President Barack Obama, in his State of the Union speech, called for an “all-of-the-above” strategy to develop energy that’s “cleaner, cheaper and full of new jobs.”
He’ll be lucky to get one out of three.
It’s likely that our energy sources will become cleaner. Stricter pollution and carbon standards are inevitable, and the abundance of natural gas from hydraulic fracturing in the U.S. means it’s likely to become a viable alternative fuel – both for electricity generation and powering fleet vehicles. To drive home the point, Obama was in Nevada on Thursday touting the prospects for natural gas.
By 2040, natural gas will surpass coal as the world’s second-biggest fuel source behind oil, according to a recent study by Exxon Mobil Corp.
Obama wasn’t just referring to natural gas, though. He wants to improve the reliability of other sources – wind, solar, biofuels. For that, he wants to shift tax incentives from the oil industry to renewables programs.
Given that much of new fuel development is moving toward cleaner sources, it makes sense to offer tax benefits, but it shouldn’t be an either-or shift from conventional energy.
As we’ve seen with the collapse of natural gas prices, companies will simply shut in production if it isn’t economical, and the shift to cleaner fuels will stall. So it makes sense to maintain some tax incentives for “unconventional” plays such as shale drilling at least at lower prices, and marginal producing “stripper” wells.
The jobs pitch
If it’s jobs the president is worried about, we can’t afford to discourage fossil fuel production. While “green jobs” are increasing, they alone can’t solve our economic problems any more than renewables by themselves can resolve our energy issues.
Unfortunately, the administration always pitches its energy initiatives in terms of jobs. That may have political value in a struggling economy, but it undermines the purpose of government-funded research.
Solyndra debacle
Innovation can’t be measured by short-term hiring. The Solyndra debacle should have made that clear. In his speech, Obama touted – and probably overstated – the government’s role in developing hydraulic fracturing, but he seemed to miss the lesson.
Houston’s Mitchell Energy benefited from some early government-funded research and maybe even some cost-sharing on early projects, said Bill Whitsitt, a spokesman for Devon Energy, which acquired Mitchell. But it took decades of private-sector financing, development and risk-taking to turn that government research into the current job boom.
Don’t expect cheap
The big stumbling block in the president’s plan, though, is the “cheaper” part. We have been spoiled by decades of cheap energy, and it is coming to an end, no matter what source we use.
The president started off his comments on energy by stressing the highest U.S. oil production in eight years and the lowest foreign oil dependency in 16 years.
What he didn’t explain was why. Four years of rising oil prices have made economical expensive drilling techniques such as hydraulic fracturing, which in turn had led to production gains.
Rising prices encourage development, but they don’t make energy cheaper.
As I’ve said before, an effective national energy policy will focus more on supply than price.
The more we can do to secure supplies, especially in our own hemisphere, the more chance we have of shielding our economy from supply shocks in less stable parts of the world.
Skip the feel-good stuff
Obama’s strategy does better on the theoretical than the practical. His earlier State of the Union speeches are littered with ideas that didn’t materialize or died in Congress. He falters on energy issues when he tries to turn long-term planning into short-term gains, to tout jobs and feel-good promises over the difficult message of higher costs, tightening supply and the need to prepare.
If we’re going to have an energy plan, we have to do better than one out of three.
Loren Steffy, loren.steffy@chron.com, is the Chronicle’s business columnist. His commentary appears Sundays, Wednesdays and Fridays. His blog is at http://blogs.chron.com/lorensteffy. Follow him on his Facebook fan page and at twitter.com/lsteffy.
I’m still having trouble getting a definition of what these ” subsidies ” for oil/gas industry are , exactly.
He’s playing a game of semantics. The two largest ” subsidies ” , IDC and depletion, are merely accounting treatments that either more accurately reflect the net income earned and/or encourage private sector investment by speeding the write off of expense.
They are very similar to accelerated depreciation allowed all businesses. Republican candidates today are proposing that manufacturing companies be allowed to take full depreciation immediately on investment in new equipment.
Its not like this avoids taxes permanently, its just at the front end, which attracts investment.
And depletion is not allowed for the large oil/gas companies. Its also available to all mineral mining and forest industries.
The only real ” subsidies ” I can find, are tax breaks allowed for secondary and tertiary recovery techniques in old depleted fields. And that does not matter to a hill of beans in the overall picture. Taking those away , just make it tougher on Ma and Pa Oil Companies operating in these old fields.
