Wednesday, September 1, 2010

Howard Dean, Ed Gillespie agree: Energy policy needed

According to the Ernst & Young Business Risk Report 2010, the country's uncertain energy policy is the No. 1 risk to the oil and gas industry. Actually, the move wasn't a monumental one as this risk ranked No. 2 in the same survey last year, topped only by "access to reserves: political constraints and competition for proven reserves."

I see a theme here.

Ernst & Young points to the "vague outcome" of the Copenhagen climate conference in December 2009 as one factor. Yet another: the energy policy decisions further complicated by the tragic Gulf of Mexico oil spill.

Political factors that might limit or prevent access to reserves and an uncertain energy policy that hinders the ability of oil and gas companies to plan, invest, and respond to the laws of supply and demand have a tight grip around the industry that provides the country with its energy needs.

At Ernst & Young's Energy Executive Insight Session recently, I had the opportunity to hear a debate between Howard Dean, Former Chairman of the Democratic National Committee, and Ed Gillespie, Former Chairman of the Republican National Committee.

As politicians do, each stated their case for victory in the coming elections. However, both agreed on one thing: the need for a cohesive and comprehensive energy policy.

Governor Dean believes the country hasn't had an effective energy policy in 20 years, partly because the topic isn't well understood in Washington, partly because the industry itself isn't unified.

Different constituencies – wildcatters, super majors, enhanced recovery companies – are working against each other instead of together. Dean noted the coal industry as one example. "The biggest opposition of the oil and gas industry outside of the government is the coal industry," said Dean, referring specifically to shale development in the unconventional resources space.

Will natural gas be a bridge fuel because of its clean-burning properties and plentiful supply? Gillespie, who does work with the Natural Gas Alliance, thinks so. "Natural gas is looming in a big way in the energy debate," he said. "It's inevitable we'll see more reliance on natural gas – maybe in our autos," he continued.

While Dean disagrees about natural gas in the automobile industry – he feels electricity has leapfrogged the fuel in that regard – broadly speaking, he sees the US as having the ability to use all forms of energy. The question is in what order and how do we do it? The technology is there, but the marketplace is distorted. This is where an energy policy is needed.

"No matter what happens with the election, the parties will have to decide they WANT to pass something," commented Dean.

Can the energy industry to come together and write an energy plan?

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