One Year in Play and the IRA Further Compromises the Energy Future

The oil and gas industry has grown accustomed to opposition from multiple fronts. While the political arena has dramatically influenced its direction, the Biden administration has enacted its force of attempted blows. Even at the expense of the American people, the POTUS and his administration have stepped into the energy sector to enact influence. While trying to shore up and support alternate energy, it continues to further alienate oil and gas, the undeniable foundation of the energy supply.

President Biden signed the Inflation Reduction Act into law on August 16, 2022. Charged with countering various issues like the deficit and lowering prescription drug prices, this new law enacted to better Americans’ lives for the past year additionally includes a segment pointed to the energy industry with a focus on energy production while promoting clean energy.

While the past oil and gas industry produced energy in a less-than-acceptable manner of responsibility, the new and improved version continues to suffer from scrutiny and erroneous claims. The industry has made great strides in responding to domestic energy consumption safely and responsibly. Still, opponents continue to disagree and deploy countermeasures resembling the tried-and-true tactic of lack of funding utilized in the corporate world.

When companies desire a new direction and seek to achieve it unnoticed, attention to older programs and funding gets redirected. The result manifests a slow death, and the program dies off as if it were never present. The Biden administration has adopted the same approach to managing the oil and gas industry. Although the industry presence is critical in providing for the growing appetite for domestic energy consumption, the federal government still aims to decimate the industry. It, however, realizes the switch cannot simply be flipped to make oil and gas ride off into the proverbial sunset. Instead, industry killers are planted like sleeper cells in newly published laws, like the IRA, to initiate a slow but complete anhelation of an industry that the country and the world cannot live without.

Creating jobs at the expense of others

According to a White House Fact Sheet, the IRA “creates good paying union jobs that will help reduce emissions across every sector of our economy.” Incentivizing wages through tax credit expansion directed at energy-efficient construction and electric vehicle charging infrastructure plays a prominent role in how the IRA seeks to create those emission-reduction jobs.

The IRA additionally identifies promise and importance in promoting domestic manufacturing for clean energy production. Biden’s law deals with abundant clean energy tax credits, clean hydrogen, nuclear, solar, wind, clean fuels, and carbon capture.

While the IRA paves a path for clean energy jobs, the security of those rooted in traditional oil and gas receive no assurance of longevity. Tax credits and provisions promoted by the IRA steer job security away from hydrocarbon production. With the current political setting, oil and gas companies are rightfully directing attention to clean energy development. Still, they are also refraining from investing in new developments in traditional oil and gas. Instead of robust drilling programs to increase production, companies seek to enhance existing production to increase profits.

As a result, a staggering population that has made oil and gas their careers now sees an uncertain future of industry direction. Decreases in exploration directly influence the loss of jobs. While new forms of energy production demand a growing workforce, many need help transitioning. Others nearing retirement often fail to look marketable because the investment made in training for transition is too costly for an individual who would leave the industry shortly after securing employment.

Playing supply chain favorites 

The same White House Fact Sheet suggests President Biden kept his promise to revitalize domestic manufacturing. Furthering his commitment, the IRA established specific components to fortify this economic growth. Biden’s law was touted as a blueprint to construct supply chains specific to clean energy by incentivizing domestic production, specifically in areas including solar, wind, carbon capture, and clean hydrogen production. Tax incentives were devised to assist manufacturing, specifically for batteries, solar, carbon capture systems, and offshore and wind components.

Regardless of how much progress has been made, the IRA’s premeditated supply chain enhancement selection process only furthers the demonizing waged at traditional oil and gas, a significant pillar of the energy sector that is not going anywhere anytime soon. While alternate energy sources are undoubtedly essential and will play a role in energy supply, they cannot carry the total weight of the endeavor. Hydrocarbons will continue to serve as the foundation for providing energy to U.S. citizens and others around the globe.

The IRA’s failure to offer incentives and fortify fossil fuel supply chains only hurts the American people in the long run. Unpredictable supply chains weaken the ability to provide a stable energy future. While a surplus of batteries and other clean energy components are available, they fail to help fossil fuel production. Alternate energy by design can only support a percentage of the energy supply, so leaving other areas like fossil fuels vulnerable, the energy future looks gloomy and not so bright.

Down the road

“While the Inflation Reduction Act took important steps to help incentivize investment in carbon capture and storage and hydrogen, it fell well short of addressing America’s long-term energy needs. As populations grow and economies expand, the world is going to demand more energy, not less, and the U.S. natural gas and oil industry is focused on meeting this demand while reducing emissions. API will continue to work in support of policies that incentivize investment in this essential sector and allow for the U.S. to share more American energy and innovation with the world,” responded API Executive Vice President and Chief Advocacy Officer Amanda Eversole.

API’s assessment resonates loudly when responding to the growing appetite for energy consumption. While incentives and tax credits are a viable start to solving the crisis ahead, rectifying the problem can only occur if all aspects of the energy supply receive attention. Overlooking and ignoring the significance of fossil fuels will only lead to failure. To truly meet the energy needs of all citizens, each area of energy production will need to be embraced and cultivated. Sacrificing one for the other provides a limited future that falls short of meeting needs and demands, and leaves the people in the dark