Lets be fair about these ” subsidies ” , and if they take them from oil, then take them from everybody.
Agree with ‘Dollar”…..the Prez has had three years to figure the Energy Sector out….still no Energy Policy….
obma doesn’t need any education on what he is doing. This is exactly
what he said he would do before he was elected. He promised the greenies that he would destroy the power producing companies and coal
companies also. he has tuned loose an unregulated agency the EPA
with no oversight to set the standards and regulation of the power
companies. With that in mind they had raised the limits of pollutants
beyond what is profitable for the companies. No congressional oversight
was required and they were meeting or exceding the current regulations.
The EPA is also trying to file suit to block or stop FRACKING which has
given us access to large amounts of Natural Gas this year and helped keep
the cost of natural gas lower. If Fracking is blocked/stop by the EPA
then you will see rising cost in both Natural Gas and Oil in the United
States. By blocking the Keystone Pipeline we are losing valuable resources that could help keep our nation from being dependet upon terrorist nations. obamas blocking drilling in the Gulf of Mexico and along both coast is his giving in to the sociast and enviromentalist who
want us to return to live in caves while they continue to exploit the jets and expensive lifestyles they enjoy plust leaving a larger carbon footprint than any one else.
I’m not listening to campus commie types blathering about energy who travel in two of my jets everywhere they go.
Andrew: Politicians have had decades to figure out the energy industry, and neither side has figured out an effective energy policy.
James: The oil and gas companies (and the folks who work with them, like me) seem to be doing awfully well while Obama “destroys” them. Profits for them and the small companies that help them are not exactly wilting under the out-of-control EPA.
Hyperbole much?
Obama doesn’t just need a dose of reality on energy, his entire speech and campaign platform are based in some alternate universe.
The Number 1 problem of all current green energy sources is that they are tremendously inefficient compared to the current primary sources. Wind, solar, and biofuels all require ENORMOUS footptints to produce the same amount of energy as a single oil or gas well or a nuke, coal, or NatGas fired electricity plant.
This inefficientcy makes them cost more, and in order to be competitive, they are the true recipients of GENUINE, government subsidies. BTW, a true subsidy is the government giving these companies money so their product is less in price to competing products. Tax deductions are not subsidies.
Just look at ethanol for fuel. Congress is ending the subsidy for ethanol producers. AP and the Chron published a doomsday article telling us that the price of gasoline will be going up at the pump making it sound like the oil companies were responsible, instead of the fact that we’re no longer paying the difference on April 15th.
“cleaner, cheaper and full of new jobs.”
it all sounds great, like everything else that comes out of his month. you don’t win elections with a dose of reality. That sad thing is that 50%+ are the ones who needs a dose of reality.
What is the big surprise. With Obama, its just words. The only promise he has made that he came thru on is higher enegry prices. Oh I almost forgot about Obamacare. A program so popular that half the states are sueing to avoid it and all of his cronies have been granted waviers from it.
Facing reality not only improves your life but all the lives around you.
Just think if America had invested heavily in alternative energy and conservation in the early 1970′s, when OPEC reared its ugly head, we would not have these discussions now, or for that matter, the Iraqi war.
BTW – Keystone was nixed by a Republican, the governor of Nebraska. When Keystone decides not to route its pipeline through nature preserves and fragile aquifers, it will be approved. Quite arrogant to do so in the first place.
Mr. Steffy – I like this article, well written
So, your answer is Drill more? It took a lot of stones to get to that conclusions. This is the problem when anyone talks about energy . Everyone is a swami. I remember the 60′s we were talking about all of the above alternative energy sources then and the same exact arguments were made back then. Obama is simply saying why don’t we try and stop complaining about why we can’t. Talking about what or may not happen tomorrow is a tired argument. Solydra is no different than the failed investments Bain capital made in some instances. So what? Does that mean we throw our hands up and just quit. That’s weak. If any country is a lesson it is China. They are buying up all of our capacity to make solar panels because they get it or they are coming around. We’ll be crying another river about China in a few years. We better stay on the fossil fuel train and buy tickets on the nuclear, wind, and solar trains or else we will find ourselves stuck somewhere we don’t want to be.
This Idiot needs more than a slap of reality, He needs to be woke up and given a cup of coffee.This man has no inkling of an Idea what’s going on!
