Two western governors, one a Republican and one a Democrat, sounded similar themes on Thursday as they talked about energy development, public lands, and federal regulation in a discussion with Jack Gerard, president & CEO of the American Petroleum Institute.
Appearing at the Utah Energy Development Summit at the Salt Palace, Gerard, along with Utah Gov. Gary Herbert and Colorado Gov. John Hickenlooper agreed that the nation is witnessing a unique American moment as the United States begins to lead the world in energy development.
Asked what his vision is for energy development, Herbert said his top priority in Utah is keeping the economy strong, and energy development is a big part of that. With a robust economy, everything else goes well, he said, with adequate funding for education, social services, and protecting the environment. “The energy sector is precious to us.” He cited statistics from a new study showing the total economic impact of energy development in Utah is $20.9 billion annually, counting direct, indirect and induced impacts.
Hickenlooper said energy, along with a healthy environment and good education, is key to Colorado’s future. The states need to reduce the friction between business and government by reducing regulation, while maintaining high environmental standards. Colorado seeks to have cleaner air and cleaner water every year, he said, but also a thriving economy. Things like horizontal drilling have helped put true energy independence in America within reach. This is a profound change and results in more jobs, better national security, and a stronger economy. Energy independence is a great thing for Colorado, Utah, and America, Hickenlooper said.
Herbert and Hickenlooper agreed that developing state-based environmental programs, along with working together through organizations like the Western Governors Association, is a better approach than the federal government imposing onerous regulations. Utah and Colorado are both developing programs to protect sage grouse habitat, working with federal agencies, and the process is working well, the governors said.
Hickenlooper said he believes that states, working with all stakeholders, including the federal government, can do a better job of protecting the environment. “I’m optimistic we can reach a resolution on sage grouse habitat without federal intervention,” he said.
Herbert said he’s always concerned about one-size-fits-all mandates from federal government while states have differing situations. “Some want to use endangered species listings to prevent energy development,” he said. “Some people are not genuinely coming to the table.” Utah has a plan that protects 94% of sage grouse habitat, Herbert said. The birds are thriving under Utah’s efforts, he said. “We’ve spent millions of dollars. We have a plan in place and we don’t need the feds to step in,” he said. “Let us execute our plan.”
Regarding the Obama administration’s new 111D Clean Power Plan, which requires states to reduce carbon emissions by 30 percent over several years, Hickenlooper was “cautiously optimistic” that Colorado can comply. He called the regulation a “byzantine way to get where we need to be.” Western states should be able to work in concert to meet the standards, he said. “We all want clean air and a healthy environment, but we don’t want to sacrifice jobs and the economy.”
Herbert said costs and benefits should be carefully considered in environmental regulation. “Some don’t care about the cost, as long as they get the benefit. I’m concerned about the billions of dollars in cost.” He said Utah is positioned to comply with the 111D requirements, but he’s concerned about the future of the coal industry. “Coal is still important,” he said. Baseload electrical supply will need to come from carbon-based fuel and nuclear power for at least the next generation, he said.
In response to a question by Gerard, both Herbert and Hickenlooper said the United States should export hydrocarbons. More export infrastructure is needed and the permitting processes should be expedited.
Highlights of New Study on Energy Impacts on Utah’s Economy
Applied Analysis (“AA”) was retained by the Utah Governor’s Office of Energy Development to review and analyze the economic and fiscal impacts sourced to Utah’s energy sector, including mining development. Utah’s energy sector is a vibrant and material component of the state’s economic and fiscal structure. The industry provides a significant portion of the state’s jobs, personal income for its residents, economic activity and public revenues.
Economic Impacts
Currently, the output of the energy sector totals $20.9 billion when direct, indirect, and induced impacts are considered. In total, this represents 14.8 percent of the state’s gross domestic product. The energy industry directly accounts for 10,673 jobs, and another 29,046 jobs are supported throughout the economy when considering indirect and induced impacts. In total, the energy industry accounts for a total of 39,719 jobs in the State of Utah.
Fiscal Impacts
The energy sector in Utah is also responsible for considerable revenues for state and local governments. In total, approximately $655.6 million was generated by the energy industry by way of taxes, fees, and federal government distributions. With an estimated $15.8 billion in property value, the sector generates approximately $189 million in annual property taxes for state and local governments. Notably, these revenues continued increasing throughout the Great Recession, a time when government revenues were declining and demand for services increased. The energy sector provided increased stability for the state’s finances during a challenging period in history.
