Energy Post-Election: A Great Place for Moderation

  • Moon Rise behind the San Gorgonio Pass Wind Farm
    Nov 8, 2012

    No matter the outcome of Tuesday’s election, the big question was always which version of the candidates we would get when it came time to govern. Mitt Romney had at least two distinct personas: the conservative Mitt that was necessary to win the Republican primary and the moderate Mitt that showed up in the first presidential debate. President Obama on the other hand, won his first election with a coalition that included moderates, independents, and even some Republicans who thought that he represented their views. Many from the moderate camp have been openly critical of Obama’s more-liberal-than-expected leanings during the first administration. The big question now is who will Obama be in his second term?

    As with any second-term presidency, the Obama administration now has the opportunity to take stock of what it did well, what it could do better, and the all-important question of what it wants its legacy issues to be. Energy was once a top-tier issue for the Obama administration. When the president first came to office, passing cap-and-trade legislation and funding clean energy technologies were major priorities that received the commensurate level of staffing, political clout, and attention (at least briefly). In a few short years, the energy landscape shifted under the Obama administration’s feet in two fundamental ways. First, the unraveling of the climate agenda within U.S. domestic politics took the energy out of the global climate agenda and nearly erased the storyline on which Obama had cast his entire energy policy. Second, the realization that the United States is endowed with economic and producible unconventional oil and gas resources has changed the energy realities in this country.

    To its credit, the Obama administration has worked very hard to adapt to one of the most significant and fast-paced resource revolutions of our time. The administration has devoted significant time and attention to understanding this new resource dynamic and has taken a cautious approach to regulation and policy initiatives that might affect either the demand for or production of these resources. It has taken opportunities to speak out in favor of unconventional gas, and even oil to a certain extent, when it comes to the positive contribution that both make to the nation’s economic and strategic outlook.

    Skeptics of the administration’s new-found appreciation for oil and gas point to decisions yet to be made on federal regulation of hydraulic fracturing, permitting of the Keystone XL pipeline, export permits for liquefied natural gas, and a host of other regulations that could make the operating environment for fossil-based energy sources more difficult, as a sign that the administration was only moderating itself for purposes of reelection and will revert back to the more clean energy–focused agenda of its first two years.

    Only time will tell, but the facts on the ground suggest that energy is the perfect place for a second Obama administration to take a moderate and perhaps even somewhat bipartisan stance. Here are a few reasons why:

    • Politics. The politics of energy are not national, they are local, and the unconventional resource revolution is playing out at a local level. Members of Congress who have resource development in their backyards will need to navigate the compromise between the economic boom and environmental and social concerns that come with that development. Congress and the administration will naturally be searching for their role in all of this, and that will not necessarily break down along party lines. As noted energy analyst Kevin Book points out today on E&E TV, the Obama administration will need folks on the other side of the aisle to work with on this, but a cautious, pro-production agenda could be successful.
    • Opportunity. Energy may not be a major agenda item in and of itself, but the opportunity for significant changes to U.S. energy policy could come in the context of major debates over the tax code, budget cuts, and potential stimulus. The fiscal cliff provides ample opportunity for discussion of energy subsidy and tax reform, a battle over research and development funding, and even some discussion of climate-related tax policy. None of these things is guaranteed to happen, but the Obama administration has been very consistent about its support for oil and gas “subsidy” removal and continued support for clean energy technologies. Opportunities for compromise on both these issues have a good chance of coming up during this new term.
    • Environment. The Obama administration has run on a message that environmental regulation can be good for the economy, while the Republican rebuttal suggested that environmental regulation was hurting the economy by delaying investment and making things more costly. Perhaps the biggest area for moderation is in the implementation of environmental regulations regarding hydraulic fracturing, greenhouse gas emissions, and water issues. These are areas where the poles of the debate have been leading—either to aggressively ram through regulations that have been pending for almost a decade or to completely remove the authority of the Environmental Protection Agency to regulate certain areas. Energy companies looking for certainty may find compromise a welcome change.
    • Economics. For two election cycles now energy has played a prominent role as one of the key growth areas for the future of the U.S. economy. There is no doubt that high or low prices for energy yield a negative or positive, respectively, overall effect on the nation’s economy by virtue of being an important basic input. But how to turn abundant energy resources or competitive new energy technologies into an opportunity is still not something we’re very good at from a policy perspective. The best commercial and policy minds are needed to find an answer to this question. This would be a win for both sides if we could find a way to do it.

    Several weeks back, Frank Verrastro, senior vice president and James R. Schlesinger Chair for Energy and Geopolitics at CSIS, authored a Commentary on the areas where U.S. energy policy could use some attention. Given the current energy landscape, a moderate approach to these issues could yield some very positive, and possible, outcomes.

    Sarah O. Ladislaw is senior fellow and codirector of the Energy and National Security Program at the Center for Strategic and International Studies in Washington, D.C.

    Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

    © 2012 by the Center for Strategic and International Studies. All rights reserved.

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