US energy future back in Obama's hands

Throughout election 2012, President Obama has promoted an America dependent on a diverse energy portfolio, rather than the volatile global oil market. What does his reelection mean for energy?

In his victory speech early Wednesday morning, the newly-reelected President Obama offered a glimpse of an America "that isn't threatened by the destructive power of a warming planet," served by elected officials who work across the aisle to "[free] ourselves from foreign oil." 

It was as close as Mr. Obama got to broaching global warming in his speech, but it gives analysts and industry insiders enough to speculate over what the 44th president's second term holds for oil, gas and renewables.

The passing expression of environmental concern relieved some climate-change activists frustrated with the candidates' sidestepping of an issue they say deserves foremost attention.

“During his first term, President Obama articulated a vision of America leading the world with a clean energy future that meets the challenge of climate disruption head-on," said Sierra Club Executive Director Michael Brune in a statement Tuesday. "Today, American voters chose to give President Obama both an opportunity and a challenge of huge proportions."  

Bolstered by the memory of hurricane Sandy's fury and free from the burden of reelection, some hope Obama's second term offers an unprecedented chance to make serious inroads on energy independence and climate change. Obama has said he wants to extend the wind industry tax credits set to expire at the end of the year and continue to invest in new green technologies.

But not everyone is convinced.

"There must be a real risk that action on climate change becomes a bargaining chip that Obama trades for GOP support on economic issues, particularly given the widespread judgement that he has spectacularly failed to win over opponents in the past," writes Damian Carrington in The Guardian.

The future of fossil fuels

The oil, gas, and coal industries are left to see exactly what role they'll play in the "all-of-the-above" strategy Obama has touted over the past months.

Crude oil futures fell 2.2 percent Wednesday after Obama's reelection as investors expressed concern over the coming fiscal cliff battle.

Production of crude oil from federal lands jumped from 642 million barrels in 2009 to 739 million barrels in 2010, before dropping back to 646 million barrels in 2011, according to the US Energy Information Administration. Many attribute the decline to supply disruptions like the BP oil spill in the Gulf of Mexico, but some say the drop is indicative of a reluctance by the Obama administration to issue drilling permits.  

Republicans have attacked the Environmental Protection Agency under Obama for imposing stringent regulations on the oil and gas industries that eliminate jobs and impede the country's shift towards independence from foreign oil. 

"As the nation struggles to recover from a lagging economy in the coming year, Americans could also be grappling with a regulatory onslaught from the Obama-EPA that will strangle economic growth, destroy millions of jobs, and dramatically raise the price of goods, the cost of electricity, and the price of gas at the pump," reads an October 2012 report from the Republican minority staff of the US Senate Committee on Environment and Public Works.

The report says Obama has purposely delayed until after the election the implementation of greenhouse gas regulations that could cost Americans more than $300 billion to $400 billion a year.

A decision on Keystone?

The fate of the Keystone XL pipeline may serve as a bellweather for the role traditional fossil fuels will play in Obama's second term.

In January, the president rejected a permit for the $7 billion pipeline, which would connect Canada’s oil sands to American refineries, saying more time was needed to do a complete review of the proposed project's environmental impact.

Since then, the White House has supported the construction of initial phases of the project, from Oklahoma to the Gulf Coast. Some, including Canadian Natural Resources Minister Joe Oliver, believe that Obama will approve the entire project now that the election is behind him.

But Obama has been open about his preference for clean energy over fossil fuels. 

“You can either stand up for the oil companies, or you can stand up for the American people,” Obama said in a March appearance in Nashua, N.H. “You can keep subsidizing a fossil fuel that’s been getting taxpayer dollars for a century, or you can place your bets on a clean-energy future.”

Still, Obama warmed to the "all-of-the-above-approach" in the closing months of the campaign, and some in the industry expressed optimism that oil and gas would continue to play a significant role in his energy policy.

"Americans have made their decision," said American Petroleum Institute President and CEO Jack Gerard in a statement Wednesday. "We look forward to continuing our work with the president and helping him fulfill his campaign promise to increase domestic oil and natural gas production that will create American jobs and strengthen our economy. With both candidates supporting more development of America’s vast oil and natural gas resources, energy is a big winner in this election."