural gas. Truckers use diesel fuel to ship goods to market. And businesses rely on oil and natural gas to make and sell their products and provide their services. If you buy a loaf of bread, purchase a new electronic gadget, or drive a car, consider yourself a part of the oil and natural gas industry. From airline pilots to welders, and every job in between, we’ve all got a stake in our energy future.

The API paper is available here.

The National Association of Manufacturers’ statement from Executive Vice President Jay Timmons, “Manufacturers Urge Continued Expansion of Offshore Development.”

American Petroleum Institute, a statement from President Jack Gerard:

The announcement by President Obama and Secretary Salazar is a positive development. We look forward to reviewing the details of the proposal, and we stand ready to work with them to make this a reality. We appreciate the administration’s recognition of the importance of developing our nation’s oil and natural gas resources to create jobs, generate revenues and fuel our nation’s economy.

Exploring for and developing our nation’s offshore resources could help generate more than a trillion dollars in revenues and create thousands of jobs to add to the already 9.2 million jobs supported by today’s oil and natural gas industry.

As we move forward, we hope that consideration can be given to other resource-rich regions, such as the Destin Dome area of the Eastern Gulf and areas off the Pacific Coast and Alaska. We also need to ensure that the permitting processes are handled in an expeditious way. The oil and natural gas industry has a proven track record of safe oil and natural gas development and the majority of the American people recognize this by supporting greater offshore development for the benefit of their communities, their states and their nation.

Virginia Gov. Bob McDonnell, “White House Decision Ensures Virginia will be First State on Eastern Seaboard to Produce Natural Gas and Oil Offshore“:

I thank the President and Secretary of the Interior Ken Salazar for ensuring Virginia will be the first state on the East Coast to explore for and produce energy offshore. The President’s decision to allow energy exploration off Virginia’s coast will mean thousands of new jobs, hundreds of millions in new state revenue and tens of billions of dollars in economic impact for the Commonwealth. It will also help our nation take a further step towards energy independence. Environmentally-safe offshore energy exploration and production is good for Virginia workers, the Virginia economy and national security. Just this session the General Assembly passed, with bipartisan support, legislation I requested to authorize offshore oil and gas exploration and drilling and to allocate 80% of revenues to transportation and 20% to green energy research and development. (continue reading…)