The election of Barack Obama as the 44th president of the United States was a historic event celebrated by millions in the US and abroad.  Now that the celebrations have ended, discussions have turned to the enormous challenges Obama will face when he takes the nation’s highest office in January of 2009.  Given the urgency of the current economic crisis engulfing the US and the rest of the world, economic recovery will undoubtedly be his first priority as president.  After that, Mr. Obama will have to choose which of the numerous other problems to focus on next.  According to author Michael T. Klare’s article on alternet.org, it is critical that President Obama make energy policy his next priority.

According to Klare, worldwide demand for oil will continue to climb at increasingly rapid rates (the current demand contraction being a short-term trend), especially in the developing world, led by China and India.  While demand is rising, Klare claims, supply will be dwindling: “It used to be thought that the depletion rate of [conventional oil] fields was about 4% to 5% a year, but…the International Energy Agency (IEA)…is expected to report that the decline rate is closer to 9%, an astonishingly high figure.”  Climbing demand and falling production would lead to a world where the US would have to compete with China and India for increasingly scarce oil supplies, as the developing nations of Asia are predicted to out-consume the US by 2030.

Klare posits that Obama should face these impending problems head-on.  He suggests a massive government initiative to place our country on a new energy track.  First, he argues, the President should initiate conservation programs and increase development of public transport to curb oil demand.  He should then support development of green technologies, set goals for usage of energy from green sources, and reorder government priorities so that using our military to protect our oil supplies gets bumped to the bottom of the list.

While an Obama Administration will certainly face serious energy-related challenes, his candidacy has provided hope for progress in the energy realm.  He often spoke of his ambitious goals of creating 5 million “green collar” jobs and reducing American dependence on foreign oil on the campaign trail.  How much action President Obama delivers on those campaign promises remains to be seen.  But if he is true to his word on reforming US energy policy and infrastructure, and is as dedicated as he claims to be to finding a comprehensive, long-term solution to America’s energy issues, then crisis of energy and oil twenty years from now could very well be avoided.

In just 5 days, we will choose our next president. After a long and much-publicized campaign, many differences between Democrat Barack Obama and Republican John McCain have come to light. For this week’s newsletter, we thought it might be a good idea to speculate on what effect their policies might have on heating oil consumers. HEAT This Week undertook an investigation of both of the major candidates’ energy platforms, voting records, and public comments to discern what actions, if any, potential McCain or Obama administrations might take to support Americans who rely on heating oil.

Senator John McCain

Senator McCain has titled his energy platform the “Lexington Project,” (available on McCain’s campaign website) with the subtitle “An all of the above energy solution.” McCain’s overarching goal is “strategic oil independence by 2025,” leading him to name the plan after the place where America’s first battle for independence began, and places emphasis on using “all of the above” energy resources within America’s borders to achieve the goal of energy independence, including oil, nuclear, natural gas, and renewable sources such as wind and biofuels.

McCain’s first step towards increasing domestic energy production would be increased oil drilling in Alaska and offshore of the lower 48 states, as captured by the “Drill baby drill!” catchphrase that has become a popular chant at campaign rallies. The McCain campaign outlines this step in the first two sentences of his online energy plan: “The current federal moratorium on drilling in the Outer Continental Shelf stands in the way of energy exploration and production. John McCain believes it is time for the federal government to lift these restrictions and to put our own reserves to use.” In July of this year, McCain made a campaign stop in New Hampshire, where he addressed the press on the subject of oil dependency while standing in front of a heating oil truck. At the appearance, McCain acknowledged the plight of Americans struggling to pay for heating oil, but only spoke of a solution in general terms, referring back to his plan for increased domestic energy production: “We’ve got to address the beginning of the [heating oil chain]…including off-shore oil exploration, including nuclear power, including alternate forms of energy…” (source: npr.org. McCain’s plan to bring down oil prices by increasing domestic production, if successful, would most likely lead to reductions in heating oil prices as well. McCain has also proposed a federal program to build 30 nuclear power plants in the United States by 2030.

McCain’s energy platform also identifies speculation in the oil futures market as a major cause of runaway crude prices. Increased regulation of the oil markets is an increasingly popular idea–in July of this year, Senator Harry Reid (D-NV) introduced S. 3268, the Stop Excessive Energy Speculation Act of 2008. If it became law, the bill would tighten regulation of the commodities markets (specifically in the trading of petroleum products) and expand the oversight powers of the Commodity Futures Trading Commission. The bill has yet to be put to a vote in the House or the Senate, so Senator McCain’s views on the bill are not on record.

