Energy Policy Outlook

The 114th Congress of the United States convened last week and Republicans cemented their control over both chambers of Congress. 2015 is already looking to be an intense year for energy policy. There will be many issues before Congress from smog and clean air to production tax credits for wind, but there are several main issues which I predict will stand apart from the rest. They are the export of crude oil and natural gas, and the Shaheen-Portman Energy Efficiency Bill. In her November 17th article, Environmental Policy Outlook, Emily Pechar talks in depth about the Keystone XL Pipeline, which is the first item on the agenda for Congress and it’s expected to continue to be quite the controversy. Whichever way the wind blows, these energy issues can greatly help the domestic economy or hurt the environment or variation of the two.

Crude Oil/Natural Gas Exports: As domestic production of crude oil and natural gas ramps up from the boom in horizontal drilling and “fracking” of shale rock, supplies in the U.S. continue to grow. As a result of the OPEC Oil Embargo in 1973, the US significantly reduced the allowed amounts of natural gas and crude oil exports. With the current over supply, many have called to lift the ban on these exports. Supporters claim that by allowing exports of oil and natural gas, it will relieve the pressure of the oversupply by increasing the market, which will be good for business and creating more jobs in the process. Those arguing against lifting the ban, have pointed out it will also increase the price of gas and oil which will increase to meet the world market price. Oil and gas prices are expected to fall well into 2015 before rebounding and many argue it is not wise to lift the ban during a short period of abundant supply. In addition, lifting the ban and flooding the market with cheap(er) oil and gas will promote our reliance of fossil fuels in a paramount era when society should be transitioning to zero-carbon energy sources.

Energy Efficiency: S. 128, “A Bill to Promote Energy Efficiency, and for Other Purposes” (See also S. 2262) would amend the Energy Conservation and Production Act (ECPA) to improve energy efficiency of structures through building codes; it would make federal government initiate energy savings practices, and it would provide funding for research and retrofits for the private sector. More than 270 organizations across all industries are in support of the bill, and it is estimated to create 200,000 jobs while saving taxpayers and consumers billions of dollars in the coming years. In the 113thCongress, the bill had broad bipartisan support and the authors of the bill have been more than accommodating to proposed amendments in order to get it passed. Senate Democrats offered to trade passage of the Keystone XL Pipeline legislation for the passage of the energy efficiency bill, however, the bill was torpedoed when Republicans attempted to attach divisive amendments related to Environmental Protection Agency regulations and natural gas exports. Now that Republicans have a clear majority in both chambers of Congress, there is no longer the need to combine the two pieces of legislation. The authors of the bill, Rob Portman (R-OH) and Jeane Shaheen (D-NH) have stated as late as last week, they do not want Keystone legislation anywhere near this bill and they are confident the bill will pass this session.

Keystone XL Pipeline: Republican Senate leadership moved fast on Keystone legislation when Congress convened last week. The house passed a version of the bill (266 – 153) on Friday, January 9th, which would authorize the construction of the pipeline and the Senate is expected to follow suit this week. The legislation is expected to pass; however, President Obama threatened to veto any Keystone legislation which bypasses the established procedures set by the Department of State (DOS) and a Nebraska lawsuit deciding who has the authority in the state to authorize the pipeline. In addition, President Obama does not believe the pipeline to be in the national interest, citing that America is taking on all of the risk associated with the pipeline and reaping none of the long term benefits, as TransCanada – the company making the $8 billion investment – will be profiting from the tar-sands oil sales. The oil that would travel through the pipeline would also most likely be exported to foreign markets. Many have argued the debate about this pipeline is no longer necessary, as TransCanada has found other routes to move the crude oil while it has awaited approval the last six years. Instead, the debate has recently become highly politicized as a Republican show of strength in the dawn of the 114th Congress.

These legislative efforts have the ability to alter the energy and environmental atmosphere of the U.S. which will have ripple effects across the globe. The debates will continue and they will we be highly visible, politicized, and even divisive.

Article updated March 20th. 

Image credit from Gunasekar via WikimediaCommons depicting the United States Capitol.