Let the market dictate energy’s future

09 14, 2014 by The Daily Advertiser

Why does the oil and gas industry oppose greenhouse gas emission reductions when it encourages natural gas production?

That is a common question that shows the “so-called” environmental experts do not understand the industry and its impacts to society.

Energy costs, natural gas and electricity primarily, are the second-highest cost in determining gasoline price after the price of crude oil. This equates to several millions of dollars a day for a large refinery. As energy usage is the major source of GHG from industry, why would the refining industry waste energy and increase emissions?

One of my staff members shows a sticker on his hard hat from 1978 to “Save-NR-Gee.” This effort was long before the global warming debate. The industry works hard every day to reduce emissions because energy workers directly relate to energy costs and therefore their profitability. Yes, oil refining is an energy intensive industry; but energy workers do not waste energy.

The Department of Energy projects that the United States GHG emissions will remain constant through the year 2040. In fact, Louisiana GHG emissions have remained relatively constant since 1990. Yet China’s emissions will increase three times to be one-third of the world’s GHG emissions in the same period.

The rest of the world’s emissions will increase 1.3 percent per year over the same period. Why penalize the United States and Louisiana businesses for the excesses and benefits of others?

So why does the industry oppose GHG regulation? In addition to the above, the answers are many.

First, and foremost, we believe the Environmental Protection Agency does not have the authority. The Supreme Court somewhat indicated this earlier in the year. The industry believes in free markets. No two refineries are identical. To think the EPA can write a rule that addresses all 150 refiners equally and fairly does not make sense.

It is in the United States’ interest for all fuel sources to compete equally. Nearsighted environmental policy should pay no part in the debate. As outlined above, cuts in the United States’ emissions will have no impact on the GHG emission increase trend worldwide.

The usages of natural gas are many. Yes, they are fuels for electricity generation, fuel for refineries and chemical plants and sources of heat for Louisiana homes. Natural gas is also the cause for billions of dollars of Louisiana investments for new natural gas export facilities, natural gas-to-liquid fuel facilities and methanol facilities in Louisiana. Not to mention the pipeline and other infrastructure to move these products.

It is also a potential valuable asset in the national trade balance.

Let’s let the economic market dictate the future. Let’s get EPA out of the equation. All of us will be better off.

Former congressman Chris John is president of Louisiana Mid-Continent Oil and Gas Association.