• Energy Tax Facts
  • 1 Jul 13

Forbes: The President’s Climate Speech and the Role of Natural Gas

Actor and anti-Fracking hysteria-monger Mark Ruffalo went a bit over the edge on Tuesday (as is his habit), lashing out at President Obama for failing to ban hydraulic fracturing in his speech on “climate change”.  Ruffalo was quoted by Politico as follows:

“Obama deserves praise for prioritizing climate change, but if he’s serious he needs to start by rejecting fracking for oil and gas,” Ruffalo said. “President Obama can’t claim to seriously address climate change and expand fracking for oil and gas — that’s a stark contradiction.”

Ruffalo went on to say that “fracking greatly exacerbates climate change and threatens to put us over the edge”.  As is also his habit, Mr. Ruffalo offered no evidence other than rank hyperbole to back his claims that “fracking” somehow effects “climate change”, which is unsurprising given that no such evidence exists.  He also failed to detail exactly what “edge” he was talking about, but we can reasonably assume it is probably the same “edge” upon which his sanity appears to teeter anytime he opens his hulkish (pun intended) mouth on this subject.

Of course, the President himself wasn’t exactly a modicum of consistency of thought related to oil and natural gas in this speech, as he advocated alternately for more fuel switching from coal to natural gas in the power generation sector and moving to more natural gas-fueled heavy trucks, and in his next breath repeated his unending call for a repeal of all tax “subsidies” received by the oil and gas industry.  Given that – as we have detailed in this space repeatedly – the oil and gas industry does not receive any “subsidies” from the federal government, the President is really calling for a repeal of any existing tax treatment that applies to the oil and gas industry, like deductibility of intangible drilling costs and the percentage depletion deduction.

So on the one hand, the President claims to want the industry to produce more and more natural gas to help clean up the air by replacing other fuel sources, but on the other hand he wants to repeal these tax treatments that play such a crucial role in the industry’s ability to raise the capital necessary to pay for the drilling of natural gas wells.  Brilliant!

Advocates on both sides of the Keystone XL pipeline debate were also all atwitter (figuratively and literally) after the speech, in which the President said he would approve the building of the northern leg of the line only if the State Department concludes that it would not “significantly” increase greenhouse gas emissions.  Given that the State Department already reached that very conclusion in a draft study released in March of this year, Keystone XL advocates are concluding this means the President will indeed issue his approval soon.

But opponents continue to cling to the false rationale that Canada’s oil sands somehow will cease to produce the oil they already produce if Keystone approval is ultimately denied, urging the Administration to adopt their fairy tale in making the final judgment.  As we pointed out last week, such a final outcome does not appear likely if the decision is made based on rational public policy thought processes and facts, but we do have to admit that disapproval of Keystone XL wouldn’t be the first fairy tale-based decision to come out Washington in the last five years, so anything’s possible.

Overall, as it relates to the oil and natural gas industry, the speech amounted to a regurgitation of policies that have been proposed over and over again, repetition of the standard false assertions on the tax front, and not a lot else.  Given their consistently hyperbolic state of being, it’s easy to see how such a status quo speech might throw Mr. Ruffalo and his band of scare mongers over that “edge” they alway seem to be perched upon.

For everyone else involved in the issue, the speech was really a bit of a non-event, and thus poses no new threats that the oil and natural gas industry hasn’t already seen before.