By Dan Potter
President Obama staging a photo op at the TransCanada pipe yard outside of Cushing today angers members of the Domestic Energy Producers Alliance.
DEPA’s Mike Cantrell says the President has proven for three years that he is against the fossil fuel industry.
“The irony of it is, he’s been unsuccessful because Congress wouldn’t go along with him. And now, he takes credit for the gains we’ve made in oil and gas production which have nothing to do with him and his policies. They’ve (occurred) in spite of him and his policies,” Cantrell said.
DEPA has cancelled plans to stage a protest in or near Cushing during the President’s visit.
“They’ve changed it from campaign visit to a state visit,” says Cantrell. “It’s not open to the public.”
The President’s press entourage will be bussed from Oklahoma City to the Cushing event so even they wouldn’t come in contact with any protestors.
When asked what he’d say if he had a few minutes with President Obama, Cantrell says, “I’d say, Mr. President, we’d like to visit with you about domestic oil and gas. And that there’s a difference between U.S. domestic energy producers and royalty owners and the big oil companies that you seem to lash out at. But, in your lashing out at them, you have hit us all with your policies.”
- Obama said ready to push partial Keystone XL approval (mb50.wordpress.com)
- Obama flip-flops on Keystone XL pipeline (rt.com)
- Not a friendly greeting for the president’s energy tour (politico.com)
Obama will be in Cushing, Okla., the start point of the pipeline’s southern half on Thursday
Citing a senior administration source, CNN reported on Tuesday that Obama wants to slash several months off a permit approval process that can ordinarily stretch on for as long as a year.
The administration wants to speed things up to deal with a glut of oil in Cushing, Oklahoma, where crude from the Midwest runs into a logjam on its way to refineries on the Gulf of Mexico.
Obama will make the announcement Thursday at a storage yard in Cushing, the starting point of the pipeline’s southern half.
Pipes that will be used to build Keystone XL to the Gulf Coast are being housed at the facility.
Gas prices rising
The announcement comes as prices at the pump continue to soar. Republicans are blaming Obama’s energy policies for rising gas prices and continue to attack him for rejecting Keystone XL in January.
The U.S. average price for a gallon of gasoline rose for the 11th straight day on Tuesday to $3.85 US, and soared to $4 a gallon in some states. That would amount to a little over a dollar a litre in Canada.
Millions of barrels of unrefined crude are sitting in storage facilities in North Dakota, in particular, but there’s a lack of pipeline capacity to carry it to the Gulf Coast and a limited number of rail cars that can transport the oil south. The state is currently in the throes of a major oil boom thanks to the discovery of the so-called Bakken Shale.
Obama’s recent praise of Calgary-based TransCanada’s decision to proceed with the construction of the southern segment of the pipeline signalled a shift in attitude from the White House after it rejected the pipeline outright in January.
The entire length of the proposed, $7.6 billion pipeline would stretch from Alberta’s oilsands through six U.S. states to the Gulf Coast.
No decision from State Dept.
The U.S. State Department has yet to make a decision on the pipeline, saying it needs more time to conduct a thorough environmental review of a new route around an environmentally sensitive aquifer in Nebraska. State department officials are assessing the project because it crosses an international border.
In November, under mounting pressure from environmentalists, the State Department deferred making a decision on Keystone until after this year’s presidential election, citing concerns about the risks posed to the aquifer.
Pipeline proponents cried foul, accusing Obama of making a cynical political move aimed at pacifying the environmentalists of his base and improving his chances of re-election.
Republicans then held the administration’s feet to the fire, successfully inserting pipeline provisions into payroll tax cut legislation in late December.
Within a month, facing a mid-February deadline imposed by that measure, Obama nixed TransCanada’s existing permit outright, saying there wasn’t enough time to thoroughly review a new route before giving it the green light.
But Obama also assured Prime Minister Stephen Harper that the decision did not reflect on the pipeline’s merits, but was merely necessitated by Republican pressure tactics. He welcomed TransCanada to propose another route.
