INSIGHT: Obama’s 'green dream team' an industry nightmare?

18 December 2008 17:20  [Source: ICIS news]

US offshore resources face renewed restrictionsBy Joe Kamalick

WASHINGTON (ICIS news)--President-elect Barack Obama this week named his top energy and environmental administrators, a group that global warming advocates are hailing as the “green dream team” - but it might be a nightmare for US industry.

Obama has chosen Nobel laureate Steven Chu to head the Energy Department, saying the physicist will make the pursuit of new and cleaner forms of energy and new alternative and renewable energy sources “the guiding purpose of the Department of Energy as well as a national mission”.

Chu, who shared in the Nobel Prize for physics in 1997 and now heads the department’s Lawrence Berkeley National Lab in California, is a strong advocate of energy efficiency and renewable energy - both noble goals and broadly endorsed by US chemical producers and manufacturing in general.

He also is a devout supporter of global warming theories and appears decidedly hostile to conventional fossil fuels that now - and for decades to come will - make up the bulk of the nation’s energy resources.

“We have lots of fossil fuel,” Chu said in a lecture at Berkeley in April last year. “That’s really both good and bad news: We won’t run out of energy, but there’s enough carbon in the ground to really cook us. Coal is my worst nightmare.”

Senator James Inhofe of Oklahoma, the ranking Republican on the Senate Environment and Public Works Committee, said Chu’s comment about coal - which generates 50% of US electric power - is troubling.

In the same April 2007 lecture, Chu said that government regulations drive technology advances, although a quick search could not identify what regulations gave birth to the Wright flyer, television, personal computers, lasers and cell phones.

In addition, in hopes of reducing US greenhouse gas (GHG) emissions to check and hopefully reverse global warming, Chu told the Wall Street Journal in September this year that “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe”.

Obama was quick to declare, the Journal noted, that a gasoline tax increase would be a mistake because it would put additional burdens on American families.

To fill a newly created White House position for energy and environment senior advisor, Obama called on former Environmental Protection Agency (EPA) administrator Carol Browner, who has a long history as an advocate for emissions controls on utilities, industry and transportation to combat global warming.

She also opposes renewed access to potentially vast oil and gas resources in US outer continental shelf (OCS) regions off the nation’s Atlantic and Pacific coasts, which only recently have been freed from a nearly three-decade-long congressional moratorium on drilling.

Browner contends that developing those offshore reserves would do little to reduce US dependence on foreign oil.  But if a barrel of domestic oil can be produced to replace a barrel of Venezuelan oil, does that not reduce the need for the foreign barrel?

The US Atlantic and Pacific offshore areas are conservatively estimated to hold 86bn barrels of oil and 420,000bn cubic feet of natural gas - and those are evaluations made in the late 1970s before the advent of modern three-dimensional seismic technologies.

There are many in Congress who would like to re-impose the offshore drilling ban that Democrat leaders in the House grudgingly allowed to expire in September.  With US retail gasoline prices then at $4/gal and higher, they dared not maintain the drilling moratorium. 

But as fuel prices have moderated and look to remain relatively low for the next year or so, Congress may move to put the drilling ban back in - and legislators will have a strong White House ally in that cause in Browner.

Senator Inhofe, a high-profile opponent of anthropogenic global warming theories, said Browner is “a proud liberal who has long advocated an environmentalist agenda that would drive up energy costs on families and put thousands of Americans out of jobs”.

This week Obama named Senator Ken Salazar (Democrat-Oklahoma) to be Interior Secretary, a position that has authority over millions of acres of federal lands onshore and offshore and the substantial coal, oil and gas resources they hold.

Salazar’s critics note that he voted against development of oil and gas reserves in Alaska’s north slope and fought efforts by the Bush administration to expand natgas production in Colorado’s Roan Plateau.

He also helped block development of oil shale resources in the American West.  And he supported legislation that ostensibly would open limited parts of US Atlantic and Pacific OCS areas to development - but in fact was a bill that would have blocked offshore drilling indefinitely.

During his campaign for president, then-Senator Obama said that the threat of global warming was so dire and imminent that “nothing less than the complete transformation of our economy” is necessary to combat it.

Given that near-panic policy, the Obama administration and the newly broadened Democrat majority in Congress are certain to soon bring into law a cap-and-trade emissions mandate to force reductions of US greenhouse gases to 80% below 1990 levels by 2050 - a goal that he and congressional leaders have repeatedly declared. 

It is a policy goal that many in industry fear will irrevocably drive much of the nation’s manufacturing base offshore.

It also is an objective that many in industry fear will trigger wide-scale fuel-switching among US electric utilities from coal to natural gas, driving demand and prices sharply upward for the gas feedstock so vital to the country’s petrochemical and downstream industries.

Even as those promised climate change policies accelerate and broaden demand for natural gas, key members of President-elect Obama’s new energy team are by all accounts dead set against allowing access to available and abundant gas supplies.

What can they be dreaming?

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By: Joe Kamalick
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