API’s Gerard talks ‘energy dominance,’ administration’s oil and gas strategy

Source: By Monica Trauzzi, E&E • Posted: Wednesday, August 2, 2017

What does the Trump administration’s “energy dominance” rhetoric mean for the oil and gas industry? During today’s OnPoint, Jack Gerard, president of the American Petroleum Institute, explains how his organization is engaging the Trump administration on oil and gas issues.

Monica Trauzzi: Hello and welcome to OnPoint. I’m Monica Trauzzi. With me today is Jack Gerard, president of the American Petroleum Institute. Jack, nice to see you. Thanks for coming on the show.

Jack Gerard: Great to see you. Thanks for having me on your program.

Monica Trauzzi: So, Jack, last week the D.C. Circuit rejected EPA’s justification for reducing renewable fuel requirements in 2016. It’s a win for the biofuels industry. What impact do you think this has on the ongoing debate over biofuels and the role that they should play in the U.S.’s fuel mix?

Jack Gerard: Well, I think it has some impact but it’s probably limited impact, and what I mean by that is what the court basically said is there are other means to look at the need to waive down those requirements or the volumes associated with the ethanol fuels. And so I think in the short term once the EPA looks at it again, hopefully they’ll continue to use and we believe should focus on the economic harm to the consumers as really the justification or the articulation of what they should say to then justify, if you will, waiving those volumes down. But fundamentally the problem is the renewable fuel standard is — needs to be reformed. And so we think the court decision in and of itself reminds us of the need for reform. So hopefully we’re going to get the Congress to take action, we’re going to step back and say, “You know, we wouldn’t be litigating these matters if we fixed the policy in the first place.” So that’s our hope and our expectation moving ahead.

Monica Trauzzi: And a tough hill to climb to get Congress to act on that.

Jack Gerard: Well, there’s strong bipartisan support for this right now, and we believe a combination of this, the efforts to expand to E15, and others are really making the fundamental point that when this was originally conceived and put together, there were certain assumptions about our energy policy in this country, that we’re relying more and more on outside sources. Well, the reality is we’ve met all the concerns that were being considered in the 2007 time frame, but it wasn’t the renewable fuel standard that fixed those concerns. It was the expansion of our energy policy, specifically production of oil and gas, that’s not weaned us off our imports. Since 2007 we dropped from 58 percent to 27 percent of imports. So the policy is moving in the right direction, but it’s not the result of the renewable fuel standard.

Monica Trauzzi: Taking the 2018 numbers into account where we see conventional biofuels remaining the same, advanced seeing a slight dip according to what EPA is proposing, do you think that that proposal is a sign that the Trump administration supports the biofuel industry?

Jack Gerard: Well, my sense is I think they support all aspect of the energy industry, but we’ve got to get the energy policy right. And it’s inappropriate we believe for the government to always be in there putting their finger on the scale for and on behalf of different forms of energy. That’s why we think the renewable fuel standard should be reformed in the light of our current reality, which is the United States is the leader in energy production on a global scale. Today, as you know, we’re the leaders in oil and natural gas production, and what that’s done is allows us to become more self-sufficient, more energy secure as a nation. So when you look at the various justifications for different policies and you look at this administration, we’re pleased with the direction they’re going because they recognize energy — they often use the word “dominance.” They recognize the role energy plays —

Monica Trauzzi: Yeah, what do you think of that phrase, “energy dominance”?

Jack Gerard: Well, I think it’s a commitment on the part of this administration to say, “You know, we’ve overlooked energy in the past. We’ve been picking away at little small pieces here and there. Let’s take this great economic engine we have called energy in the United States and let’s enhance our role as a nation, creating well-paying jobs, making us more energy sufficient.” And now the potential to actually export our energy to those nations where we’d like to have even better relationships, to allow them to wean themselves off other sources that are less reliable than us.

Monica Trauzzi: But how does that phrase help us build relationships, dominance? I mean, it —

Jack Gerard: Well, I think it depends on how you want to interpret that phrase. The way we interpret that phrase is that we’re just going to enhance the role of energy from the United States’ perspective. Before as a major importer of product — now we’re able to export finished products. We’re able to export the raw crude material, LNG. That to me is a moving, if you will, in that direction of really enhancing the energy opportunity in the United States. I believe that’s what’s the intent of the Trump administration.

Monica Trauzzi: So on the whole do you think the oil and gas industry has a friend in the White House right now?

Jack Gerard: Well, I think we’ve got a lot of friends in this town, in Washington, D.C., both Democrats and Republicans. As we move forward I’m hopeful that more of those friends will come together and coalesce around a comprehensive policy. In our business we often say, “We don’t have candidates that are Republicans and Democrats and socialists and liberals or whatever. Our candidate’s energy.” And when we focus on energy, we’re trying to encourage everyone to come together and develop a comprehensive policy that addresses the associated issues and therefore benefits the American public, the American consumer.

Monica Trauzzi: This administration is very supportive of the coal industry. Do you think that hurts your member organizations in turn?

Jack Gerard: No, not at all. In fact I think what this administration is going to do hopefully is reset the broader balance so that all energy forms are given the opportunity to compete. We don’t believe you should put the finger on the scales for any one energy source. In fact, our view is we should get the government out of the business of picking winners and losers and allowing all to compete equally. We welcome the coal industry. We welcome the nuclear industry — wind, solar, energy efficiency. It should all be part of that equation where we compete equally for the chance to provide the energy the public needs. And the biggest beneficiaries of that type of approach: the American consumer. Today their costs are less. If you look at our product, AAA estimates the average consumer now saves over $500 a year at the gas pump just because we produce more oil that’s been translated into natural gas — excuse me, not natural gas but gasoline, and thus consumers get the benefit at the pump. So there’s opportunity up and down that value chain. We’re for all forms of energy, and we’d sit here with all of our colleagues and say, “Let’s work together on a unified energy front.”

Monica Trauzzi: And the devil is of course in the details. [Laughter]

Jack Gerard: It is. We’ll work those out as we get to them.

Monica Trauzzi: We’ll end it there. Thank you so much. Nice to see you.

Jack Gerard: Thank you, Monica.

Monica Trauzzi: And thanks for watching. We’ll see you back here tomorrow.