WASHINGTON -- After a year when climate change, geopolitical instability and income inequality have all grabbed the headlines, there is a solution to these, said the head of the American Petroleum Institute (API): the U.S. model of energy.
Jack Gerard, president and CEO of the oil and gas industry trade group, described the American energy industry as strong, “even during this time of realignment,” when low crude prices are pushing some oil and gas producers toward breakeven and beyond. In his remarks on the Washington-based group’s annual State of American Energy report this week, Gerard said this strength under pressure is due to the integrity of the U.S. model, which manages to pull off three feats at once.
“Simultaneously, the United States is leading the world in energy production, we have one of the strongest western economies and are leading the world in reducing greenhouse-gas emissions, a trifecta of success unmatched by any other nation,” he said.
A case study demonstrating this, said Gerard, is the domestic natural-gas industry. He pointed to a 9% drop in U.S. greenhouse-gas emissions when comparing 2013 to 2005, according to Environmental Protection Agency (EPA) data, even though population, energy use and gross domestic product grew in those eight years. (Many experts partly credit the growth in natural gas’ market share from coal at power plants for the greenhouse gas reduction.) At the same time, U.S. household income grew $1,200 in 2012 because of lower home energy costs tied to shale gas development, according to an IHS analysis.
“We have a case study,” said Gerard. “There are those who try to ignore the case study, or who deny the case study. The reality is we are leading the world, and how did we get there?”
When asked during a question-and-answer session whether the recent Paris agreement on climate change could signal the beginning of the end for fossil fuels, Gerard was defiant.
“Experts will tell you that by 2040, 80% of the energy sources the U.S. will rely on will continue to be fossil fuels,” said Gerard. “We lead the world in carbon reduction, and we’re doing that today because of fossil-fuel production.
“Those who take the simplistic approach—‘Let’s forget about fossil fuels’— you can’t forget about fossil fuels,” said Gerard. “They’re the foundation of our economy, and all of the experts will tell you they’re the foundation of our economy for years to come.”
Gerard also credited the American energy renaissance for being a “key driver” in moderating any upswing in oil prices during the recent tensions between Saudi Arabia and other Middle Eastern nations.
“The geopolitics of energy has changed significantly over the last decade,” he said. “The U.S. is now the world’s No. 1 producer of oil and natural gas. It’s the fundamentals of the laws of supply and demand taking out a lot of the risk we’d seen historically. As unrest continues to heighten, tensions increase, the market is basically showing there alternatives out there now for that energy.”
With the 2016 presidential elections coming up, API will meet with all of the presidential candidates, Gerard said, regardless of their political party. Its Vote4Energy voter education campaign emphasizes responsible growth of the American energy industry, an “all-the-above” approach to energy sources, and adopting energy policies that will fuel America’s economic prosperity and global influence.
A recent example of “forward-thinking” energy policy, he said, was the lifting of the 40-year ban on oil exports, which he believes will be a win for American consumers and eventually reduce their fuel costs.
“Lifting the crude export ban is a long-term visionary plan that allows markets to operate as they should,” said Gerard. “All we’re asking for is the opportunity. Give us a chance to compete with everybody else around the world, and the key beneficiary is the consumer. Why? Because the lowest-cost oil will find itself into the marketplace, it will be refined for less and will be brought to the American consumers’ doorstep for less.”
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