Consumer Energy Alliance’s Whatley discusses details of an all-of the-above strategy

Monica Trauzzi: Hello and welcome to OnPoint. I’m Monica Trauzzi. Joining me today is Michael Whatley, executive vice president of the Consumer Energy Alliance. Michael, thanks for joining me today.

Michael Whatley: Thank you so much for having us on.

Monica Trauzzi: Michael, lots of talk in Washington about an all-of-the-above approach to energy policy. What does that actually mean and how can the U.S. get there?

Michael Whatley: Well, you know, what it means is that we do need to have advances in the production and consumption of alternative and renewable fuels and we certainly agree with the president on the need for that. But it also has to take into account that, you know, coal for example, is generating more than 50 percent of the electricity we use. Oil, gasoline and diesel are going to be the bedrock fuels that are going to power the transportation system for quite a while. Natural gas is obviously a key critical factor for anything that we’re going to be doing going forward. So, you know, when we say that we need it all, we really do need to keep all of these fuel types on the table and we need to get away from conversations that have to do with either or.

Monica Trauzzi: And aren’t all these things items that the president mentioned in his State of the Union address, in particular on natural gas and offshore drilling for example?

Michael Whatley: They certainly are, you know, and we were excited to hear the president talk about the need for all of these different fuel types, but at the same time, you know, there were a number of things that were mentioned in the speech that gave us some cause for concern and then, frankly, there were some things that were left out of the speech that gave us cause for concern as well. You know, for example, Keystone XL was not discussed at all and we think that that’s a huge issue that needs to be put on the table, the fact that we had gasoline prices at record annual average highs in 2011, diesel prices as well. They’re projected to be even higher this year. We feel that there needs to be a tremendous focus on domestic and North American energy production that we’re not seeing out of the administration at this point. You know, with electricity prices and reliability, the president has continued to focus on the need for renewable fuels and expansion there. But the EPA has been moving forward with regulations that are putting multiple coal-fired power plants at risk that are going to threaten the reliability of the grid. We think that needs to be addressed as well. And on natural gas, as excited as the president was when he was talking about it, we’ve seen a fairly concerted effort by EPA and other departments in the administration to really crack down on hydraulic fracturing, which has brought about that revolution.

Monica Trauzzi: All right, so much of what the administration has done here in terms of these regulations relates directly to the environmental impacts that these sources of energy are having. How high on the list for you is the environment then when you’re considering energy policy?

Michael Whatley: Well, it’s tremendously important you know, but I think that there is a fallacy that is put forward by the environmental community that we can either have domestic energy production or we can protect the environment. We strongly disagree with that view. You know, we can have responsible energy development that is going to protect the environment —

Monica Trauzzi: But isn’t that what these regulations are trying to do, they’re trying to make it responsible?

Michael Whatley: Well, there is a fundamental tension that’s going to be in it and, you know, the regulations, you know, that we’re looking at are obviously designed to protect the environment. But EPA has had — made no bones about the fact that they view their mission, in terms of setting up a regulatory regime, is to phase out coal. And, frankly, the renewable and alternative energy sources that we’re looking at in this country are not ready to take on a mainstream, base load function and be able to replace coal. So until that happens, if we’re phasing out coal too fast, then we’re going to have reliability issues.

Monica Trauzzi: OK, on Keystone XL, it’s a big issue for Republicans right now. If the goal is to provide maximum benefits for Americans, why would we build a pipeline whose energy is not necessarily guaranteed to go back to Americans?

Michael Whatley: Well, the simple fact of the matter is that we import a tremendous amount of oil from places all around the world right now. Canada is our biggest supporter. But the sources that are feeding the refineries in the Gulf Coast complex, Mexico and Venezuela, those sources are turning down. We’re getting less from them every day and those are going to have to be replaced and we would feel that those should be better replaced by Canadian imports than imports from the Middle East. We also feel that the Balkan Interconnect and being able to advance development in that play is very critical and right now it’s absolutely land constrained. So the question isn’t are we going to import oil, because unfortunately we are going to continue to rely on imports. The question is where are they going to come from?

Monica Trauzzi: So, from your perspective, if this is a serious goal of the administration to advance this all-of-the-above approach to energy policy, then what do we need to see from the administration and from Congress in the short term?

Michael Whatley: Well, I think what we need to see is an increased focus on domestic oil and gas production. What we’ve got is the Gulf of Mexico is still not producing anywhere near the levels that it was pre-Macondo. We have Keystone XL, which has been punted for, you know, at least another year or so. The president’s — the Department of Interior’s five-year plan that they’re moving forward on right now does not open up any new areas in the mid-Atlantic or the south Atlantic. It has reduced lease sales in Alaska. So we need to bring these on board. The administration needs to move aggressively to open up the resources that we have in Alaska and make sure —

Monica Trauzzi: And the administration did indicate — the president indicated that that’s what he would like to do.

Michael Whatley: Yes and we really hope that the administration is going to follow, you know, the speech and actually move forward on those things. Because what we’ve seen over the last three years is rhetoric that has been focused on, you know, announcing the need for these things to happen, but what we’ve seen in regulation and we’ve seen in administrative action has been 180° from that.

Monica Trauzzi: All right, we’ll end it there. Thank you for coming on the show.

Michael Whatley: Thank you.

Monica Trauzzi: And thanks for watching. We’ll see you back here tomorrow.

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