• Energy Tax Facts
  • 27 Jun 13

Politico: President’s plan relies on natural gas, but tries to boost taxes on it too

President Barack Obama’s call to grow natural gas markets drew a lukewarm reception from the gas industry, which criticized his call to cut fossil fuel tax incentives and remained wary of threats to regulate the sector more tightly.

Obama gave the natural gas industry a full-throated endorsement during his Tuesday climate speech, calling it “the transition fuel that can power our economy with less carbon pollution even as our businesses work to develop and then deploy more of the technology required for the even cleaner energy economy of the future.”

“We agree with all of the benefits that he’s brought up,” said Dan Whitten spokesman for America’s Natural Gas Alliance. “It’s just the tax provisions [of the plan] do not help us realize those benefits that natural gas provides.”

Obama’s plan called for coal-fired power plants to switch to gas and advocated the use of more heavy-duty natural gas vehicles.

But the president also renewed his effort to end to billions in oil and gas industry tax incentives that he has repeatedly urged Congress to scrap. Those tax proposals are crucial to the capital-intensive industry, Whitten said, which plows the tax savings back into new wells.

It’s a scene that’s played out before. From State of the Union addresses to stump speeches, Obama’s endorsements of the natural gas industry have been met with criticism, skepticism or, at best, tempered optimism from the natural gas industry.

The Independent Petroleum Association of America, which represents oil and gas producers, called Tuesday’s speech “another contradictory policy on the promise of American natural gas.”

“[Obama] has promoted natural gas in his speeches and actions, but at the same time, he’s also threatening new production with federal regulations,” said Jeff Eshelman, spokesman for IPAA.

Still, having the president stump for your industry has its benefits: The Wall Street Journal reported that shares of natural gas producers such as Devon Energy, SandRidge Energy Inc. and EOG Resources popped up 2 percent after Tuesday’s speech.

The Obama plan also calls for the development of the Unconventional Gas Technical Engagement Program, an effort to share industry best practices between states, private companies and foreign companies to help developing nations transition to natural gas from dirties fuels.

And Obama called for U.S. financing to support only clean coal fired power plants built abroad.

“Developing nations with some of the fastest-rising levels of carbon pollution are going to have to take action to meet this challenge alongside us,” Obama said. “They’re watching what we do, but we’ve got to make sure that they’re stepping up to the plate as well.”

The speech’s endorsement of natural gas was also viewed as support of hydraulic fracturing, the drilling method used to access gas trapped in shale. That angered some opponents of fracking, including ‘Gasland’ director Josh Fox, who said that Obama “does not have the right information on fracked gas.”

“For all the correct emphasis on the dangers of climate change, the plan is: frack now, frack here and frack all over the world — far too much fracking for gas [which is what the president means by natural gas]. Fracked gas isn’t a bridge fuel — it’s a gangplank,” Fox said.

Also tucked into the Obama plan was a commitment to “encourage the development of a global market for gas,” a phrase that seems cherry-picked from a 2011 MIT study co-authored by new Energy Secretary Ernest Moniz when he was director of the school’s energy initiative.

The Energy Department is currently reviewing several pending LNG export applications that would allow companies to send natural gas to foreign markets without free trade agreements with the United States.

The department has already approved two facilities, and Moniz has said that he plans to “be moving very soon to start a case by case analysis,” of the remaining applications and that more decisions should be expected before year end. On Wednesday, the House Appropriations Committee approved an amendment to the Energy and Water spending bill that urged the department to act expeditiously on the pending applications.

Whitten said ANGA “hopes and believes the administration will” approve the remaining export applications, while Eshelman was a bit more skeptical on what the phrase might ultimately mean for the industry.

“Like most of his speech, it was short on specifics,” Eshelman said, noting that IPAA plans to engage with the White House on both the regulations and taxation.

But environmentalists said the president’s push for exports would undermine the benefits of reducing carbon emissions, and threaten the country’s environment.

“[Obama’s] focus on fossil fuel exports — including the explicit promotion of LNG and his failure to curtail coal exports — threatens to undo the positive elements of the plan,” said Tyson Slocum, director of the Public Citizen Energy Program.

“By promoting LNG, the administration is moving full-speed-ahead on fracking, with no mention of how to control fugitive emissions, water contamination and other environmental problems posed by the controversial process.”