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article imageU.S. Energy Industry Is Wary Of Obama

By Dave Giza     Dec 23, 2008 in Environment
Although many people and organizations within the U.S. energy industry have publicly praised President-elect Barack Obama's choices to head the EPA and DOE, respectively; things will never be the same for the oil, coal and nuclear sectors.
President-elect Barack Obama hasn't appointed a single person from the dirty energy sector for his energy team. I'm referring to the oil, coal and nuclear energy industries. This has these industries concerned albeit their statements to the contrary. reports a quote from the Nuclear Energy Institute's Marvin Fertel commenting on Obama's appointment of Energy Secretary Steven Chu: ''Dr. Chu is an internationally renowned physicist...acclaimed for his technical competence.'' Dr. Chu is a former Berkeley professor and physicist.
Obama selected Lisa Jackson to head the Environmental Protection Agency. Nancy Sutley is going to head the Council on Environmental Quality. They believe in regulating energy production. A new office that will oversee energy and its relationship to the world's climate will be run by Carol Browner who has strong ties to the environmental community within the United States. reports that the Obama environmental team is united on one proposition: ''Everyone on the team wants to cap greenhouse gases-a costly proposition for a country that uses fossil fuel for 85% of its energy-and move to more renewable sources of fuel.''
If a mandatory cap on carbon dioxide emissions is approved by Congress and signed by President Obama, the renewable energy industry will benefit immensely because coal power will become more costly. Currently, coal is cheap and provides about 50 percent of the nation's electricity.
Coal could take a huge hit because it emits more carbon dioxide per unit than any other fuel source. New technologies such as capturing the carbon dioxide and burying it underground haven't been tested on a large scale. Trying to gasify coal power is expensive.
Dr. Chu has called coal his ''worst nightmare'' in the past as well. quotes Christopher Ruppel who is an energy analyst at Execution LLC. This group is a brokerage and research firm for mutual and hedge fund investors who want to invest in energy-related companies. He predicts a bleak future for coal in an upcoming Obama administration: ''The target this time is coal. The consensus is this administration does not want any new coal plants.'' However, Ruppel also believes that the group that Obama has assembled is pragmatic and won't do anything drastic or draconian to further cripple the already fragile economy. He doesn't believe that the Obama team will push for carbon restrictions that are too tight or fast and won't direct the EPA to shut down coal plants.
Others believe that Obama will be lax regarding the regulation of coal-fired power plants. After all, coal is the cheapest energy source next to conservation. The coal mining industry employs more than 500,000 people in a direct and indirect fashion.
Obama has repeatedly stated that his main focus is on the economy. reports a quote from Lasan Johong who is a utility analyst for RBC Capital Markets reflecting on the consequences of overregulating the energy industry in the dire economic situation: ''In the near term, there's not going to be much of a change in the energy policy of the U.S. The overwhelming concern is the economy. Everything [Obama] wants to do costs money, and that has to come out of the pocket of consumers.''
Regarding nuclear power, Republican rival John McCain wanted to build 50 new power plants. Obama said during the presidential campaign that nuclear energy has a role in the nation's energy future but also pointed to its high costs and concerns about properly disposing waste. Dr. Chu's most recent job was head of the Lawrence Berkeley National Lab, which began as one of the government's premier nuclear research facilities and still does fusion and radiation research. Chu signed a paper last summer along with the heads of other national energy labs, extolling the importance of nuclear power's role for the U.S. and the world.
Oil may remain unscathed due to falling petroleum prices. However, Obama promised a windfalls profits tax on oil companies if the prices rose over $80 a barrel. Carol Browner was head of the EPA during the Clinton administration and she imposed clean air regulations on oil refining.
Natural gas would be a big winner if the capping of carbon dioxide emissions is passed. Natural gas burns cleaner than coal and can provide much more power than any renewable source. Utilities and companies will look toward renewable energy sources if there is a cap on carbon dioxide emissions for various industries.
Obama will be focusing on using energy much more efficiently than now. This will be a major theme of his economic stimulus package. Obama's long term energy goals are replacing coal with wind and solar power. He wants solar panels mounted on the roofs of all major buildings.
Kevin Book is a senior energy analyst at the investment bank of Friedman, Billings and Ramsey. quotes him describing parts of Obama's long-term energy plan: ''Electric cars will become widespread, and car batteries will be used to store excess electricity or as a source for more electricity when it's needed. A computerized electrical grid will handle the electric flow, drawing it from batteries to buildings, or vice versa, when needed.''
The United States has to become much more energy efficient if these goals are to be successfully accomplished.
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