College of Law Center for Energy and Sustainable Development

Energy Forward Blog

26 Jan

New York Times
January 25, 2011

President Obama’s State of the Union Address

President Obama gave a prominent mention to shale gas development in his State of the Union address. In his remarks on the role of oil and gas in the national energy policy, he stated the following:

And nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my administration to open more than 75 percent of our potential offshore oil and gas resources.

Right now – right now – American oil production is the highest that it’s been in eight years. That’s right – eight years. Not only that – last year, we relied less on foreign oil than in any of the past 16 years.

But with only 2 percent of the world’s oil reserves, oil isn’t enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy.

A strategy that’s cleaner, cheaper, and full of new jobs. 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. Experts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use.

Because America will develop this resource without putting the health and safety of our citizens at risk. 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.

And by the way, it was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock – reminding us that government support is critical in helping businesses get new energy ideas off the ground.

. . . . . .

Our experience with shale gas, our experience with natural gas, shows us that the payoffs on these public investments don’t always come right away.

According to the President, his administration “will take every possible action to safely develop this energy,” which could “support more than 600,000 jobs by the end of the decade.” That is welcome news. But right now we have more natural gas than we need, and this glut of supply, coupled with an unusually warm winter, has resulted in natural gas prices so low that Chesapeake Energy announced earlier this week that it was cutting production of natural gas (an 8 percent cut in daily production). Chesapeake will be reallocating its investments from natural gas fields to fields that produce oil and other hydrocarbon liquids.

In addition to a policy promoting the safe development of the nation’s shale gas resources, the President needs to promote a sensible energy policy that will provide a market for this gas to be used. One solution, of course, is the NAT GAS Act, which would convert large trucks to run on compressed natural gas. The NAT GAS Act (H.R.1380 and S.1863) would accelerate the use of domestic natural gas as a transportation fuel by providing financial incentives to fleets and individuals to switch their vehicles to natural gas and to install fueling stations to service them. We should deploy our natural gas resources to reduce our dependence on foreign oil and increasing the nation’s energy security. Passage of the NAT Gas Act is one means of pursuing this objective. The President should go beyond encouraging the development of shale gas resources and actively support legislation that would stimulate the market demand to help consume these newly developed natural gas resources.

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