The Energy and Commerce’s Energy and Power Subcommittee held a hearing today on Rep. Lee Terry’s H.R. 3, the Northern Route Approval Act. This legislation would deem all environmental requirements completed and would no longer require the President to sign a permit to approve the pipeline.

This was the subcommittee’s third hearing in the past several years on the Keystone XL project. Those in support of the pipeline emphasized the positive economic impact of the pipeline in terms of jobs, manufactured goods, increased tax revenues and the increased energy security. Those opposing the project emphasized climate change, reducing the carbon footprint, the refining of heavy oil and the ongoing reliance on fossil fuel.

However, there were a few nuggets worth repeating.

Chairman Whitfield noted that that manufactures and businesses have reduced carbon emissions on the environment over that last 20 years.

David Mallino of the Laborers International Union of North America pleaded with subcommittee members to support the legislation and “clear away roadblocks” to this project. Mr. Mallino pointed out that this project will provide opportunities for many different craftsmen, and that this pipeline will be built by union members and would result in millions of man hours. (continue reading…)

The President and his advisors have repeatedly stressed that they do not believe they have to choose between the environment and the economy. The governors of Oregon and Washington are not making it easy on him; in fact, that’s precisely the choice they’ve asked him to make on exports. In a letter sent today to the President’s Council on Environmental Quality, the two governors asked for a boundless, limitless, and to our knowledge unprecedented, life cycle impact analysis of five planned coal export terminals and the cargo being transported through them, all before issuing a permit for the first one.

The kind of review they are asking for is Keystone-on-steroids; they want the President to decide whether we should be exporting coal AT ALL before issuing a permit to expand the terminals. Never mind that the ports will ship other products besides coal. Never mind that thousands of high-paying construction jobs are at stake in a region where construction jobs are at their lowest point in a decade. And never mind that such a radical change in the law could be used to block exports of, well, everything.

This last point has manufacturers very concerned. Virtually every product we export, from cars to turbines to planes to grains, has an environmental impact. The already-too-long permitting process for new projects–a process that takes on average 3.4 years–would become completely unmanageable if the law were expanded to require the type of review the two governors are now seeking.

The NAM was created in 1895 because manufacturers needed to find opportunities to export their products. We will continue to fight efforts to erect unnecessary barriers beyond what is required by law.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

The Senate budget amendment process known as Vote-A-Rama was, in many ways, an opportunity for Senators to test policy priorities to determine where consensus may lie.  Energy issues were no exception, and I’m encouraged to see that strong bipartisan support exists for many of manufacturers’ energy priorities.

The Senate passed by voice vote an amendment by Sen. Barrasso that protects exports from being bogged down by new layers of permitting and regulation, on the grounds that the exports would emit greenhouse gases after leaving the country. Sen. Barrasso’s amendment would prohibit Federal agencies from considering, under the National Environmental Policy Act (NEPA), greenhouse gas emissions produced outside the United States by any good exported from the United States. This drastic expansion of NEPA, which is being contemplated in the case of Keystone XL and for permits to export coal and natural gas, would create a precedent that could be used to block exports of all types, not just fossil fuels. Sen. Barasso’s amendment did not weaken NEPA in any way; it merely protects against efforts to expand permitting for exports further than what the law currently requires.

Two dueling amendments were voted on related to Keystone XL: one from Sen. Boxer that would preserve the regulatory status quo and one from Sen. Hoeven that would speed up the process and finally get the project approved and constructed. The Boxer amendment failed on a lopsided 66-33 vote. The Hoeven amendment passed, 62-37, the first time I can recall Keystone XL crossing the magical 60-vote threshold in the Senate.  This should put the administration on notice: both the House and Senate have now demonstrated they can get a bill to approve Keystone XL on the President’s desk. (continue reading…)

In today’s Politico former Senator Blanche Lincoln penned and op-ed on the importance of energy exports and the need for government to help industry, hurt it.

In the piece Sen. Lincoln discusses the importance of the pending permits for coal export terminals in the Pacific Northwest. Exports are essential to our competitiveness and it is important that these projects be allowed to move forward without onerous delays such as a one-size fits all environmental review.

Here is an excerpt from Politico:

This expansion, supported by private investment, would allow for the increased export of bulk commodities like coal, agricultural products and other materials. If allowed to move forward, such expansion would lead to more jobs and tax revenue for the entire region — and the nation. But it, and countless other infrastructure projects, could be permanently stalled by an onerous review that would attempt to analyze the cumulative regional environmental impact of these facilities and for every use of everything that is shipped from them: a virtually impossible task that, if followed to its logical end, could result in findings conceivably so inaccurate that they would be utterly useless. This effect, on top of possible reductions in resources to agencies, could produce a real roadblock at a time when we need all hands on deck to help us grow our economy.