- Obama said ready to push partial Keystone XL approval (cbc.ca)
- Politics sank Keystone XL, Exxon says (mb50.wordpress.com)
- Obama to fast track southern portion of Keystone XL Pipeline (whitehouse.blogs.cnn.com)
- As Obama supports part of Keystone XL, TransCanada stops to remove a pig from a pipe (macleans.ca)
- Obama Heading To Oklahoma To Fast-Track Southern Leg Of Keystone XL (thinkprogress.org)
- President Barack Obama’s four-state energy tour stops in Oklahoma on Wednesday (newsok.com)
Published: March. 12, 2012 at 6:47 AM
U.S. President Barack Obama in January denied a permit for TransCanada to build the billion-dollar Keystone XL oil pipeline. Republican leaders had tried to push the permit through by including the pipeline in a bill that extended payroll tax benefits. Obama rejected the permit because of an “arbitrary” deadline proposed in the legislation.
Exxon Mobil Chief Executive Officer Rex Tillerson told a major energy conference in Houston that industry leaders were practicing due diligence with the project but it was the U.S. political system that was getting in the way of development.
The decision to deny the initial permit for TransCanada, Tillerson said, was because of “political calculations” in Washington.
“In the end, it was also a disservice to public employees who are charged with overseeing this process and who met their obligations,” he was quoted by the Platts news service as saying. “We must continue to engage elected officials of the public to communicate the consequences of failing to move forward with such strategic opportunities.”
Backers of the pipeline describe it as a “shovel-ready” project that would shield the U.S. market from the effects that Middle East tensions have on the oil market. Critics say crude oil from Canada, designated for Keystone XL, is one of the dirtiest types of crude oil.
TransCanada can reapply after it settles on a route through Nebraska.
Read more: UPI
- Keystone XL Pipeline Bill Dies In Senate (inquisitr.com)
- Senate backs Obama on Keystone XL pipeline (mysanantonio.com)
- Keystone XL pipeline denied lifeline thrown by Republicans (ctv.ca)
- U.S. Senate blocks Republican move to force quick approval of Keystone pipeline (news.nationalpost.com)
- Keystone bill defeated by U.S. Senate Democrats (windsorstar.com)
- Senate kills attempt to approve Keystone pipeline (marketwatch.com)
March 2, 2012 | Posted by Ken Cohen
The fact is that what some call “subsidies” are legitimate provisions of the U.S. tax code that treat our industry the same as other industries. The efforts to prevent oil companies from accessing these provisions achieve nothing but raising the tax burden on the companies that find, produce and manufacture the fuels that are the foundation of the U.S. economy.
One example is the Section 199 domestic production activities provision, which exists to support new investment and employment opportunities across U.S. industries. Those who produce or manufacture items in America, including auto makers, software developers, movie producers, and newspaper publishers, qualify for it. Yet critics call this a “subsidy” for those who produce the oil and natural gas used by American consumers – this despite the fact that our industry actually gets a smaller Section 199 deduction than all other qualifying industries.
Another example is the deduction for the costs of drilling the wells to produce domestic oil and natural gas. The U.S. tax code allows companies, no matter the industry, to recover their costs in earning income. So denying or delaying the deduction of our industry’s costs – largely the salary costs of those drilling oil and gas wells – will treat our industry differently than most others. Furthermore, such measures will actually increase the costs of producing oil and natural gas in the U.S.
These are just a couple of examples of what critics are referring to when they erroneously claim that oil and gas companies receive $4 billion per year in special “subsidies” or “preferences.” When these measures are combined with other proposals to increase the industry’s taxes, they amount to an $85 billion tax hike for the U.S. oil and gas industry over the next decade – and untold consequences for U.S. energy security and global competitiveness.
What such proposals will do is increase costs for a company to manufacture a product. It is hard to see how increasing costs on manufacturers helps American consumers.
The reality is that we need to put in place the policies now that will help address our long-term energy needs. Instead of trying to convince people that standard tax provisions are actually special-interest subsidies, our nation would be better served by policies that encourage more energy development so that industry can increase supplies to the market.
We could start by increasing access to America’s own resources.
Currently, about 85 percent of all U.S. offshore areas remain off-limits to oil and gas development. As I’ve mentioned before, a recent study shows that polices that support greater access to resources in the U.S. and Canada would not only increase domestic supplies, but would also create 1.4 million jobs and generate more than $800 billion in government revenue by 2030.
