Watching Government Looking ahead

Aug. 14, 1995
With Patrick Crow from Washington, D.C. The U.S. oil industry has looked at its future, and it clearly is worried. Energy Sec. Hazel O'Leary had asked her industry advisory group, the National Petroleum Council, to examine issues and policies that will most likely shape the industry during the next 25 years. NPC received a draft report last week. The "future issues" study predicted the U.S. and the world will still be using large amounts of oil and gas in 2020, not significantly different

The U.S. oil industry has looked at its future, and it clearly is worried.

Energy Sec. Hazel O'Leary had asked her industry advisory group, the National Petroleum Council, to examine issues and policies that will most likely shape the industry during the next 25 years. NPC received a draft report last week.

The "future issues" study predicted the U.S. and the world will still be using large amounts of oil and gas in 2020, not significantly different from the more than 60% share of world energy consumption those fuels represent today.

What's needed

The study said, "The oil and gas industry can most successfully carry out its mission and realize its value to the nation by responding swiftly to market forces.

"Balancing this with the need to meet environmental and other societal goals, and given the inherent uncertainties of our energy future, a more flexible and responsive policy and regulatory framework is required."

The study said the government should encourage responsible development of U.S. oil and gas resources and reassess legislative and regulatory constraints.

It urged the nation to spread its oil import sources among as many countries as possible.

It recommended the government use sound science during legislative, regulatory, and judicial processes. Also, cost-benefit analyses should ensure that regulatory decisions are made with full awareness of the tradeoffs involved.

When regulatory interventions are necessary, government should set targets and allow industry to achieve those goals in the most cost effective manner.

American citizens should be better educated regarding the consequences of energy decisions, and a forum should be created for that purpose.

Industry and government should improve and expand communications with stakeholders outside the industry to better resolve environmental and other disputes.

And it said government should improve its coordination of energy policies.

"Policy decisions that affect the oil and gas industry are made in many different departments and agencies of the federal government," the study said. Improved coordination would provide an opportunity to better resolve conflicting policies with a fuller understanding of energy's role in the economy and of the impact of policy measures on the industry."

The study suggested the administration form a working group of high level government officials from departments with oil and gas responsibilities.

Legal costs

Leadership efforts may have other benefits as well, the study said.

"Legal services have become a significant expense for oil and gas companies, and much of the expenditure goes to correct or clarify deficiencies in regulations.

"The government and various stakeholder groups also consume extensive legal and other resources on these matters. Part of the motivation for improving the resolution process is to decrease as much as possible the need to resolve issues in the courts.

"All parties agree that they and the country in this increasingly competitive world can no longer afford protracted resolution of policy matters in the courts."

Copyright 1995 Oil & Gas Journal. All Rights Reserved.