Sen. Lincoln hits the nail on the head when she says “we need all hands on deck to help us grow our economy.” Additional reviews and red tape will bog down projects like the coal export terminals and set us further behind our global competitors while we lose out on valuable export opportunities.

Today President Obama urged Congress to establish an “energy security trust” which would take a portion of federal revenues from oil and gas production on federal lands and earmark them for research in advanced vehicle technology which would include cars fueled by electricity, bio cells, natural gas and biofuels.  The goal would be to earmark $2 billion over the next 10 years for research in these areas. Initially the President spoke about his plan during the State of the Union speech in February.

The President visited the Argonne National Laboratory in Chicago for his speech today. This federal lab has been working on advanced vehicle technology since the 1990s with a focus on advanced car batteries. During his visit he again spoke about an “energy security trust.” While much of what he said was positive and good we can’t afford to focus on just a few fuels. We need to continue basic research on all types of fuels. Advance vehicle technology research is critical if we are to continue to increase the efficiency of our cars and trucks. The research of today will reduce vehicle fuel consumption and the impact of vehicles on our environment in the future.

As part of his plan the President said he is looking for a pilot program to remove the “bottle necks” from the permitting process in North Dakota’s Bakken Shale Formation. This is great news,  the White House finally understands that the permitting process is taking far too much time and is the “bottle neck” in the production process.  This should not be a surprise. The energy sector has been talking about these permitting bottle necks for years! We hope the Administration and the President understand that it has been the federal government that has created barriers to production and slowed our exploration efforts.

Second, I found it interesting that the President would pick the Bakkens for a pilot project given that most of the production in the Bakken Shale Formation is taking place on private lands where the federal permitting process is not an issue. The fact is that for the last 6 years most all of the new production has taken place on private lands. Most of the shale gas development is on private lands. If we had to rely solely on federal lands for oil and gas development we would still be building import facilities for LNG! (continue reading…)

The past two days we have seen strong bipartisan efforts from both chambers of Congress to move forward with approval of the Keystone XL pipeline. In a time when you don’t seen much partisan agreement, members from both sides agree that Keystone XL would be good for our economy and energy security.

Just today Congressman Lee Terry introduced legislation in the House that would approve Keystone XL. The legislation has support from House Democrats John Barrow and Jim Matheson who both attended a press conference this morning urging passage. House Energy and Commerce Committee Chairman Fred Upton said he was aiming to get the bill to the floor of the House by Memorial Day.

Yesterday, Senators Baucus and Hoeven unveiled bi-partisan legislation that would approve the Keystone XL pipeline without any further action required by the President, or the Department of State. Baucus and Hoeven were joined by 12 other Senators in support of their legislation and these Senators were evenly divided between democrats and republicans (Sens. Mark Begich (D-Alaska), Lisa Murkowski (R-Alaska), Pat Roberts (R-Kan.), John Cornyn (R-Texas), Joe Manchin (D-W.Va.), Mary Landrieu (D-La.), David Vitter (R-La.), Heidi Heitkamp (D-N.D.), Mark Pryor (D-Ark.), James Risch (R-Idaho), Jon Tester (D-Mont.) and John Barrasso (R-Wyo.).

Most people will tell you that Washington is broken and that they can’t get anything done. Despite the current state of the Senate and House there are issues and areas where Democrats and Republicans want to work together and are reaching across the aisle to do so. This is a good example of members of the House and Senate understanding the importance of this energy project and what it will mean in terms of energy security, economic growth and a better relationship with our Canadian neighbors.

The Canadian oil sands will continue to be mined, refined and exported regardless of what happens to the Keystone XL project. The question has never been if oil will be exported, it has been where will be exported. Keystone XL is about economic growth and having the energy to power the economic growth.

Manufacturers use one-third of the energy consumed in this country and in many instances lower energy costs are allowing us to complete in a global market place in ways that we have not been able to do for years. Oil from Canada allows us to rely less on countries throughout the world that are hostile to America and our way of life.

These members of Congress understand the importance of this project in terms of economics, national security and energy. They are willing to put partisanship aside to do what is best for our country and our economy.

Chip Yost is assistant vice president of energy and resources policy, National Association of Manufacturers.

Late this afternoon a group of House Republicans lead by Congressman Scalise (R-LA) held a press conference to announce a resolution opposing a carbon tax. Late last month the NAM released the results of a study by nonpartisan NERA Economic Consulting which found a carbon tax would have a negative effect on jobs, energy costs and manufacturing output.