During the 2008 campaign, Obama made his adgenda perfectly clear, stating that it’s time to “end the ase of oil” and that his energy plans will “necessarily bankrupt the coal / energy industry”. This fool doesn’t seem to realize that oil & petrochemicals are a necessary part of all our lives….without oil / pertochemicals, every thing we use , wear, and posess would be made of wood, iron or natural fibers…No plastics, no nylon, spandex……no electronics… electricity would revert to being a luxury, only affordable to the wealthy….no cellphones, no protective coatings, insecticides, or chemical fertilizers….no carpet in your home, no AC or refrigeration!!
All these “Greenies” out there need to turn off their ‘hearts’ & turn on their brains. Life as we know it will not be sustainable without oil/petrochemicals.
BTW willrogers, it is worth noting that Obama and his State department EPA assement gave a green light to proceed with Keystone back in Sept, 2011. And that is after studying it for three years. Thisw delay is nothing more than pure political theartics to appease part of his base. Get off the kool aid!
Missing from this whole debate is any discussion of the demand side of the market. (Remember Econ 101 anyone? “Supply AND Demand”?) Texas is raising its highway speed limits to 75 mpg. Far too many people needlessly drive SUVs. People commute long distances to the suburbs and exurbs where they live in McMansions. Heck, there’s even an element in our society that objects to government regulations regarding the use of compact fluorescent bulbs rather than incandescents!
Living high on the energy hog like this puts upward pressure on the price of energy, makes us more dependent on imported fuel, endangers our national security, and contributes to global warming.
Back in WW II there was a propanda poster that read, “When you ride alone you ride with Hitler!” Americans back then were aware of the national security implications of irresponsible energy use. It’s high time we all took a good, long look in the mirror and started behaving responsibly!
President Carter was a supporter of oil sands in the 70′s. It was his idea to break from OPEC by tapping these resources. When we wanted to drill in ANWR, we were told that it would take 10 years to get the oil to the mainland. That was 10 years ago. We keep being told that solar and wind power is right around the corner, but it never materializes. As my father used to say, “wish in one hand and c#@& in the other and see which one fills up faster”.
More lies from Obama. November can’t come quick enough.
Interesting comments within article this relative to natural gas.
1. The abundance of natural gas from hydraulic fracturing in the U.S. means it’s likely to become a viable alternative fuel.
2. By 2040, natural gas will surpass coal as the world’s second-biggest fuel source behind oil.
3. “As we’ve seen with the collapse of natural gas prices, companies will simply shut in production if it isn’t economical…”
4. “…it took decades of private-sector financing, development and risk-taking to turn that government research into the current job boom.” (Hydraulic fracturing)
It strikes me that within the foreseeable future we will not see such dramatic changes in the production of oil as we have in natural gas over the past twenty years. Note the “invisible hand” impacts in the above. I think the price of oil will provide more than ample incentive to develop and produce what can be done without government subsidy of any kind. Subsidy would be better directed to those areas which will be replacing it as it both increases in price and runs out in availability.
We can’t afford to wait for Nov.! By then OWS will have created anarchy and chaos giving Bozo the excuse to declare Emergency Powers, cancelling the elections and declaring himself dictator! IMPEACH….IMPEACH….IMPEACH NOW! It only takes a few minutes every day to send a msg to your Senator and Representative demanding IMPEACHMENT! Perhaps if they receive enough of these we can motivate them to do something!
And a chicken in every pot. Whatever. Speeches littered with utopian ideas that will never materialize combined + rah rah BS + terrible four year track record = deaf ears.
Tired of hearing conservatives lie about every word that comes out of Obama’s mouth and his very existence. At some point, I would like to see conservatives talk about President Obama, not the mythical evil figure they have invented in their weird fantasy bubble they live in, mostly on internet chat boards.
Obama = Chicken with it’s head cut off when it comes to business! Vote his butt out already please!
As was said in the past, a speech about everything is a speech about nothing.
But don’t blame me, I vote the scary old dude and the psycho animal killer!
An amazing number of people seem to think that if America were to ‘shut off’ the gas and oil supplies, everything would switch over to ‘green energy’ (solar, wind, etc.) immediately, with not even a flicker. What an incredible shock this country will be in for if our foreign oil supplies suddenly stop, with no domestic fall-back plan. Saying “I voted for Obama” won’t get you a tankful of gas from an empty gas station.
This country would be virtually bankrupt overnight if the energy supply falters.
Agreed, we need to continue developing green energy, but meanwhile, we need a steady supply of oil and gas to bridge the gap from present technology to the next generation… which could easily be 20+ years.
