API's Gerard hopes Obama's speech heralds improved relations

The US oil and gas industry hopes President Barack Obama’s Jan. 27 State of the Union address will begin a shift of administration-industry relations from confrontation to cooperation, American Petroleum Institute Pres. Jack N. Gerard said.

An update to this story was added on Jan. 27.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Jan. 26 -- The US oil and gas industry hopes President Barack Obama’s Jan. 27 State of the Union address will begin a shift of administration-industry relations from confrontation to cooperation, American Petroleum Institute Pres. Jack N. Gerard said.

Gerard told reporters in a Jan. 26 teleconference that he expects the president to focus on job creation and on reducing economic pressures on the middle class, and that the US oil and gas industry strongly supports both goals.

“What we seek is not an earmark or stimulus, merely an opportunity to develop the vast US oil and gas resources,” Gerard continued. “We specifically do not want the pattern we’ve seen over the past year from the Department of the Interior when they’ve lessened our access to domestic resources. In the past year, since Secretary [Ken] Salazar has taken office, the total federal oil and gas leasing program has shrunk to the lowest level on record.”

He noted that in New Mexico, where 8% of the total employment is tied to oil and gas and 40% of the state’s revenue comes from industry and related activity, the amount of federal leasing dropped 58% from 2008 to 2009. “We believe the best approach is to develop a sound oil and gas policy that recognizes the potential for green job creation, but also the potential for oil and gas development across the United States,” he said.

Responding to reports that Salazar plans to announce on Jan. 28 that the US Minerals Management Service will begin to take public comments on a proposed Atlantic Outer Continental Shelf seismic study, Gerard said, “This has been a no-brainer. Industry has wanted to conduct these studies for some time, and we’re thrilled the decision has been made. We believe it’s long overdue.”

‘Not as constructive’
Gerard also acknowledged that relations between the secretary and some oil and gas groups have become contentious. “We would greatly appreciate the opportunity to have better communications with him,” he said. “We feel at this time they’re not as constructive or productive as they could be, and we hope that the president’s speech tomorrow night will begin a change toward having an open and honest dialogue.”

A spokeswoman for Salazar said later in the day that Gerard’s statements about 2009 federal oil and gas development relative to 2008 were inaccurate. “Oil and gas production on federal lands and waters is up—not down—from 2008, and under Secretary Salazar’s leadership the department has offered more than 56 million additional acres for development,” she said in a statement. “[DOI’s] agencies will continue to promote oil and gas development in the right ways, in the right places, and with a fair return for the American taxpayer, regardless of the political spears Mr. Gerard may throw on any given day.”

Gerard also said he hopes that the administration’s fiscal 2011 federal budget request, when it emerges in a few more weeks, won’t have the kind of onerous oil and gas taxes from a year earlier and which fortunately were not included in the final 2010 budget that emerged from Congress.

“Previous proposals have assumed we have too much energy development in the United States. Clearly, no one could believe that now,” said Gerard. “We hope the dialogue over the past year will soften some of the rhetoric so we can get down to the realities of creating jobs and improving the national economy. Energy, over time, has become a partisan issue. It should not be. It is something that everyone, regardless of political persuasion, should support.”

Gerard said climate-change bills that passed the full US House and the Senate Environment and Public Works Committee in 2009 were a false start. “We believe that we need to consider the reality of the energy sources we have today, and what it will take to fuel the economy today and into the future,” Gerard said. “Natural gas is one example. It was not considered in the first proposals. We believe the debate has to mature, and the prospects aren’t likely that there will be a climate bill this year. A comprehensive energy bill looks more likely.”

He also said he doesn’t expect the US Supreme Court’s recent decision concerning corporate support of political campaigns to result in a flood of oil and gas industry contributions. “We believe that the best approach in public policy development is to have a good fact-based conversation. We will continue our outreach and education efforts across the country in the same way we always have,” Gerard said.

Contact Nick Snow at nicks@pennwell.com.

More in Government