President Obama has an oil and climate change conundrum.
The president is revered by environmental groups for taking steps to reduce greenhouse gas emissions that come from burning fossil fuels, such as signing higher fuel-efficiency standards for cars and protecting more land and water than any other president. But when he discusses the recovering economy, Obama often touts the fact that the United States now produces the most oil and natural gas in the world and the benefits that has yielded, such as $2 per gallon gasoline.
That divergence came into focus Tuesday when the administration released the draft of its five-year offshore drilling plan for 2017 through 2022.
The plan seeks to both appease the environmentally minded voters who helped get Obama elected twice and to ward off harsh criticism from an energy industry that contends the president is riding on private-sector accomplishments. Interior Secretary Sally Jewell acknowledged the tension between permitting expanded oil and gas development and the administration’s stated goals of reducing greenhouse gas emissions that scientists say drive climate change.
“We are in the world at a time of transition in energy,” Jewell said in a conference call with reporters, noting that the administration has worked to “facilitate development of new energy sources while also recognizing that we do have dependence on fossil fuels for the time being.”
The plan calls for opening the Atlantic Ocean for drilling for the first time in three decades and preserves most of the Arctic for energy production. Industry groups were encouraged by the Atlantic decision, saying companies were still interested in the expensive offshore projects even with low gas prices because oil demand is projected to grow well into the future. In a low-oil-price scenario, the U.S. Energy Information Administration projects world oil consumption to grow from 92.9 million barrels per day this year to 123.3 million barrels per day in 2040.
But the offshore plan also proposes permanently removing 9.8 million acres of Arctic water from energy development and won’t allow oil drilling in the Pacific Ocean or eastern Gulf of Mexico. The move comes on the heels of Obama’s call Sunday to block oil and gas development on 12 million acres of the Arctic National Wildlife Refuge in Alaska, which enraged Republicans who said it violated a 1980 law to keep a portion of it open for potential production.
“What it says is their sole priority when it comes to the Arctic is climate. I have said that climate is very important … I think that what we’re seeing coming out now is they’re saying that this is all that matters when it comes to the Arctic. I think they need to talk to the individuals,” Sen. Lisa Murkowski, R-Alaska, said of the administration’s recent actions.
The industry also has warned that energy production could take a hit from the first-ever regulations on methane emissions the White House signaled it would offer earlier this month in an effort to curb the heat-trapping gas by at least 40 percent over 10 years.
“The trend is not a good one,” Erik Milito, director of upstream operations with the American Petroleum Institute, said in a call with reporters. “It’s been a difficult sequencing of announcements coming from the administration in terms of decision after decision that does not reflect a positive operating environment for the oil and gas industry.”
The industry still remembers Steven Chu’s comments just months before he was nominated for energy secretary in 2008: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe” to generate behavioral and policy changes to wean the U.S. off oil.
Gas prices hovering around $2 per gallon have proven a threat to Obama’s hopes of putting more people into fuel efficient vehicles. Sales of gas-guzzling SUVs jumped in the last quarter of 2014, and Energy Secretary Ernest Moniz noted last week the administration would miss its goal of getting 1 million plug-in electric vehicles on the road. So far, about 280,000 have been sold.
What they see from the administration is a begrudging acceptance that surging oil and natural gas production largely on private and state lands has driven an economic rebound. But with Obama’s tenure coming to a close and his sights on leaving an environmental legacy, his critics say recent executive actions and regulations best reflect the administration’s view of the oil industry.
“With no more elections left, he’s now on his true path,” Christopher Guith, senior vice president for policy with the U.S. Chamber of Commerce’s Institute for 21st Century Energy, told the Washington Examiner. ” $2 gas is inconvenient for addressing climate change, but he might as well take advantage of the economic benefits it generates.”
While the offshore plan wasn’t the package environmental groups were hoping for, they said they felt Obama had their interests in mind. They held out hope that the president would strip the Atlantic and Arctic from the final drilling plan, noting it wouldn’t go into effect until after he leaves office. The draft plan will face 60 days of public comment once formally entered into the Federal Register.
“Our adversary is not the Obama administration, but rather the oil, gas and coal industries’ heavily funded campaign against efforts to tackle climate change and protect the health of the families and communities across our country,” Sarah Saylor, senior legislative representative with Earthjustice, told the Examiner.
Still, green groups said opening the Atlantic — which is host to technically recoverable reserves estimated at 4.72 billion barrels of oil and 37.51 trillion cubic feet of natural gas — and preserving nearly 90 percent of the Arctic for oil and gas development muddled the administration’s climate goals.
“Opening carbon reserves that are now safely underground will lock in decades of carbon pollution, as oil companies seek to recoup the massive investment needed to access these new reserves,” Natural Resources Defense Council Executive Director Peter Lehner wrote in a blog.
Some suggested the plan, if finalized as drafted, could give Obama less leverage in international climate talks set for the end of the year in Paris. The U.S. may be put in the position of asking oil-producing countries such as Saudi Arabia and Russia, which have created roadblocks in past negotiations, to make concessions about their own oil and gas industries.
“As the administration works to rally international leaders behind a bold climate pact in 2015, decisions to tap new fossil fuel reserves off our own coasts sends mixed signals about U.S. climate leadership abroad,” said Margaret Williams, managing director of U.S. Arctic programs with the World Wildlife Fund.