Seems like y’all are filled with such contempt for our Government and Obama no one can even muster a intelligent analysis of what’s happinging now and what the future will bring. Personally, I don’t want to go back to the sixties. So many people filled with such vitriol and most of them don’t even no why, much less what’s really going on in the energy sector and the country. I am not in the oil business but a couple clients that own rig leasing companies say they have more rigs out than ever. Domesic energy production has increased dramatically, rig count is highest it has been in years, Houston is rocking financially. I would love to see a coherent alternative to Obama that is more moderate than the current crop of idiots but doesn’t look like that will happen so I will continue to support our President and hope something we can make some positive changes. The United States is not going to crumble if Obama is re-elected for four more years, thats is just ridiculus. Citizens that think that the USA is going down are part of the problem, they want their own self fullfilling prophecy.
Why bother commenting on what Obama says? He says one thing and just keeps on doing another. He lasered his attention on jobs. No jobs. he’s had 3 different loser mortgage programs to save the “Underwater” homeowners. And who decided that it was a good idea to change the terms of the loans even when current on their payments? This Progressive President has one Agenda and he’s going to follow it. That’s not an energy policy, it’s a political path. So don’t waste your breathe or thoughts.
This clown prez doesn’t have a clue! He the most inept idiot around! Its like he lives in a dream world where everything is going to be sugar and spice!
Don’t listen to what this guy says. Watch what he does. They are not the same thing.
House Republicans are accusing President Obama of making a sham announcement to open nearly 38 million acres in the Gulf of Mexico to oil and gas drilling, arguing that the same lease sale was already in the works before he took office.
Ridiculing the president for touting the Gulf lease sales as a “major announcement,” Republicans on the House Natural Resources Committee said the Gulf of Mexico area in question was first set to be opened by the Bush administration, so Mr. Obama’s decision to lift the embargo he put in place after the BP oil spill will do nothing to open new areas for exploration.
Jesus would not own a gun or vote republican!
The best possible thing for American economic recovery is to put Obama and his minions on the unemployed list come November. I don’t care if it’s Perry, Romney, Paul, Newt or just a plastic trash can all are better for our country than Obama ever thought of being..
Roberto, don’t be such hypocrite. Liberals did the same thing about Bush for 8 years. Grow up.
President needs a dose of energy reality huh ?
lol.. well , he needs way more then that…
getting back to his own country is a start!
we here in america dont put up with his trashy kind…
The share of electricity produced from renewable energy in Germany has increased from 6.3 percent of the national total in 2000 to over 20 percent in the first half of 2011.[1] In 2010, investments totaling 26 billion euros were made in Germany’s renewable energies sector. According to official figures, some 370,000 people in Germany were employed in the renewable energy sector in 2010, especially in small and medium sized companies. This is an increase of around 8 percent compared to 2009 (around 339,500 jobs), and well over twice the number of jobs in 2004 (160,500). About two-thirds of these jobs are attributed to the Renewable Energy Sources Act[2][3] Germany is the world’s first major renewable energy economy.[4] In 2010 nearly 17% (more than 100 TWH) of Germany’s electricity supply (603 TWH) was produced from renewable energy sources, more than the 2010 contribution of gas fired power plants.
Oil is not the only answer. Your political spin may serve your editors but it does not serve America.
Y’all are hilarious, as is this stupid article. Since when has any president outlined a detailed solution to a complex problem in a state of the union address? If you want to discuss the issue, remove the political background noise and have at it.
RetiredUSMC,
That’s why Jesus died on the cross…
THE COMMIE OBAMIE ENERGY POLICY
THIS IS YOUR COMMIE OBAMIE SPEAKING. BUY THE NEW COMMIE GENERAL MOTORS CHEVY VOLT THAT HAS THE TAXPAYER SUBSIDIZED 7500 DOLLAR TAX CREDIT for a total taxpayer subsidy OF $250,000 DOLLARS PER CAR. http://www.mygovcost.org/2011/12/21/gms-chevy-volt-costs-taxpayers-250000-per-vehicle/
OH AND YOU STUPID TAXPAYERS PAID THE UNION MEMBERS A 4300 DOLLAR BONUS LAST YEAR. YES, AND THEY JUST NEGOIATED A NEW CONTRACT AND THE UNION MEMBERS GET A 5000 DOLLAR SIGNING BONUS. IN ADDITON, HE ALLOWED GM TO OPEN 2 NEW PLANTS IN MEXICO. NOW THAT’S IS GREAT FOR AMERIKAN JOBS – EH!!! YEA AND US IDIOTS ALLOWED COMMIE OBAMIE TO USE OUR BAILOUT TAX MONEY TO DO IT!!!! WONDERFUL.
