“All this will create jobs.”
That was Secretary of Energy Dan Brouillette at the recent 2020 Natural Gas Summit, hosted by the Department of Energy at its headquarters in Washington, D.C. in late September, talking about the re-emergence of the oil and gas sector in the coming months and years. Energy leaders, as well as global LNG market representatives, were on hand, virtually, to hear and to share updates, projections and laments on today’s energy landscape. Featuring Director of the White House National Economic Council Larry Kudlow, the seminar reiterated the importance of domestic natural gas production to America’s economy, specifically as it related to job growth, the abundance and reliability of natural gas and its affordability, as well as the deleterious effects of government interference and regulation.
Brouillette had two main points he wanted to make at the outset: The first was that once the COVID-19 pandemic is over, the resurgence of the natural gas industry – which he saw happening even today – would provide benefits within the sector, which would then provide a ripple throughout the larger economy.
The second, in touting what he said was the Trump Administration’s support of the natural gas industry in America, was to caution against the long reach of environmentalists and over-eager politicians.
“By not building out infrastructure, we’re not allowing Americans to access cheap energy,” he said, citing two examples of such over-regulation, namely, “The pipeline from Marcellus to New England, which can’t get done, and in California, where the lights are going off.”
Considering the devastation of COVID-19, combined with the worldwide decrease in demand and oversupply, Kudlow admitted the industry has taken quite a beating of late, reminding those present about the time in April when oil futures plunged to below zero. That dynamic – a one-day event – nevertheless was indicative of the devastation.
According to the Bureau of Labor, in 2019 the oil and gas industry employed approximately 470,000 people. Since then, more than 100,000 have been lost, including 44,000 from oil-field service companies, 23,00 from oil and gas drilling, and approximately 16,000 from pipeline companies. More specifically, according to EnergyinDepth, an independent petroleum association, in 2017 natural gas-production related employment accounted for about 300,000 jobs in America.
The summit was ostensibly non-partisan, though there were no environmentalists or regulatory hawks in attendance. The theme of the summit was the administration’s interest, intercession and commitment on behalf the industry – a claim and pedigree Kudlow emphasized when he alluded to his former life as the host of CNBC’s “Kudlow and Company.”
“I used to start my show with, ‘Drill, drill, drill,’” he said.
“President Trump,” he continued, “has changed the game, is laser focused on energy, and loves cheap energy.”
The downturn notwithstanding, Kudlow struck an optimistic tone about not only the future, but even the present.
“Jobs numbers are very good,” he said. “We’re snapping back,” adding that the “virus remains under control” and “we got through the summer.”
For his part, Mike Sommers, president of the American Petroleum Institute, admitted the industry, at the moment, is still hurting, but wanted to remind the assembled of the importance of the energy sector on the overall economy, as, he said, it has always been.
“The foundation of economic recovery is energy,” he said.
The ‘Other Team’
Sommers went on to say that while other costs have gone up for other aspects of life – food, housing, transportation, as some examples – household energy costs have gone down. He gave the administration much of the credit for this and took sharp aim at those who are advocating a slower or even no-growth future in hydrocarbons.
“We need,” he said, “to get infrastructure. Activists, who can’t get in the way of supply or demand side, have tried to stand in the way by ‘stepping on the hose’ in the middle.”
Kudlow, too, referred to “activists” in his remarks, as well, using a sports analogy to criticize those who are against unleashing the industry to its fullest potential.
“I have a lot of friends on the other side,” he said on more than one occasion, “people I have interviewed thousands of times, but I don’t understand – I really don’t – people on other team who want to stop frac’ing and fossil fuels, for it will do great harm to the economy and to jobs. 180 million Americans are using natural gas right now. Those against natural gas are hurting people who can least afford it.”
Karen Harbert, president and CEO of the American Gas Association, doubled down on over-regulation, arguing the Trump Administration should stop states’ abilities to prohibit pipelines, which, she believes, are causing delays in providing affordable energy to consumers.
It was a theme, as well, picked up by Kathleen Sgamma, president of the Western Energy Alliance, representing independent producers, who was adamant not only about those against the industry but their reasons for being so.
“Trying to replace oil, gas, coal with renewable is a worthwhile goal, but it’s not reality,” adding that the transition to cleaner and more efficient energy was done through market economics, not “heavy-handed government.”
The “other team,” she said, employing air quotes, “is not interested in clean energy, but government control. We have cleaner air here than in Europe.”
Natural Gas Ascendant?
Returning to the theme on the summit, Kudlow then asked Charlie Joyce, chairman of the Board of Otis Eastern, whether natural gas will eventually be the “king and queen” of energy?
“It has to be,” Joyce said. “The others don’t have the staying power. We’re going to have find other sources than sun and wind. I don’t see anything replacing natural gas.”
On cars powered by natural gas, which participants said was already happening, the matter of electric cars came up. Kudlow shared his doubt with Sherman Knight, the president and chief commercial officer of Competitive Power Ventures: “It’s hard to believe,” said Kudlow, “electric cars will take over in a couple of years.”
Knight responded that the timing and number of electric cars as a force in transportation was tough to predict, thus would not give Kudlow a specific year we might see significant inroads. Overall, Knight did strike a more conciliatory tone about what has to happen next, both from a policy and perception standpoint, including:
- To reduce emissions, decarbonize the economy and/or build more renewable generation, natural gas must be part of the energy mix
- To change the public’s negative perception of natural gas and restore confidence that natural gas production, transportation and consumption can be done ethically, sustainably and economically
- To increase access for gas resources to reach power generation and retail customers is important for ensuring more renewables, lower carbon footprint and lower costs of electricity and heating to consumers
- To ensure a strong, but predictable review and approval process is essential
Whatever the transition looks like to a more renewable energy landscape, and specifically the role natural gas will play in it all, Brouillette said that the country will not be getting there anytime soon and that it was wrong for states to adopt a 100-percent renewable energy policy. He referred, as an example, to last fall’s rolling blackouts in California and its connection to the state’s decision earlier in 2019 to move away from fossil fuels, as well as its future plan to buy energy from other states, like Arizona and Nevada in high peak-energy times.
“The technology doesn’t exist today,” he said of states desires to go completely renewable.
Brouillette used as an example the case of his two daughters, and how one wanted to decrease her carbon footprint by giving up her own vehicle and sharing a family member’s.
“She says she’ll just borrow her sister’s, which will work fine until they both need the car,” he said.