One of those job creators is the Keystone XL pipeline, but that’s not the only reason it should be approved. In Canada, our industry is developing oil sands that are giving us access to one of the world’s largest-known reserves of energy – approximately 170 billion recoverable barrels, or the energy equivalent to fueling today’s North American vehicle fleet for about 35 years. The energy industry’s innovative techniques and technologies are allowing us to develop these resources in safe and environmentally responsible ways.
If our nation’s leaders were to consider our industry’s contributions to the economy and to government revenue, the conversation could be more constructive. U.S. oil and natural gas companies contribute much more to the U.S. economy than the oil and gas that fuel it. For example, in 2011, ExxonMobil alone contributed $72 billion to the U.S. economy by paying our taxes, producing returns for our shareholders, paying our employees and investing in energy projects around the country. Our $12 billion in U.S. taxes to local, state and federal governments in 2011 exceeded our U.S. operating earnings by more than $2 billion.
I encourage you to compare what’s being said with what’s actually being done when it comes to policies that support domestic energy development. There’s a disconnect between the two.
- Shale Energy Regulation Threatens Development And Jobs (energyindependenceforstates.com)
- API: Obama promises fuel but produces hot air (junkscience.com)
- Michael J. Economides: In 2012, Let’s Align U.S. Energy Policy with Global Reality (junkscience.com)
Speaking at a town hall at Houston Community College, Chu said a modest increase in the price of natural gas wouldn’t significantly raise its cost to U.S. consumers who use it to heat their homes and manufacturers who need it to make products.
Natural gas futures closed at $2.55, up 17 cents, in trading Thursday on the New York Mercantile Exchange. It brings much higher prices in other countries.
“Exporting natural gas means wealth comes into the United States,” Chu said.
The Energy Department’s Office of Fossil Energy is reviewing several applications to export liquefied natural gas. The exports would relieve the glut of natural gas on the domestic market and raise revenue, but also potentially increase prices for domestic consumers.
Several U.S. energy companies have announced plans to close their natural gas wells and curb spending in natural gas fields, as its price has fallen from more than $13.50 in 2008.
In his State of the Union speech last week, President Barack Obama called for an “all-of-the-above” approach to domestic energy production, including investment in oil, natural gas and renewable energy sources.
Chu said it’s important that the United States be at the forefront of innovations and technologies in renewable energy.
“We have a choice. When all these things become cost-competitive, do you want to buy or do you want to sell?” he asked. “If we are buying, that is wealth out of the country. If we are selling, that’s wealth into the country.”
Before the hour-long session with students at the college, Chu met with oil and gas executives and explored the Texas Medical Center’s energy efficiency upgrade.
Chu said the administration is open to exploring alternate routes for the pipeline that would carry oil from Canadian tar sands to Gulf Coast refineries.
It’s become a touchstone issue for supporters who say it will create jobs and reduce U.S. dependence on oil from hostile nations, and opponents who argue it could threaten water supplies and promote use of an especially dirty form of oil.
Chu said he supports construction of pipelines nationwide, particularly to relieve the glut of oil at the hub in Cushing, Okla., a major price point for domestic oil.
“There is such a shortage of pipelines between Cushing and Houston,” Chu said. “There will be major construction of pipelines in the next decade or so. All the job creation from Cushing to Houston is being done now.”
Chu touted government investment in wind, solar and other renewable energy sources, as well. He said he expects the cost of solar power to fall by 50 percent within six to eight years.
Chu also dismissed Iran’s threats to close the Strait of Hormuz, a key oil shipment channel, in retaliation for international sanctions aimed at the nation’s nuclear program.
“I don’t think they can really shut down the Strait of Hormuz,” Chu said. “We certainly have capabilities to reopen it.”
