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What Does the State of the Union Mean for Energy Policy?

A power generating wind turbine in New Hampshire

In his State of the Union address, President Obama befuddled his critics who believe that his administration has been hostile to oil and natural gas by laying out a bold vision based on developing all the nation’s domestic resources centered on natural gas. Did the president really outline a new energy policy for the country? Will his administration take the tough actions that must be adopted to make it a reality?

The president stated, “We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy.” At the same time the president sent a clear message to the industry that this development must occur in a manner that in no way endangers public health and safety and declared that companies drilling on public lands must disclose the chemicals they use in the fracking process. The president went on to note “the development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper proving that we don’t have to choose between our environment and our economy.” He also reminded the public that it was public research dollars that helped develop the technologies that remove natural gas out of shale providing him some political cover for the financial setback of the $500 million Solyndra project.

The president is inspiring at providing bright visions of the nation’s future. However the reality of this administration is that it has not always acted to develop all the nation’s energy treasures and in some cases have actually turned significantly away from two of our nation’s most vital energy sources: coal and nuclear power. While the administration has supported nuclear power rhetorically the president's decision to scrap Yucca Mountain after a public investment of nearly $20 billion dollars and a statutory obligation for the federal government to provide such a facility seems at best to be at odds with his vision for the development of all domestic resources. While the industry may be able to store nuclear waste at reactor sites for a number of years this is not a long term solution and while the president's Blue Ribbon Commission may offer new solutions how hard will the president fight to enact one of its recommendations or will it lapse as in the case of the Simpson Bowles Commission on the deficit. America sits on one of the largest reserves of coal in the world. While the president has supported R&D on Carbon Capture and Sequestration (CCS), where is the political and global leadership to make this issue a hallmark of his administration when we all know that unless CCS can be shown to be both commercially and technologically feasible there is no scenario under which the IPCC’s assessment of the threat of irreversible climate change can be met regardless of what we and the rest of the world do to development renewable energy over the next 40 years.

Finally, largely missing from the president's speech was the acknowledgement that after years of erosion in U.S. domestic oil production, the combination of plateauing U.S. oil demand, surging domestic unconventional oil production, and improving fracking technology, offer the prospect of, a reduction in the nation’s trade balance with significant macroeconomic benefits to the economy as the $400 billion dollars we currently send overseas to pay for our oil addiction can be spent at home. Mr. President you have provided dynamic leadership on a number of fronts but now is the time to provide the nation your lasting legacy. Free us from the dependency on our oil by developing our domestic energy resources. Finally, to the extent we need to import some of our oil rely to the greatest extent possible on our reliable neighbors in Canada by permitting the Keystone pipeline on a fast track basis. Mr. President move vigorously ahead on developing our natural gas and if deemed feasible move to approve as many LNG export projects as possible commensurate with the interest of our domestic manufactures but do not let spurious arguments stand in the way of our becoming an important source of natural gas for our allies in Japan and elsewhere in Asia.

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