SOTU: 'American Energy' Key to Boosting U.S. Job Creation
It wouldn't be a State of the Union address without an energy pitch aimed at reducing America's dependence on foreign oil or how to boost the economy with job creation. President Barack Obama delivered plans for both during Tuesday night's address to the American people.
Onshore & Offshore Drilling
Obama said he is determined to boost domestic energy production and said he would direct his administration to open 75 percent of potential offshore oil and natural gas resources for exploration.
Bloomberg reported Tuesday that a 2011 Interior Department report estimated the Gulf of Mexico could hold as much as 11.6 billion barrels of untapped crude -- enough to meet U.S. demand for almost two years -- and nearly 60 trillion cubic feet of natural gas.
"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 sixteen years," Obama said.
Energy experts agree that an increase in shale gas drilling could boost jobs between 600,000 and 900,000 jobs over the next decade. The president said he would call on companies who engage in the practice of "fracking" to extract natural gas imbedded in rock to detail what chemicals they use in the process.
"We have a supply of natural gas that can last America nearly one hundred years, and my Administration will take every possible action to safely develop this energy" Obama said.
Obama has endorsed the extracting of gas from shale as long it is done environmentally safe. However, shale gas drilling opponents say hydraulic fracturing increases the chances of groundwater contamination.
The Wall Street Journal reported Tuesday a decision was made not to include setting "a natural gas production goal" in Obama's speech.
Alternative Energy Sources
With the U.S. only holding 2 percent of the world's oil reserves, Obama said "oil isn't enough," and urged Congress to renew tax credits targeted at an all-out, all-of-the-above strategy for renewable energy sectors that will develop and produce cleaner and cheaper energy that is full of new job opportunities.
"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," Obama said.
Obama said he would not walk away from the promise of clean energy, saying some technologies don't pan out and some companies fail -- an under-the-radar reference to Solyndra, a solar panel company awarded $535 million in 2009 and filed for bankruptcy less than two years later -- and that it is time to end decades-old subsidies to oil companies.
"It's time to end the taxpayer giveaways to an industry that's rarely been more profitable, and double-down on a clean energy industry that's never been more promising. Pass clean energy tax credits and create these jobs." Obama said.
Jack Gerard, president of The American Petroleum Institute, released a statement Tuesday following the president's speech saying: "Advocating greater energy production but penalizing those who provide that energy is not a sound energy policy, but a contradiction."
Over in Europe, analysis of the president's speech by the British Broadcasting Corporation described it as "drawing battle lines" ahead of the US Presidential Election. The BBC noted that Obama's continued support of clean energy and his call to end subsidies to the oil industry were part of a "whole host of small measures to help the economy that put Republicans on the spot".
French newspaper Le Monde noted that while Obama called on Congress to promote green energy, he himself acknowledged that the political class in Washington was too divided to fight climate change at the moment.
Keystone XL Pipeline
The president did not mention the Keystone XL pipeline during his speech. Last week, the State Department formally recommended Obama deny granting a presidential permit for TransCanada's proposed Keystone XL pipeline, saying the project was not in the national interest.
Supporters say the proposed pipeline would bring oil from Canada's oil sands to U.S. refining centers, creating 20,000 direct jobs and indirectly employ 118,000. This initiative would have also supported Obama's mission to reduce America's dependence on foreign oil. Environmental concerns are considered to be one of the primary reasons behind the state department's decision.
In a preview to the State of the Union speech, Obama posted a video over the weekend on his campaign website to supporters saying he would lay out a blueprint for American energy that can be “fueled by homegrown and alternative energy sources" and help American workers build skills that get "people the education and training they need to take on the jobs of today and tomorrow."
Obama Outlines Training, Education Policies
Related but unrelated, Obama proposed three policies to help educate and train the American workforce by reducing federal aid to colleges and universities that raise tuition too high, doubling the numbers of work-study jobs available for college students, and encouraging new partnerships between businesses and community colleges to train workers for needed jobs.
"It's time to turn our unemployment system into a reemployment system that puts people to work," Obama said.
One such training program between businesses and community colleges exists at Lone Star College in Houston. Funded through a $500,000 state grant, 60 scholarships are currently available covering the full cost of tuition and books for a 6-week, no-cost, technical training course that presents an almost guaranteed opportunity to landing a job in the oil and gas industry after completing the course.
Looking Back Over the Last 3 Years
Eliminating oil tax breaks and investing in alternative "clean energy" sources were Obama's primary energy goals during the 2011 state of the union address. However, limited movement was made toward either goal during the last year.
Democrats included tax breaks in the $1.2 trillion deficit "supercommittee," which collapsed in November. Before that, the Senate's attempts to pass a bill that would nix $21 million in tax breaks from some of the country's largest oil companies over the next decade died in May after a 52-48 vote failed to deliver the 60 votes needed to move the bill forward.
As for investing in alternative energy sources, the government's 2009 approval of a $535 million federal loan to support the development and construction of Solyndra's proprietary solar panels came to an end in September 2011 when the California company filed for bankruptcy. Federal investigators continue today looking into connections between the federal loan and fundraising of up to $100,000 by Solyndra investors for Obama's 2008 presidential campaign.
In 2010, Obama proposed oil and natural gas drilling offshore the U.S. East Coast, weeks before BP's Macondo well leaked nearly 5 million barrels of oil into the Gulf of Mexico in May, which led to a 6-month deepwater offshore drilling moratorium that wasn't lifted until October 2010. The first new deepwater exploration permit, following an overhaul of regulations, was approved in February 2011.
Rigzone Editor Jon Mainwaring contributed to this article from London.
Dow Jones Newswires contributed to this report.
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