Friends of the U.S. Chamber of Commerce

May 10, 2012
Bloomberg News
Mark Drajem

Huddled around the West Wing table were an unlikely group of co-conspirators with the administration of U.S. President Barack Obama.

One participant had been fighting Obama’s proposal to raise taxes by $24 billion on oil companies; another had complained that a federal labor board is hampering hiring; a third pushed Congress to repeal Obama’s provision to clean up pollution from boilers. On the one issue they were called to discuss on that April day, however, they could rally around the Democratic administration: its recent embrace of natural gas.

For a president who has drawn withering criticism from the energy industry on issues ranging from the Keystone XL pipeline to environmental restrictions on coal-fired power plants, the White House meeting -- and a series of decisions that followed - - illustrate his embrace of one fossil fuel.

While Obama put his initial emphasis as president on boosting solar panels and wind turbines, natural gas is now front and center even as skepticism about hydraulic fracturing, or fracking, is rising among Obama’s environmental allies such as the Sierra Club.

“They’re more responsive, and they’re listening more closely to our views,” Jack Gerard, the president of the American Petroleum Institute in Washington and one of the participants in that meeting, said in an interview. “The energy and economic reality is starting to sink in.”

Won Small Battles

At that April 13 meeting with trade groups representing companies including DuPont Co. (DD) (DD), Noble Energy Inc. (NBL) (NBL) and Caterpillar Inc. (CAT) (CAT), the Obama administration unveiled an interagency task force to coordinate the development of natural gas. And since then industry has won a series of small battles: officials downplayed reports of water pollution from fracking in Wyoming and Pennsylvania; they turned down a request by environmentalists to ban diesel in fracking; and they eased off on two gas-drilling regulations.

In response, Obama has gained two -- not three -- cheers from industry groups, and an issue that may be politically potent this year.

“It took a while for the administration to realize the role it could play,” Michael Walls, vice president of the American Chemistry Council and another person in the Roosevelt Room that day, said in an interview. “What we’ve seen is an evolution in thinking.”

Contributions to Republicans

While Obama is unlikely to gain the full-throated support of the oil and gas industry -- which gave 88 percent of its $22 million in contributions to Republicans in this campaign, according to the Center for Responsive Politics -- gas production is taking off in key electoral battleground states such as Pennsylvania, Ohio and Colorado. And the surge in natural gas production and fall in prices offers Obama a ready rebuttal to Republicans on energy issues.

“This is a counter-argument to those attacking him on gasoline prices,” Bruce Oppenheimer, a professor at Vanderbilt University who studies the politics of energy, said in an interview. “It becomes a real talking point for him when he gets attacked on energy.”

Of a list of nine energy options polled by the University of Texas in March, expanding production of natural gas was seen as the most likely to generate support for a candidate, topping expanding drilling off the Gulf Coast, eliminating the Environmental Protection Agency or backing renewable energy.

The growth in natural gas production from shale has pushed down prices by 50 percent in less than a year and led to a spurt in employment and production of steel, chemicals and fertilizer.

Fracking-Linked Pollution

At the same time, many local residents and activists complain that the process of hydraulic fracturing to free that gas has led to contamination of drinking wells, toxic wastewater seeping into streams and hazardous smog in the air.

The administration is tacking in response to the surprising boom in natural gas, which pollutes less than coal when burned in a power plant, while also trying to mitigate risks, officials say. Obama himself claimed in his State of the Union address this year that the U.S. has a century’s worth of natural gas reserves, and developing that gas could boost employment by 600,000 jobs by the end of the decade.

“We recognize that there is this important potential here, and we want to make sure we get it right,” Heather Zichal, the top White House aide on energy, said in an interview. Given the boom in production, “our thinking has truly evolved, both on the production and utilization side.”

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