U.S. energy policy should encourage a domestic oil-and-gas production boom that can foster an “American renaissance” of jobs and economic development, the industry’s top economist told Montana business leaders Wednesday.
John Felmy, chief economist for the American Petroleum Institute, also said it makes
no sense to oppose the Keystone XL Pipeline on environmental grounds, because the Canadian oil sands will be developed regardless.
“The notion that you’re going to stop Keystone XL and stop Canadian oil-sands development is just silly,” he said. “Clearly, this is something we need to move forward on.”
Felmy spoke at the Montana Chamber of Commerce’s annual “business days at the Capitol,” a two-day gathering of business and political leaders.
With advances in technology like hydraulic fracturing and deep-water drilling, the industry is finding and developing huge new sources of oil and natural gas in America, Felmy said.
This development can create and is creating thousands of jobs and millions of dollars in tax revenue, he said, and U.S. energy policy should not stand in the way of this boom.
He said the United States should avoid policy mistakes it made during the 1970s, such as imposing onerous taxes on the industry, price controls or unnecessary regulations that block exploration.
Hydraulic fracturing, or “fracking,” has led to gas development booms in economically depressed areas in the Northeast, he said, and offshore deposits exist in many areas where exploration is blocked.
When asked whether the effect of burning fossil fuels on climate should be a factor in U.S. energy policy, Felmy said the institute is “not in the business of talking about climate science.”
Yet, he did say that if carbon emissions are to be reduced, it should be in a “cost-effective way” that won’t “destroy our economy.”
Felmy said that renewable power such as wind or solar will play a role in the U.S. energy mix, but remains a small segment, and that any economy needs a reliable source of power such as coal, natural gas and oil.
“We’ve got to keep the lights on,” he said. “Because if you can’t have reliable power, you can’t have an economy. …
“During this last cold spell, we didn’t have any wind (power) and we certainly didn’t have any solar. If you didn’t have coal or gas (power), you would have had a whole lot of people suffering.”
Felmy said building the Keystone XL Pipeline to transport crude oil from Alberta to U.S. refineries in the South will actually lead to less environmental impacts than the alternative. Without the pipeline, the oil will be developed and likely shipped overseas to China for refining, he said.
The pipeline means lower carbon emissions and the benefit of economic development in America, he said.
TransCanada has proposed the pipeline, which is awaiting a final decision on a permit by President Barack Obama. The pipeline would go through the northeast corner of Montana.