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Editorial comment

It is once again budget season and announcements and plans have been difficult to avoid, especially with regards to the Obama Administration’s FY2015 budget proposals. A US$ 3.9 trillion proposal was released on 4th March that seeks to increase the US Department of Energy’s (DOE) funding by 2.6% over the 2014 budget and reduce the Environmental Protection Agency’s (EPA) budget by 3.8% from 2014 enacted levels. The budget is also, in particular, looking to allot US$ 475.5 million for fossil energy research and development and earmarks US$ 2 billion over a 10 year period for the Energy Security Trust to fund and research the development of cost effective, advanced transportation alternatives utilising cleaner fuels and domestically produced natural gas.


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After the release of the above, not all were pleased with the content. American Petroleum Institute (API) President and CEO, Jack Gerard, spoke out immediately saying that ‘the President’s FY2015 budget proposal contains no new ideas in the oil and natural gas sector, recycling earlier calls for tax hikes that would hurt job creation, energy production, and government revenue.’ The US oil and gas industry has the potential to create over 1 million new jobs in the country and increase its government revenue to US$ 127 billion before 2015 according to a Wood Mackenzie study, so implementing fiscal policy that harms the industry surely shouldn’t be on the political agenda. Rex W. Tillerson, ExxonMobil CEO and chairman, has also spoken out in favour of progrowth energy policies saying that they can ‘spur our economy by opening access to American resources, enabling investment and innovation, and by advancing energy and infrastructure projects that employ millions of Americans.’ As the US oil and gas, and energy industry as a whole, demands the opportunity to flourish and exploit its newfound wealth, it is understandable that the FY2015 tender has not been welcomed with open arms.

The American Public Gas Association (APGA) has taken a slightly more balanced view of the budget. Whilst the organisation has called it ‘biased towards investing in renewable energy technologies,’ and said that it ‘remains silent on the role that the direct use of natural gas will play in the coming year,’ positives have been found. The APGA seems pleased that natural gas vehicle (NGV) provisions have been included. The budget includes a tax credit for dedicated medium and heavy duty alternative vehicles which includes compressed natural gas (CNG) and LNG vehicles as well lowering the 24.3 cents/gal. LNG highway excise tax to 14.1 cents/gal. These budget inclusions are hopefully one of the many small steps that need to be taken to utilise the considerable volume of natural gas the US now has at its disposal.

Over the next few months the FY2015 plans will be debated furiously on Capitol Hill as reactions and demands from associations, such as those above, politicians and party members are collated and considered. I for one will be following this with interest, as the US oil and gas sector needs the support and funding to fully realise its potential and be given the chance to make the nation's energy secure.