SOTU: 'American Energy' Key to Boosting U.S. Job Creation

'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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Mr. H. | Jan. 25, 2012
"We have subsidized oil companies for a century. That's long enough. Its time to end the taxpayer giveaways to an industry that's rarely been more profitable..." Our company has been in business for over 60 years. Wev'e never seen a "subsidy". Mailbox money is for farmers, and has been "for a century".

Oilblur | Jan. 25, 2012
One can sure see that it is election time in the US. Politicians will say anything to get elected. Actions should be the benchmark for re-election, not pretty words. The actions of the Obama Administration has been very unfavorable to down right hostile to the US O&G industry as well as many other forms of business. And so "Hope and Change Redux" begins.

steve | Jan. 25, 2012
Obama speaks with fork tongue. He feeds you with one hand and smacks you with the other. Hey let them drill in the Gulf and we will tax them more. Myself personally do not believe that fossil fuels are the sole blame to global warming. I believe this is a scare tactic to create more products to make someone else rich. Many scientist believe the earth is going through another cycle just like it has done in the past. It's a SCAM! It's funny how we pay the price for clean air yet US companies go to China & India and pollute there and ship products back with even greater profits due to cheap labor and no health care cost it is a travesty to the American people. Its free trade but not fair trade. China are they not COMMUNIST financially backed by there government! No wonder we cannot compete. What does our government do for us? Well I guess the did bail out GM, Fanny Mae, Freddie Mac ect...... big biz ...Funny how that works.

bill | Jan. 25, 2012
"open 75 percent of potential offshore oil and natural gas resources for exploration" and allowing drilling and production to actually take place are two entirely different things. Once the E & P companies spend hundreds of millions on the leasing process, the various federal agencies will slow roll or disallow activities just as they have done for decades. The shale boom was going to happen regardless of who occupied 1600 Pennsylvania. It is because of that boom that there are now more new millionaires than ever...thousands of them. The problem for a government overrun with socialist tendencies is that the new millionaires came from the ranks of the working class that held on to the family land or owned a small service business now in demand by the E & P sector. The many thousands may well vote the other way now as they have experienced first hand making the pie bigger rather than slicing it into smaller pieces. Solar and wind is the topic of every political conversation these days. While campaigning the first time, the now president stated that the big oil projects would take ten years to bring to fruition. I wonder if anyone noticed that when Cape Wind off Marthas Vinyard and Nantucket finally gained all the approvals to move forward, the time clock indicated ten years had passed. Lip service such as spouted last, sounds logical and forward leaning to those not associated with the E & P business but for those of us that have spent a lifetime providing energy, it sounds like business as usual in Washington.


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