Houston, the U.S. need leadership during a period of low oil prices, layoffs
By Ed Hirs, University of Houston
The candidates in this year’s fractious presidential campaign agree about one thing: There’s universal silence on energy policy. And even if they include a wish list of energy proposals on their campaign websites, no one offers details.
That’s too bad, because Houston and the United States desperately need leadership at a time when stubbornly low oil prices, layoffs at home and concerns about the global economy are competing with worries about climate change. President Barack Obama has proposed more subsidies for renewable energy, eliminating subsidies and credits for oil and natural gas production, and a $10.25-per-barrel tax on oil.
The oil tax won’t happen no matter who is elected, but our next president will face hard decisions. Among them: Exports of oil and natural gas have been approved, but we continue to import much of our oil, so oil exports are largely irrelevant. Restrictions on new pipelines mean that parts of the country – including the Northeast – pay high prices for imported liquefied natural gas when our own cheaper shale gas fields are just a few hundred miles away. Concern about the carbon impact has caused financial markets to write off coal; we need an energy policy to spark the retirement or retrofitting of our remaining coal plants.
And those are just the decisions looming on hydrocarbons. Nuclear energy can’t be off the table if we want a lower-carbon future, but the public mostly knows about nuclear power via “The Simpsons.” Overcoming a cartoon character to build support for fourth-generation reactors and safer fuels, including Thorium, will be tough.
It will take an “Apollo Program” for solar and wind energy if renewables are to take over electricity generation in the United States, with researchers solving problems related to re-engineering the grid, energy storage, intermittency, distributed generation and transmission. It will be expensive, and the president will have to lead that push.
None of the presidential candidates has offered a blueprint for any of those priorities. Republican front-runner Donald Trump and Ohio Gov. John Kasich don’t even mention energy on their websites. Even Ted Cruz has offered only President Obama’s “all of the above” strategy with little more than platitudes: slashing regulations, approving the Keystone XL Pipeline and taking advantage of nature’s bounty. Marco Rubio offers similar suggestions but has recently brought in oilman, Larry Nichols, as his energy advisor.
Ben Carson calls for dropping all subsidies, incentives and mandates, while Democratic candidates Hillary Clinton and Bernie Sanders call for more renewable energy and reduced reliance on petroleum, with few specifics.
But platitudes and slogans won’t help the more than 200,000 people who have lost their jobs in the U.S. oil industry since prices began dropping, nor will they replace the $200 billion cut from the nation’s GDP due to lower revenues and less drilling activity. The supposed consumer gain from lower gasoline prices is actually a transfer of wealth from one neighbor to another.
Specific policies could help. My colleagues and I demonstrated the costs and benefits of, and called for the return to, import restrictions to reduce the nation’s reliance on foreign crude; while an import quota imposed by President Dwight Eisenhower was in effect, U.S. crude prices were double to world price and a newly formed OPEC writhed. That would bring U.S. workers back to the oil patch and encourage conservation, including deployment of new technology to improve recovery from existing wells.
Removing local and economic impediments to constructing new pipelines would not only be good for Houston’s midstream companies, it would also ensure that residents in Boston aren’t paying for natural gas comparable to prices in Tokyo, with is totally dependent upon imported (and far more costly) liquefied natural gas. Sensible regulations and federal financing could boost the South Texas Nuclear Project and others around the country.
Those changes are important for Houston’s energy industry, but they are also important for Americans everywhere. And they will require leadership, because they won’t be cheap – higher gasoline prices, higher electricity prices, higher taxes. But the cost of business as usual is far larger: environmental damage from coal-fired power plant emissions, and the $4.4 trillion, 6,500 American lives and more than 55,000 wounded in an effort to defend our “allies” in the Middle East.
The question is, Who among the candidates can lead the nation to address these challenges? So far, no one in either party has stepped up.
Ed Hirs is a University of Houston energy fellow and energy economist at UH, and is managing director of Hillhouse Resources, LLC.
This article first appeared in the Houston Chronicle on Feb. 24, 2016.