Top U.S. executives on Monday urged federal officials to open more land to oil, gas and coal interests and approve the Keystone XL oil sands pipeline, but avoided taking a stand on more divisive issues like the level of natural gas exports the United States should pursue.
Tapping new supplies of oil and gas should be at the heart of a comprehensive plan that would replace an “incoherent patchwork of subsidies, mandates and regulations” and help grow the economy, said the Business Roundtable, which speaks for chief executives at major U.S. companies.
“Technology, coupled with access to vast resources, could help strengthen America’s’s position as an energy superpower,” Chevron Corp. CEO John Watson said in a call outlining the plan.
Crude output increased more in 2012 than any other time since the domestic oil industry got started in the mid-19th century, according to the Energy Information Administration.
Much of that boom follows innovations such as hydraulic fracturing, or fracking, which has opened large parts of the country to drilling and ushered in a major shift away from coal to cleaner natural gas in electric power generation.
There are still too many restrictions on drilling, the executives said, and officials should expand drilling as one step to end “the decades-long cycle of ad hoc energy policies.”
The Roundtable, which brings together executives from companies as varied as Coca-Cola Co. and J.P. Morgan Chase & Co, agreed that carbon fuels were the key to near-term growth but dodged divisive questions on the level of potential oil and gas exports.
The CEOs have been meeting with lawmakers recently to push the connection between energy development and jobs. The report also comes at a time when President Barack Obama is reshaping his energy team and has vowed to take action on climate change.
Energy companies want to export a larger share of oil and natural gas production while industrial giants like Dow Chemical Co. want cheap domestic energy as a way to boost the manufacturing sector.
“When it comes to exports, we said we like the idea generally of free trade and think it makes sense, but we’ve also included a comment that it is important for a lot of industries in the United States to have those low cost raw materials so we haven’t been overly specific with what we want to do there,” said David Cote, chairman and CEO of Honeywell International Inc.
Instead, Congress and the administration should pursue policies that expand ocean and onshore drilling while “ensuring regulatory and financial predictability.”
The CEOs said that federal authorities should “respect” the traditional role played by states in regulating oil and natural gas activity and added that over-regulating would risk putting some promising fracking areas off-limits.
All Of The Above
The CEOs did not call for mandatory limits on heat-trapping greenhouse gases or pricing carbon emissions, as President Barack Obama had urged in his State of the Union address earlier this month as part of his strategy to combat climate change.
The Roundtable reiterated support for “collective actions that will lead to the reduction of greenhouse gases on a global basis” and an “all of the above” energy approach that includes traditional and alternative production.
It warned that excessive regulation by the Environmental Protection Agency (EPA) and other government bodies would drive production and manufacturing overseas, where environmental protection may be more lax.
“Successful environmental stewardship also requires a global commitment that levels the playing field and ensures that energy is produced in an environmentally responsible manner, regardless of location,” the report said.
While the CEOs said they favored offering tax incentives to help commercialize non-fossil energy, such as renewable and carbon capture and storage, they warned that those subsides must be “finite” and “phased out in a predictable fashion.”
Congress should adopt or extend tax incentives for other renewable fuels and technologies but incentives should be limited to those that are on “a credible path to unsubsidized competitiveness” and can eventually be phased out.
The CEOs recommended expanding the availability of the so-called Master Limited Partnership tax structure used by the fossil fuel industry to renewable energy projects. That would allow certain types of companies to avoid corporate income tax by raising money in the stock market, while having income taxed only at the unit holder level.
That approach, which has bipartisan support, had been introduced in a bill in 2012 by Democratic Senator Chris Coons of Delaware. He may reintroduce the bill this spring.
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