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The Obama administration has impacted the natural gas industry with recent regulatory proposals – Clean Power Plan, U.S. EPA Rule 111(d), and new methane restrictions on natural gas wells. Two colleagues of mine, Todd Snitchler and Steve LaTourette, have written on their effects.

First, Todd discussed the effect of U.S. EPA Rule 111(d) on new power generation in his article “What does 111(d) mean for power generation?” Todd, former Chairman of the Ohio PUCO, noted that “natural gas looks to be a winner under the Clean Power Plan but the jury is still out.”

Then, in last week’s issue of This Week in Washington (published by our subsidiary, McDonald Hopkins Government Strategies), Steve discussed the new methane restrictions on natural gas wells in “Obama takes on natural gas." A former U.S. Congressman, Steve points out that “the increasing reliance on natural gas in the U.S. has divided environmentalists. As a power source, it burns more cleanly than coal and has contributed to a downturn in domestic emissions. But it carries with it concerns about water and air pollution from development and fracking, and many no longer see it as a viable bridge between coal and renewables, despite its availability and low cost.”

It has been difficult over the last six years to know President Barack Obama’s position on fracking and the shale opportunity, and these two recent proposals are case in point. I agree with Todd that natural gas would appear to win under the Clean Power Plan, but the new methane restrictions are a serious blow to the industry. Further, while natural gas appears to win under the Clean Power Plan, the wind and solar industries clean up under the Plan.

The Guardian addressed this topic earlier this month in “Obama's clean power plan will hit shale gas share of electricity,” which drives the point that the Clean Power Plan is skewed towards renewables and against natural gas.  The mechanism within the Plan to favor renewables over natural gas is pollution credits for states that build more renewable generation. The article quotes Marty Durbin, president and CEO of America’s Natural Gas Alliance:

 

“With the reported shift in the plan, we believe the White House is perpetuating the false choice between renewables and natural gas. We don’t have to slow the trend toward gas in order to effectively and economically use renewables.”

 

The U.S. has reaped an economic and strategic bonanza from shale. The Obama administration cannot deny this fact, but it has also been unable to embrace this opportunity because of pressure from environmentalists. And that is why we see the awkward dance from this administration.

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