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White House touts energy policies as rules loom

By Jim Kuhnhenn
Associated Press

WASHINGTON — While the Obama administration released a report meant to head off criticism of proposed coal-plant regulations, a spokesman for at least one Wisconsin utility was saying no conclusions can be drawn until the proposed rules are released.

Tom Hoen, spokesman for Minneapolis-based Xcel Energy Inc., parent company of Northern States Power Co.-Wisconsin, said the new regulations are not scheduled to be released until Monday and Xcel officials won’t comment without having time for review.

“We still need to find out what it means,” he said, “for us and our customers.”

Northern State Power Co.-Wisconsin provides electrical service to 253,000 customers and natural-gas service to 110,000 customers in northwest Wisconsin and the western part of Michigan’s Upper Peninsula.

The proposed regulations, though, have already drawn criticism from conservatives and business groups such as the U.S. Chamber of Commerce, which have argued that the reductions in emissions will be too small and the consequences to the economy too large to justify new restrictions. The Obama administration tried to deflect some of those charges Thursday by releasing a 42-page report suggesting that significant increases in the domestic production of natural gas and reductions in oil consumption have better positioned the United States to advance its economic and environmental goals.

Few of the report’s conclusions are new, but the report does include a detailed analysis of how past reliance on petroleum imports made the U.S. economy especially susceptible to oil price shocks, a vulnerability that White House economists said has been diminished by a reduced U.S. demand for foreign oil.

According to the report, greater domestic energy production, the use of wind and solar power and the reduction in oil consumption “have had substantial economic and energy security benefits and they are helping to reduce carbon emissions in the energy sector and thereby tackle the challenge posed by climate change.”

A quarter of the report is devoted to analyzing the economic impact of the United States’ shift from importing more energy than it produced to producing more than it imports. According to the report, this means the U.S. economy is better protected from high oil prices now than before.

So, if an upheaval occurs in an oil-producing country and sends prices soaring, U.S. consumers would still pay the higher costs at the pump, creating adverse economic reverberations. But because the U.S. is producing more than it imports, a greater portion of that consumer spending would stay in the U.S. and contribute to the economy instead of fleeing overseas. In theory, U.S. drillers would get more money, pay more in taxes and create jobs to find more oil.

That said, the U.S. remains a top oil importer, second only to China, and is the No. 1 consumer of oil.

According to the White House report, Obama energy initiatives, ranging from new vehicle fuel economy standards to electric plants powered by renewable energy sources, have contributed to less reliance on foreign oil. It also cites energy-efficient building projects and reduced processing time for onshore drilling permits and issuance of new offshore permits.

Yet many of the trends that buttress the administration’s case are attributable to dramatic technological advances that have vastly expanded the extraction of domestic natural gas and oil. The main process, called hydraulic fracturing, has caused a furor within the environmental movement.

According to the report, natural gas is cleaner-burning than coal or oil, and the White House has embraced it as a “transitional fuel,” and while “extraction of natural gas raises some environmental concerns,” the administration supports “safe and responsible development.”

In addition, some of the positive trends predate Obama’s presidency, which began in 2009. According to the report, the decline in petroleum consumption, for example, began in 2006, though it attributes much of the initial decline to the start of the recession. Meanwhile, natural gas consumption has risen 18 percent since 2005.

AP Energy Writer Jonathan Fahey in New York and The Daily Reporter staff writer Dan Shaw also contributed to this report.

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