The McCain campaign has criticized Senator Obama’s energy plan, claiming that Obama’s platform includes a tax on heating oil. According to the nonpartisan website factcheck.org, these claims are questionable.
Several bills have moved through Congress in the last few years that would increase funding for or amend the qualification requirements of the Low Income Home Energy Assistance Program (LIHEAP). Most recently, H.R. 2638, the Disaster Relief and Recovery Supplemental Appropriation Act of 2008 (covered on The Heat Zone blog on September 25th), was signed into law last month, substantially increasing LIHEAP funding to states throughout the country. Senator McCain abstained from voting on H.R. 2638. In 2006, the senate passed S. 2320, which provided supplemental funding to LIHEAP for the 2006 fiscal year. Senator McCain voted Nay on S. 2320. According to a July 2008 report on National Public Radio, McCain voted against the 2006 LIHEAP funding bill because he believed its planned expenditures were irresponsible. McCain has indicated that he would support S. 3323, the Weatherization, Assistance, and Relief for Middle-Income Households Act of 2008, which would also increase financial support for LIHEAP, because it includes new revenue sources for increased funding.

Senator Barack Obama

Senator Obama’s energy policy shares some common ground with Senator McCain’s. Obama also calls for reduced energy dependence and supports increased domestic energy creation. His plan seems to place greater emphasis on developing green energy sources through major government investment in new technologies.

The first action in the energy sector by an Obama administration, according to the campaign’s website, would be to institute a windfall profits tax on oil companies who have seen record profits in recent years. The campaign claims this tax would provide funding for an immediate “emergency energy rebate” of $1,000 per household ($500 per individual) to help families pay energy bills, including heating oil. Obama’s platform directly addresses the rising price of home heating, setting the goal to weatherize 1 million homes each year. Senator Obama’s plan also includes increased funding for LIHEAP, though no specifics are offered to describe what level of funding would be required. A “portion of a second round of fiscal stimulus” would fund the weatherization project and increased LIHEAP funding. The Obama campaign believes it holds the higher ground on the issue of heating oil assistance, as articulated by Obama’s state director in Maine, Toby McGrath, in a story on NPR: “…when it comes to the price of heating oil and gas prices, Senator Obama clearly has a plan for Mainers and America, whereas Senator McCain doesn’t.”

Obama’s energy plan also includes a plan to order a “swap” of the US Strategic Petroleum Reserve–removing light, sweet crude from the reserve and replacing it with heavy crude. Theoretically, this would lower gasoline and heating oil prices by boosting supply–easily refined light, sweet crude could be quickly made into gasoline and heating oil and injected into the market. The potential effectiveness of this plan has not been confirmed by industry experts.

Obama’s platform, like Senator McCain’s, includes a condemnation of speculation on the energy commodities market and outlines plans to increase oversight of that market: “Barack Obama and Joe Biden will close energy industry market loopholes and increase transparency to prevent traders from unfairly lining their pockets, while driving up oil prices at the expense of the American people.” Like Senator McCain, Senator Obama’s position on S. 3268, the Stop Excessive Energy Speculation Act of 2008, is unknown.
As previously mentioned, Obama’s energy platform includes a specific reference to LIHEAP, in combination with weatherization, as a tool to provide every needy family with affordable home heating. Senator Obama also abstained from voting on H.R. 2638, the Disaster Relief and Recovery Supplemental Appropriation Act of 2008, which included increased LIHEAP funding. In March of 2006, Senator Obama voted Yea on S. 2320, supporting increased LIHEAP funding for fiscal year 2006.

Whoever is elected to the nation’s highest office on November 4th, he will bring numerous new policies with him. It is important that every eligible voter casts his or her vote for the next American president, as our new leader’s decisions will have a tremendous impact on our daily lives, our pocketbooks, and our shared future.

NOTE: Neither Senator Obama’s nor Senator McCain’s campaigns responded to repeated requests for comment on this report.

This report first appeared in the October 24, 2008 edition of the HEAT This Week newsletter

This summer two separate bills, H.R. 6321 and H.R. 6473, were introduced to the House of Representatives. Both bills, if they became law, would provide relief from high energy prices and supply problems for residents of the Northeast.

H.R. 6321 (also called the “HEATR bill of 2008″), introduced by Rep. John McHugh (R-NY), would provide a tax credit to individuals and families to the tune of $500 or 33% of one year’s energy costs. The credit would be limited to households making less than $100,000 per year.

H.R. 6473, introduced by Rep. Paul Hoades (D-NH) would require the Secretary of Energy to sell off heating oil from the Northeast Home Heating Oil Reserve under specific circumstances: (1) if a major disruption in energy supply occurs, and (2) if the retail price of heating oil reaches $4.00 per gallon

Both of these bills are still in the first phase (”introduction”) of the legislative process, and may not even move beyond the committee phase to be voted on by congress. If one or both of the bills did become law, however, they would form a nice safety net under HEAT USA members and others who rely on heating oil to keep warm during the winter. The Heat Zone will keep track of both bills when and if they move through the legislative process.