Originally posted at Evidence Soup
Bitter political conflicts threaten growth of the U.S. economy, and energy issues are no exception. I believe a better presentation of certain key evidence could improve people's understanding of natural gas. First I'll highlight some evidence about production. Then I'll provide some hard evidence showing why we need more transparent, efficient regulation.
Natural gas is your friend. Yes, the Gulf oil spill was atrocious. So is overreliance on Saudi oil. But we'll need fossil fuels for the rest of our lives. It's easy to demonize the petroleum industry (I once heard a Prius-driving neighbor say she didn't want to 'give $ to big oil', but evidently 'big automotive' a/k/a Toyota is okay).
Natural gas is a relatively low-cost, clean-burning option. New technologies have grown the U.S. supply, which can keep prices low. Media love doing stories about hydraulic fracturing (fracking), and interviewing ranchers who claim to have been injured. There will be some costs, but the benefits of a reliable, affordable, domestic natural gas supply far outweigh those costs. And we can export the stuff: Apache is being joined by Shell and others with their eyes on the LNG (liquefied natural gas) export prize. (Apache is an innovative company that drilled for natural gas before it was cool. BTW, I met my dear husband when we both worked at Apache years ago.)
Evidence of benefits. A new IHS study, America's New Energy Future, illustrates how natural gas can contribute substantially to the U.S. economy. Among other things, domestic production has cut imports, reduced the balance of payments by $75B, and created 1.5+ million jobs. Daniel Yergin, who knows about such things, wrote a recent Wall Street Journal op/ed piece recapping the report [paywall].
Better presentation, please: The IHS authors follow the traditional practice of listing sources and models used, so there's transparency. What they don't do is provide evidence that's interactive, tangible, and easily digestible; for instance, providing specific findings linked to supporting evidence.
Evidence about environmental effects is unclear. Misinformation abounds, and it's hard to know the truth about natural gas. Stereotypical stakeholders include 1) Energy producers who sponsor extensive PR campaigns without producing specific evidence. 2) Granola-munching environmental regulators who cynically assume everyone in industry is a lying, polluting cheat - and have no grasp of economic costs/benefits. 3) Regulators who cozy up to industry in hopes of landing lucrative jobs. 4) Producers who nonchalantly drill, spill, twirl their pencil-thin mustaches, and flee with fistfuls of dollars.
Regulators aren't such good friends after all. Drilling for gas and constructing LNG facilities requires billion-dollar investments and years of planning. An opaque, inefficient regulatory environment benefits no one (except empire-building bureaucrats and attorneys).
Evidence about requirements should be more clear. Do we want to protect the environment, improve efficiency, and produce energy responsibly? If so, why not have a one-stop system where regulators identify the rules in plain English, and producers respond with transparent evidence of compliance? (There are some plain-language requirements for the federal government, but this goes beyond that.) People should collaborate on compliance plans proactively, rather than through enforcement actions in an atmosphere of mistrust.
Compliance costs are hidden evidence. Here's what it was like for me, working in environmental compliance for a natural gas producer/processor. The management teams I worked with invested heavily in following the rules, permitting everything properly, etc. But it was very difficult to know what the regulations required (just ask anyone trying to open a restaurant). Federal, state, and local agencies overlap, and sometimes protect their turf more than the environment. Some play "gotcha!" when a rule is violated, even if you were making a good-faith effort to comply. (See specific examples at the end of this post.*)
Environmental evidence should be balanced against evidence of benefits. Producers must be held to strict standards that protect groundwater and human health. But rules should balance the interests of landowners, producers, and the general public, protecting our economy and national security while also protecting the environment. Too often, the big picture is blocked by a NIMBY chorus. The U.S. sometimes requires agencies to weigh costs against benefits, though it's nearly impossible to depoliticize rulemaking (my PhD dissertation studied the role of cost-benefit analysis and evidence in federal regulations under Executive Order 12291; my findings were not encouraging).
*Evidence of compliance costs is hidden, but real. I should know: I've been there. These are small examples, but illustrate the unproductive way we regulate energy producers. True story: My team was once told by a state regulatory staffer we had all the air quality permits we needed, only to be confronted by the federal Environmental Protection Agency (EPA) and threatened with multi-million dollar fines.
Another true story: Many regulators won't put anything in writing until they want to punish you for something. I once spoke to a state agency about a specific reporting requirement, and they said (over the telephone) it didn't apply. Shortly thereafter, the same agency told a colleague he was required to prepare a report for a separate property; he did so at substantial expense. Later he was told it wasn't necessary, but no one would own up to having previously required it. How does this protect the environment?
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