Today, the NAM sent a letter to Congressman Scalise outlining the findings of the study. Below is an excerpt from the letter:

“NERA concluded that the increased costs of coal, natural gas and petroleum products due to a carbon tax would ripple through the economy, resulting in higher production costs, less spending on non-energy goods, fewer jobs and slower economic growth. Nationally, a carbon tax designed to reduce CO2 levels by 80 percent could place tens of millions of jobs at risk and raise gasoline prices by over $10 a gallon, natural gas prices by almost $60 per MMBtu, and residential electricity prices by over 40 percent. NERA also found that a carbon tax would have a negative impact on manufacturing output. In energy-intensive sectors manufacturing output could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent. The overall impact on jobs would be substantial, with a loss of worker income equivalent to between 1.3 million and 1.5 million jobs in 2013 and between 3.8 million and 21 million by 2053.”

Yesterday, a bicameral group of Democrats released a discussion draft of a carbon tax plan. The NAM’s Ross Eisenberg posted here on Shopfloor.org yesterday regarding their efforts.

The bottom line is a carbon tax resembling the one in our study would drive up energy prices and make it more expensive to manufacture in the United States.

Today, Representatives Henry Waxman and Earl Blumenauer and Senators Sheldon Whitehouse and Brian Schatz released a discussion draft of legislation that proposed to place a carbon tax on greenhouse gas emissions.  The lawmakers are seeking input on various aspects of their legislation, including the tax rate and how revenues will be spent.  The discussion draft and related background materials can be found here.

Late last month, the National Association of Manufacturers released the results of a study looking at the economic consequences of a carbon tax. The study, conducted by NERA Economic Consulting, examined two carbon tax scenarios: one levied at $20 per ton increasing at 4 percent and the other designed to reduce carbon dioxide (CO2) emissions by 80 percent. Revenues were recycled into deficit reduction and reduction of income tax rates.  Both scenarios modeled ($20 a ton and 80% reductions) had a devastating impact on the economy and manufacturers.

NERA concluded that the increased costs of coal, natural gas and petroleum products due to a carbon tax would ripple through the economy, resulting in higher production costs, less spending on non-energy goods, fewer jobs and slower economic growth. Nationally, a carbon tax designed to reduce CO₂ levels by 80 percent could place tens of millions of jobs at risk and raise gasoline prices by over $10 a gallon, natural gas prices by almost $60 per MMBtu, and residential electricity prices by over 40 percent.

Our study also found that a carbon tax would have a negative impact on manufacturing output. In energy-intensive sectors manufacturing output could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent. The impact on jobs would be substantial, with a loss of worker income equivalent to between 1.3 million and 1.5 million jobs in 2013 and between 3.8 million and 21 million by 2053.

A carbon tax resembling the one in our study would drive up energy prices, make it more expensive to manufacture in the United States, and harm our ability to compete with other nations. The NAM believes that any benefits of a carbon tax—under both carbon tax cases—would be far outweighed by the negative impacts to the overall economy.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

In today’s Wall Street Journal former Democratic Senator from Louisiana Bennett Johnston penned an op-ed about his past experience with natural gas regulation while he served in the Senate.

In his piece former Senator Johnston discusses the previous attempts by Congress to regulate and then deregulate natural gas. He concludes that from his own experience it is better to allowing the free market to work. Here is an excerpt from the piece:

The free market might not always lead to everyone’s definition of the sweet spot, but experience has shown that it is a better allocator and regulator than bureaucrats and politicians. We should heed the admonition of Adam Smith that demand begets supply: Allow the free market to allocate the nation’s newfound energy bounty.

The abundance of natural gas is helping manufacturers become more competitive by lowering energy costs. A study by PwC and the NAM concluded that the natural gas revolution can create 1 million manufacturing jobs by 2025.

The Bureau of Labor Statistics reported that producer prices rose 0.2 percent in January, the first increase since September. With that said, inflationary pressures remain modest, with core finished goods prices up just 1.8 percent over the past year. This is below the 2 percent goal stated by the Federal Reserve Board, and it reflects significant easing over the course of 2012, as described last month and as can be seen in the attached graphic.

More specifically, in January, energy costs continued to fall, down 0.4 percent for the month. Prices for finished energy goods – mostly from gasoline – have declined for four straight months, helping to lowering inflationary pressures. Food costs rose 0.7 percent in January, reversing the 0.8 percent increase in December. The largest contributor to this gain was higher vegetable prices. Outside of energy and food costs, other increases were found in the pharmaceutical sector and with some types of capital equipment.

A similar picture emerges for the manufacturing sector, which has experienced only a 0.7 percent increase in producer prices year-over-year. This is largely due to reduced energy costs, with raw materials for petroleum and coal products manufacturers down 4.4 percent since January 2012. Nonetheless, these costs were 0.9 percent higher in January on crude petroleum prices. (continue reading…)