What impact will Interior Secretary Sally Jewell have on the future of offshore drilling policy in the United States? During today's OnPoint, David Holt, president of the Consumer Energy Alliance, discusses Jewell's background and influence on energy policy. He also explains how the current level of partisanship in Washington could affect the United States' ability to reach energy self sufficiency.
Monica Trauzzi: Hello, and welcome to On Point. I'm Monica Trauzzi. Joining me today is David Holt, president of the Consumer Energy Alliance. David, it's nice to have you back on the show.
David Holt: Thanks, Monica. Good to be back.
Monica Trauzzi: David, you recently engaged with six governors at the OTC Conference in Houston who have vested interests in expanding offshore drilling. What kind of dialogue do they feel that they're having with the administration, the federal government, on policy?
David Holt: Great question. Consumer Energy Alliance hosted a panel discussion, where we had six governors from Texas, Mississippi, Alabama, South Carolina, North Carolina, and Alaska, plus senior officials from Virginia and Louisiana, that all came together to talk about offshore development, proper stewardship for the resource, revenue sharing, and that federal/state dialogue. I think each of the governors, the general theme was there's so much opportunity available. They want to be good stewards. They want to understand more about their resource base, particularly in the mid-Atlantic and other areas in the Eastern Gulf, Alabama, Mississippi, that are, you know, still off limits. Too much of Washington - I think the governors might characterize too much of Washington is designed - the regulatory officials are designed to find ways to say no, and the governors are looking for ways to say, hey, we want to understand more about our resource base. We want to understand more about what that means for jobs and economic opportunity, because we are really, with the energy revolution that's occurring in this country, we have tremendous opportunity. And these states and these governors and these leaders of these individual states all came together to say, let's do more to find out what we have, and spur economic growth.
Monica Trauzzi: But isn't that what the admin, isn't that what the administration is doing? They're trying to find out more information about these areas, and then look for ways to potentially expand?
David Holt: Well, we hope so. And the governors are coming together, saying, hey, administration, we want to work with you to find ways to get to yes. But the mid-Atlantic states were involved in the lease sale opportunity several years ago that was later removed. Right now, Virginia and other mid-Atlantic states don't really have an opportunity to even lease or develop their offshore until 2020 at the earliest. So let's have that conversation now. Let's work together in partnership between the states and the federal government to develop these resources in a thoughtful, environmentally responsible way.
Monica Trauzzi: Well, and on that point on the environment, how much of the conversation that you had with the governors centered around the environmental impacts of offshore drilling?
David Holt: I think it's front and center. It is, you know, there's no governor that wants to risk tourism, or risk their shoreline. They want to understand, and why they came to the Offshore Technology Conference is to really understand better about the technology, and about the safety equipment that has come online now, and the environmental responsibility that the industry has and is taking, and have the governors push the industry even more to do it the right way. So having that conversation, hearing more directly from industry, hearing more directly from the federal government, working with the new Interior Secretary and others to expand that conversation, to ensure that these states, A, have a seat at the table, that the federal government understands that they clearly have come together in a unified block of governors, and they're inviting other coastal governors to join their coalition to continue to have this conversation.
Monica Trauzzi: So let's talk about the new Interior Secretary. From what you've seen so far from Sally Jewell, how do you anticipate she will weigh in on this conversation on offshore drilling, and what impact will she have?
David Holt: Well, I think what we've seen so far is she's asking the right questions. She was also at the Offshore Technology Conference. I know she's talking to a number of companies, both from an energy efficiency standpoint, conservation, technology, safety, what's happening in the offshore. So she's got a little bit of a learning curve. She has some experience in the oil and gas sector, but it's been, I think, you know, a few years. So I know she's doing a little bit of a listening tour, and learning more from individual companies and others. The governors, my understanding is the OCS governors that came together in Houston have also written a letter to her, asking to engage in a conversation with her, and make themselves available to her for their perspectives. So it remains to be seen a little bit, but it seems to be she's asking the right questions.
Monica Trauzzi: So let's switch gears. There are several critical energy decisions facing this administration, including Keystone XL. Is Keystone as big of a game-changer as many proponents would say it is, or is it kind of more symbolic, in a way?
David Holt: We think it's a game-changer. You know, Canada is our number one energy partner. Keystone would bring a minimum 700,000 barrels a day of Canadian crude to the Gulf of Mexico, where the Gulf refinery system is already optimized to refine that crude. It would also open up the Bakken North Dakota crude that's kind of - has nowhere to go right now. So you're looking at rail opportunities. You're looking at trucking opportunities. This pipeline would allow that crude to easily, safely be transported to the Gulf of Mexico. So it's a game-changer. It matters. But symbolically, let's not discount that, because the Keystone pipeline issue now is going on two and a half years. It is probably the most studied pipeline in US history. The United States has 2.2 million miles of pipeline already traversing our country. This would be by orders of magnitude the safest, most modern pipeline ever built. So it's an interesting political question, I guess, for the administration, and we're looking for the administration to make the right decision here and approve the Keystone pipeline.
Monica Trauzzi: But in terms of energy prices, because this is something we hear a lot about relating to Keystone, it wouldn't really have a material impact, because this oil is going to go right back out onto the global energy market, is it not?
David Holt: Well, I think the majority of this oil is going to be refined into gasoline and diesel products here in the United States, and used to meet our nation's need. If there is excess of diesel, some of that may be exported. But the majority of this oil will go to the US market. The more we are developing our own domestic North American resources, the more we're sending a positive signal to global markets that we're serious about our energy policy. We are still as a nation the number one consumer of oil. We use 25 percent of the world's global crude oil supply on a daily basis. The more we're meeting our own needs from North America, clearly, that's going to put downward pressure on prices.
Monica Trauzzi: And the last time you were on the show, you pitched this idea of energy self-sufficiency by 2020. Considering the current level of partisanship in Congress right now, do you think that that goal is still a possibility?
David Holt: You know, the situation in Washington is always difficult. There's always going to be a partisan gamesmanship, if you will. But, you know, we believe at Consumer Energy Alliance that energy should be a nonpartisan issue. We need it all. Consumer Energy Alliance has members that are the wind manufacturing, solar, nuclear, biofuels, oil, and natural gas. All those energy resources need to be a part of our long-term solution. So finding ways to say yes, let's develop our resources, let's do it in an environmentally responsible way, let's create jobs, let's have this energy renaissance that's occurring ripple throughout the economy to improve overall economic growth and jobs throughout the economy.
Monica Trauzzi: And to that end, we've been talking quite a bit lately on this show about the future of renewable fuels policy in the US. There's some talk in Congress about revising or even revoking the RFS.
David Holt: Mm-hmm.
Monica Trauzzi: What impact do you think renewable fuels are currently having on gas prices, and what's your take on the conversation that's happening in Congress right now about the RFS?
David Holt: I think you're hearing a lot of concern from a lot of different sectors of the economy on the blend wall issue, blending ethanol at 10, 15 volume percent into gasoline. A lot of the automakers don't provide warranties for their vehicles at that level, and most consumers, you know, in the Consumer Energy Alliance orbit aren't even aware that that's an issue. So you go into a gas station and you fill up with gasoline that contains ethanol at 15 volume percent, risking your vehicle warranty, that's something that people need to be aware of. And because we're not yet producing enough advanced technology ethanol, we are now up to that blend wall issue, where we're going to have to start blending ethanol at 15 volume percent. That's something that Congress needs to take a look at.
Monica Trauzzi: All right. We're going to end it right there on that note. Thank you for coming on the show. Nice to see you.
David Holt: Monica, thank you. Good to see you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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