- Canada: NEB Approves BC LNG Export Licence (mb50.wordpress.com)
- An emerging player (mb50.wordpress.com)
- Gas Natural Fenosa Deals with Cheniere Energy to Buy US Shale Gas Sourced LNG (mb50.wordpress.com)
- DOE to halt issuing LNG export licenses (mb50.wordpress.com)
- Gas Exports Ignite a Feud (mb50.wordpress.com)
- President Obama’s Domestic Energy State Of Delusion (mb50.wordpress.com)
- Macquarie Vies To Sell U.S. LNG To India (mb50.wordpress.com)
- CLNG: EIA Gas Export Study Reveals Only Part of Economic Picture (USA) (mb50.wordpress.com)
- Chesapeake CEO Opposes US LNG Exports (mb50.wordpress.com)
President Obama’s ambiguous call to “open” 75 percent of the country’s potential offshore oil and natural gas resources to exploration may sound generous, but the truth is, the areas containing those resources are technically already included in the upcoming 2012 to 2017 offshore leasing plan, and they are virtually the same areas where exploration and production have been allowed for decades.
Look beyond the president’s rhetoric to his record and it becomes clear that jobs and energy security are not high priorities for this administration. The shortsighted decision to deny the Keystone XL pipeline and the unnecessarily long moratorium on drilling in the deep waters of the Gulf of Mexico are but two examples.
Political uprisings and social unrest over the past year have highlighted the instability of oil-producing regions in the Middle East and North Africa, and the situation shows no signs of improvement. Just a few weeks ago, Iran threatened to shut the Strait of Hormuz, a critical transport route for 40 percent of the world’s oil. A robust domestic oil and natural gas industry can shield the U.S. market from such events and protect the American consumer. Unfortunately, our current policies have failed.
Around the same time as the Iranian announcement, the American Petroleum Institute unveiled a Quest Offshore Resources study showing that the deep-water drilling moratorium and subsequent permit slowdown forced 11 deep-water rigs to leave the Gulf of Mexico since 2010, taking their jobs and investments to the shores of Brazil, Africa and elsewhere. Those moves translated to a loss of $21.4 billion for our economy and an estimated 72,000 jobs in 2010 and 90,000 jobs in 2011, according to the study. We must do better.
An earlier Quest study rolled out by the National Ocean Industries Association showed that if permitting rates surpassed pre-2010 levels, 190,000 offshore industry-supported jobs could be created nationwide within the next two years without a single dime of government stimulus. The positive benefits of returning the Gulf-permitting rates to higher, more consistent levels are clear. But the Gulf represents only a portion of our nation’s offshore resources. Alaska’s outer continental shelf holds immense potential, with almost 10 billion barrels of oil and 15 trillion cubic feet of natural gas lying untapped beneath the ocean floor. Approval of exploration permits would mean 55,000 new jobs and $145 billion in new wages. The federal government would also see a significant amount of new revenue – approximately $193 billion.
There are also considerable resources off the coast of Virginia, where residents and state leadership support exploration. Unfortunately, the Department of the Interior has yet to allow the industry to move forward there. In addition to denying Virginia’s desire for an offshore lease sale, the department’s 2012 to 2017 proposed oil and gas leasing program keeps the eastern Gulf and the Atlantic and Pacific coasts off-limits to exploration and delays development in Alaska. This sends job creation elsewhere, and closes the door on economic growth.
Despite the vital revenue generated, jobs created, wages paid and increased energy security, less than 3 percent of the federal outer continental shelf is leased, leaving more than 97 percent of these resource-rich areas devoid of any permits. I cannot think of a more glaring, missed opportunity. We simply cannot continually place our nation at the mercy of hostile nations while we ignore our own energy potential. Significant oil and natural gas resources lie off our coasts and across our northern border, waiting to enhance our energy security and help stabilize fuel prices. We need to go get them. The time has come for Congress and the president to put aside rhetoric and ideological debates, pass meaningful legislation that will open our offshore domestic resources for exploration and development, stop sending our hard-earned dollars to hostile and unfriendly nations, and invest in America’s future.
- President Obama’s Domestic Energy State Of Delusion (mb50.wordpress.com)
- Obama’s Words Don’t Match with Action on Oil and Gas (mb50.wordpress.com)
- Natural gas sector set up by Obama to be sabotaged? (mb50.wordpress.com)
- 38 Million Acres Up For Grabs in Latest (and Last) GoM Lease Sale (gcaptain.com)