Oil and gas industry group urges end to shutdown, Trump's trade war

A top oil and gas industry official urged the Trump administration and Congress Tuesday to resolve the government shutdown before the energy industry is harmed.

“A longer shutdown is certainly not good for this industry,” said Mike Sommers, the president and CEO of the American Petroleum Institute, the main trade group representing the oil and natural gas industry.

Speaking to reporters ahead of the group's 2018 State of American Energy event in Washington on Tuesday afternoon, Sommers said the industry has not experienced any setbacks so far. Bloomberg reported Tuesday that the Trump administration is still processing oil and gas permits for drilling on federal land and water during the government shutdown.

But the industry fears a prolonged shutdown could slow efforts at the Environmental Protection Agency and Interior Department to roll back environmental regulations.

Sommers also encouraged the Trump administration on Tuesday to resolve its trade dispute with China, and to soften its broader approach to imposing barriers on markets for goods.

He said he is “encouraged” by reports that U.S-China trade talks are making progress.

But he said: “We want this dispute to end quickly.”

Sommers specifically expressed concern about China’s 10 percent tariff on American liquified natural gas, which it imposed in October in retaliation to Trump’s tariffs.

Industry officials have warned that Trump’s trade war with Beijing is threatening to discourage China, the world’s fastest growing LNG market, from signing long-term contracts with American developers.

“China’s retaliatory tariffs carry the risk of losing a vital energy market, which can mean losing American influence where we need it,” Sommers said during his address. “We need to make sure retaliatory tariffs on LNG don't continue and certainly don't expand,” he told reporters.

Sommers added that Trump’s 25 percent steel tariffs are raising costs for energy infrastructure that API says is needed to transport record U.S. production of oil and natural gas.

The oil and gas industry chief focused the core of his annual address to industry officials and federal policymakers on natural gas’s contribution to reducing U.S. carbon emissions, because of its replacement of coal. Natural gas emits half the amount of carbon as coal.

“When it comes to carbon, no nation has reduced emissions more than America has over the last decade,” Sommers said. “Smart policy explains only part of that progress. The single greatest factor is clean natural gas.”

But his claim comes as a new report released Tuesday found that U.S. carbon emissions rose sharply last year after three years of decline, even as a record number of coal plants retired.

Emissions increased by 3.4 percent in 2018 — the second largest annual gain in more than two decades — according to a preliminary estimate of data released Tuesday morning by the Rhodium Group.

The report found U.S. emissions increased in all major sectors: Electricity, transportation, buildings, and industrial.

In the power sector, growing electricity demand was met mostly by natural gas, and not renewables.

Jason Bordoff, founding director of Columbia University Center on Global Energy Policy, said the report’s findings showcase the limitations of the climate change benefits from natural gas replacing coal in power markets.

“Cheap shale gas has benefits by displacing coal,” he wrote in a Twitter post. “But that does NOT make it a climate policy.”

API’s Sommers said the Rhodium report does not capture the full picture of natural gas’ environmental benefits, citing progress he said the industry is making in preventing leaks of methane, a greenhouse gas more potent than carbon dioxide that is the main component of natural gas.

But the group has opposed Obama administration regulations targeting methane leaks and inspections, preferring voluntary efforts by companies.

“The risks of climate change are real. Industrial activity around the globe impacts the climate. And America’s natural gas and oil industry is meeting the climate challenge head-on,” Sommers said.

Source: Washington Examiner