Schork Oil Outlook: US Energy Independence By 2030? Not Likely
House Democrats continue their closed door negotiations to win over party members balking at passage of a climate change bill. According to The Hill,“There is broad support within the party on the bill’s overarching goal to cut carbon dioxide and other so-called greenhouse gas emissions by 80 percent over the next four decades. But how you get from here to there has split the Energy and Commerce Energy and Environment Subcommittee, the first congressional panel that will review the bill.”
Reports say as many as 11 Democrats on the 36-member subcommittee are undecided or oppose to the measure. Republicans are nearly unanimous in their opposition. Therefore, any Democrat on the fence will need to be swayed in favor to get the climate change bill to the House floor for a vote.
As highlighted in today’s issue of The Schork Report, the major sticking point is carbon permits; how many should be sold at auction? How many should be given to the utilities for free? There is also concern about forcing the use of renewable energy sources. Utilities claim the cap will lower emissions without the need for forced standards.
As the Democrats power base grows in the Senate (thanks in part to Sen. Arlen Specter’s flipto the Dems last week) the probability of climate legislation passing improves.
Senator Judd Gregg (R) New Hampshire said Monday “You are going to see a major cap-and-trade bill come out of the Senate before this session is over, maybe even this year.”
Appearing on CNBC Gregg said, “It will probably be the most intrusive industrial policy event in the history of our country because it is going to create a massive new approach to how we produce energy in this country and what the costs of energy are for regular consumers.”
It is not just utilities that are worried about taking a hit from a cap-and-trade policy; refiners say they face an even tougher challenge. Late last month, Red Cavaney, ConocoPhillips’s senior vice president of public affairs told the House Energy and Commerce Committee refiners will be hit harder than other manufacturers because they can not pass on the costs. The annual costs for refiners could top $68 billion, according to projections by the U.S. Energy Information Administration.
The US cannot attain energy independence by 2030, because mass production of alternative energy is not viable in the short term. That is the conclusion of oil and gas executives surveyed last month by KPMG LLP’s Global Energy Institute. When the 382 executives polled were asked if they would support cap-and-trade or a carbon tax to reduce CO2 emissions, KPMG found 59% do not support either, 23% would support carbon tax, and 18% would support a cap-and-trade system.
Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.