MEANWHILE THE EPA IS TRYING TO CLOSE AS MANY COAL FIRED ELECTRIC PLANTS AS POSSIBLE – SO PLUG IT IN IF THERE IS ANY THERE OR IF YOU CAN AFFORD IT. HECK WITH THIS GAS STUFF.
IN THE MEANTIME THE COMMIE OBAMIE GM HAS HIRED CHINA TO DO ALL OF ITS ELECTRIC CAR STUFF – YES THE CHINESE COMMUNISTS – NOW AIN’T THAT GREAT? SEE HOW MUCH YOUR COMMIE OBAMIE DOES FOR YOU!!!! SEE HOW GOOD THIS IS FOR GREEN JOBS – JUST NOT IN AMERIKA. SHUCKS GM IS NOT EVEN HONORING SOME PRE-BANKRUPCY WARRANTIES AND RECALLS -HAVE SOME APPLE PIE AMERIKAN OWNERS OF GM. IN ADDITION COMMIE OBAMIE HAS APPROVED LOANS TO BUILD AMERICAN CARS IN FINLAND AS A PART OF HIS USA JOBS PROGRAM – AIN’T THAT GREAT?
REMEMBER FOLKS VOTE COMMIE OBAMIE FOR BEST COMMUNISM OF ALL CANDIDATES.
SEE THE USA IN YOUR COMMIE OBAMIE CHEVROLET
http://www.commieblaster.com/obama/index.html
http://www.nachumlist.com/Socialists.htm
http://www.aim.org/aim-column/obamas-communist-mentor/
Jesus was God. He died on the cross willingly because he thought it worth the cost to make us free of sin through faith in him.
Guess most of us have caught on that the cardboard cutout in the White House is nothing more than a power mad despot who is wretchedly undeserving of the office he stole. He’s getting even. He’s saying no to projects because he can. He hates Texas and Texans. He gutted the NASA and the space program, and probably relishes the fact that our grand space shuttle is sitting in a parking lot close to a strip joint somewhere up north. He put it there because he can. He shut down drilling in the Gulf, because he can. He straightened his crown and smashed the plans for the XL pipeline. It is nothing more than a vulgar display of power by someone so pathetically unqualified to do so. Apparently, his State of Confusion speech was just more blowing smoke up the @ss of those idiots who still believe in him. Even he knew better than to make grandiose statements about his health “deform” bill. He and the Moo attended what was once a very elite Alfalfa club this weekend. I guess they must have really lowered their standards and now they’re letting anyone in.
We love Prez O, keep up the good work!
Ya know! This is just another indication of “Bay-rack’s” total ignorance and and incompetence regarding the current energy situation. First of all, “Mr. President,” here’s a flash! Hydraulic fracturing, event though it is a complex process of different types of fluids and propping agents, is only a small part of secondary and tertiary reoovery of hydrocarbons. One of the most productive gas-laden wells I have ever seen was produced by a simple acid injection that didn’t really require any fracturing. You really should require your energy czar to be in the know about the whole recovery process and not just the term-du-jour…hydraulic fracturing. Further, I have to actually agree with Loren for a change. You will not get the energy economic picture to improve by spending a lot of tax dollars on “new technology (alternative sources of energy)” alone. But, not only will it not improve the economy, but, coupled with his rampant, out-of-control spending and regulation in other areas, it will continue to carry the economy in the downward spiral it is now in! But, then, that is what we all have come to expect from this President and his lap dogs!
Listening to Obama explain energy / economic policies is the equivalent of Al Sharpton explaining the effects of global warming.
For the mist part I think that the president us doing his best to look out for the environmental health of this country. He isn’t some idiot that doesn’t know what he is doing like somepeople like to think he is. Anyone hwho says that he promised all these things and complained about it and then attacked him for not doing Anything is the biggest, and dumbest hypocrite ever. The the only reason why his ideas weren’t passed was because all the republicans sat back and cried whle they prtented to create jobs just because the president was a democrat. If everyone worked together and didn’t complain or be a pessimist about everything the president does then we might really make some useful progress. Maybe its the people who criticise the president that need the dose of reality.
He needs to be removed from office and sent to the trash heap of history. This experiment in Socialism has failed, miserably!
Obama. What a clown.