API: Energy is everything

The American Petroleum Institute’s (API) 2017 State of American Energy report made a clear statement: energy is everything.

Image of Gerard, from API.

API President and CEO Jack Gerard highlighted the energy issues that will shape America’s economic and political news this year in a press conference earlier today (4 January).

Gerard said that the report demonstrates the countless ways energy is essential to modern society, with oil and natural gas as the foundation.

He talked politics and the 2016 election in which he said exit polls found that almost 70% of voters are dissatisfied with the way the US government is working, and revealed an electorate that feels policymakers are out of touch with their daily problems and priorities.

A growing world population with a growing demand for energy is why the overwhelming and consistent view of energy experts, economists and government agencies, including the US government’s own Energy Information Administration (EIA), estimates that fossil fuels will continue to form the foundation of the US’s and the world’s energy needs far into the future, Gerard said.

According to EIA projections, oil and natural gas will supply more than 60% of US energy needs by 2040, even under optimistic scenarios for renewable energy growth. Worldwide energy consumption will increase 48% by 2040, largely due to expanding economic opportunities in developing nations, and more than 78% will be met by fossil fuels.

“Beyond consumption we continue to make and pursue advancements in energy efficiency,” Gerard said. “An EIA study noted that in 2015 the US used 15% less energy and emitted 23% fewer energy-related CO₂ emissions than the same economic activity in 2005. Our global community will need more energy, and oil and natural gas will continue to be the dominant source for decades to come. The only question up for debate is which nations will help meet future energy demand.”

“The ongoing American oil and natural gas development and refining renaissance has made it clear that the US can help meet that need. But to achieve that goal we need smart pro-growth energy policies that promote safe and responsible energy development and recognize the central role that fossil fuels will play in meeting future energy demand,” he said.

The API worked to help to disprove, conclusively, the long held assumption that increased energy production, refining and consumption must necessarily lead to a dirtier environment.

“They don’t,” Gerard said. “What we know from recent performance is that we no longer have to choose between more energy and a cleaner environment. Our nation has dramatically increased energy production and use even as emissions continue to decline.”

We must reexamine the regulatory onslaught of the last few years that has proposed or imposed some 145 regulations and other executive actions on our industry and instead work to implement smart energy regulations that are focused on the consumer, help to grow our economy, protect workers and continue to improve the environment,” he said. “It is our view that regulations that do not align with those basic and commonsense goals should be reexamined, revised or removed to make way for smarter and forward-looking energy policies.”

To build on this case, the API said that as of today, there are roughly 94% of federal offshore acreage that is off limits to energy production.

“Allowing more offshore oil and natural gas production could create more than 800,000 new jobs, grow our economy by up to US$70 billion per year and raise more than $200 billion in cumulative revenue for the government treasury. Restricted offshore areas could hold 50 billion bbl, or more, of oil and more than 195 Tcf of natural gas.”

“Just imagine what the industry could do to further benefit consumers, the economy and the environment if more of that energy were available for responsible and safe domestic production. Just think about how many more people in developing countries could have access to cleaner-burning North American natural gas or benefit from the cleaner-burning fuels produced by American refiners and what this could mean for the environment,” Gerard said.

The API is now looking to the new congress and the incoming Trump administration, in hopes that they will take notice of the American energy sector’s record of success, commitment to safety and choose to collaborate with the industry.

“We know we need more energy, but we haven’t seen any meaningful expansion of offshore access in decades,” Gerard said. “We know we need to expand energy infrastructure to keep pace with our new energy reality and deliver affordable energy to families and businesses, but government decisions and red tape are obstructing energy infrastructure projects – and the good jobs they create – even for projects that have successfully completed exhaustive approval processes.”

Although records have shown that 8 in 10 voters support increased development of the country’s energy infrastructure, there is still a small, vocal minority that have taken it upon themselves to target these projects to advance their anti-fossil fuel political agenda, according to the API.

“What they are doing, in reality, is putting themselves, workers and property at risk,” Gerard said. “Longer term, by attempting to constrain private investment in energy infrastructure – and I want to highlight that’s private investment, not taxpayer-funded investment – they are potentially preventing the creation of millions of well-paying jobs, and promoting, potentially, increased energy costs for millions of their fellow Americans.

investments in energy infrastructure lead to short- and long-term job creation, economic growth and affordable energy for millions of Americans.”

According to the API, a recent study found that updating America's energy infrastructure could generate up to $1.15 trillion in new private capital investment, which for context, is almost three times the size of the transportation bill signed into law at the end of 2015. That level of investment is estimated to support 1.1 million new jobs and add $120 billion per year to the US economy by 2025.

“That’s the kind of progress the American people made clear they want to see seven in the months and years ahead from their elected leaders from municipal governments to federal agencies,” Gerard said.

Gerard also expressed the API’s support of the tax reform.

“As an industry that supports 9.8 million American jobs, accounts for 8% of GDP and contributes an average of about $70 million a day to the federal government in revenue from taxes, rents and royalties – even in a down market – we understand the need for tax reform,” Gerard said. “Our goal is to broaden that common consensus to spur our lawmakers to harness the American voters’ embrace of energy policies that drive economic growth, lower consumer costs, continue current environmental improvement, increase American competitiveness and provide our allies with a reliable partner that uses its considerable energy resources as a way to lift people up.”

“As we look to the future, the oil and natural gas industry stands ready to offer solutions that help meet the energy needs of our nation and the world and to work with elected leaders at all levels of government to ensure that the American consumer continues to benefit from affordable and reliable domestic energy,” Gerard concluded.