President Barack Obama has described his energy policy as "all of the above," while his detractors have called it "picking winners and losers."
In practice, current energy policy is driven by conflicting objectives - capitalizing on the emerging boom in domestic oil and gas production and addressing greenhouse gas emissions through the development of renewable energy projects. This article focuses on expected policy changes affecting the oil and gas industry, and how those changes will be felt in the Pacific Northwest.
Specifically, this article examines how regulations pertaining to oil and gas drilling likely will be redefined, and how increased oil and gas production will drive new infrastructure and industrial development in the Pacific Northwest and across the nation.
Increased Federal Oversight
The recent boom in domestic oil and gas production has been widely reported, particularly the controversies surrounding the expanded deployment of hydraulic fracturing (aka "fracking"). Hydraulic fracturing is a long-established practice in oil and gas development. But when combined with recent technological advances in deep horizontal drilling, hydraulic fracturing has allowed for the development of previously inaccessible or uneconomical oil and gas deposits ranging from Pennsylvania to North Dakota to California.
The public debate over fracking reflects two principal tensions. First, oil and gas development historically has been regulated primarily by the states. However, there has been a growing call for increased federal regulation of drilling practices, particularly as production expands into new territories that are unaccustomed to such development. So in many respects, the debate over fracking is a debate over the proper balance between federal and state regulation.
Second, increased domestic oil and gas production has driven down energy prices, positively affected the balance of trade and revived domestic industrial development. While President Obama has reaped the political benefits the oil and gas boom is bringing, he is also facing a rising insurgency from environmental interests within the party ranks.
To date, the Obama Administration has sidestepped the classic tension between economic development and environmental protection by conducting studies and proposing (but generally not finalizing) new regulations. Now that the election is over, regulatory changes will likely materialize in the coming four years.
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