Energy in the State of the Union: Not a Bad Place to Start

January 25, 2012

Last night, President Barack Obama delivered the State of the Union address to Congress. The speech is being characterized by many in the media as many things: populist in tone, a campaign year positioning speech, and a mild tongue-lashing for Congress. While all of these things may or may not be true, for those of us in the energy world, the speech had some notable energy components worth mentioning.

First, the very fact that energy played a prominent role in the president’s framing of key measures to help build an “America built to last” is important and correct. Affordable and reliable energy has always been a staple of American economic growth and will continue to be so for the foreseeable future. With all of the other issues plaguing government right now, energy could easily have been downgraded to a lesser priority, but it wasn’t.

Second, the president endorsed an “all-of-the-above” approach to energy despite the obvious Republican affiliation with that title. Its mention received one of the strongest, positive responses from Republicans in the entire speech. For the president, this is a dramatic shift from the first, or even second, State of the Union, which had a decidedly more "anti-oil and gas" message. In contrast, the president cited impressive advancements in domestic oil and gas production (whether or not one believes those had much to do with government policy is a different issue) and voiced a desire to advance those improvements within the realm of what is safe and environmentally responsible.

Third, the president rightfully didn’t back down from clean energy investment and efficiency despite the looming controversy over the successes and failures of clean energy–related stimulus spending. This is an important point because proponents of many renewable and energy efficiency policies recognize that serious gains in these areas require some level of government involvement at this time.
Fourth and finally, the president recognized the need to do what we can now on climate change, despite the extreme lack of will in Congress. The president’s suggestion that Congress pass a clean energy standard is not likely to make much headway this year. But for those portions of the population who believe that climate change is one of the biggest threats facing the country and the world, failure to mention its importance regardless of political climate would have been a glaring omission and extremely out of step with Obama administration policy aspirations of the last several years.

Now, the reality of the situation is that there wasn’t much new or different in the president’s speech in terms of actual energy policies. Most of the announcements reflect things that were already in the works, like the administration’s offshore drilling plans, regulating disclosure of hydraulic fracturing fluids used on federal lands, support for a clean energy standard, removal of fossil fuel subsidies, and support for renewable energy tax credits, etc.

It is also true that many of these policies are not supported by Republicans, some Democrats, the oil and gas industry, and environmental groups. Republicans and some Democrats would like to see more access to oil and gas acreage and a streamlined regulatory process. Oil and gas companies don’t like the idea of being singled out for subsidy removal. Some Democrats and environmental groups will be upset at the pro–oil and gas message and disappointed by the lack of a stronger push for climate change and clean energy policies.

Perhaps the biggest difference between the administration and Republicans on energy came through in the Republican rebuttal from Governor Mitch Daniels of Indiana, who challenged the role of government in the energy space and criticized the administration for concrete examples of where government has overstepped its bounds or gone wrong (namely Solyndra, the Keystone XL Pipeline, and energy efficient light bulbs). Energy is just another segment of the economy that is caught in the debate about the virtue of government involvement—a debate that neither side will conclusively win any time soon and will likely need to be hashed out on an issue-by-issue basis.

Given that much of the oil and gas success touted in the speech was the result of private-sector activity and not public-sector actions, it would have been nice for the president to strike a more constructive tone on the need to work with industry to move forward on key issues like the environmental performance of oil and gas development. While clean energy innovation is, indeed, an amazing story to tell, the innovation going on in the oil and gas industry is no less noteworthy. Industry is on the frontlines of finding ways to move forward with responsible oil and gas production, often working closely with state and local regulators and environmental groups, and the federal government should realize and state more forcefully that government and industry are both on the same side in this issue of prudent resource development and have the same amount to gain from finding workable solutions to these challenges.

For those who felt like the administration needed to embrace a more all-encompassing position on energy policy, however, the president’s State of the Union message is a good place to start. The messaging represents a package that gives everyone with a stake in the issue something to trade on—which is what politics and governing are all about.

It is highly unlikely that 2012 is a year for getting much passed through Congress. The president even noted this in his speech and suggested he would continue to move forward where he can without Congress but could be much more effective with Congress’s help. It would be wise, however, to use 2012 to think about viable ways forward on energy in 2013 and beyond, regardless of the outcome of the election. The global and national energy landscape continues to shift in new and interesting ways all the time, and the country would do well to keep trying to position itself to be resilient in the face of these changes. The president’s message provides a starting point to do just that.

Sarah O. Ladislaw is a senior fellow with the Energy and National Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Frank Verrastro is director of the Energy and National Security Program and senior vice president at CSIS.

Commentaries are produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2012 by the Center for Strategic and International Studies. All rights reserved.