Overwhelming majority support fracking
An overwhelming majority (70%) of executives at middle market energy companies see the potential for U.S. energy independence within 15 years, yet they expressed concern that the regulatory environment, along with trouble in the financial world and opposition to fracking, could dash that promise.
“Despite regulatory headwinds facing the industry, energy executives believe the United States can achieve energy independence within 15 years”
These are some of the findings detailed in the research study, “2012 U.S. Energy Sector Outlook” (cit.com/energyoutlook), released by CIT Group Inc. (NYSE: CIT) in association with Forbes Insights.
The study gathered the views of more than 100 executives at middle market energy companies to assess their views on the industry and their outlook for their companies, energy prices, and trends in the coming years.
“Despite regulatory headwinds facing the industry, energy executives believe the United States can achieve energy independence within 15 years,” said Mike Lorusso, Group Head of CIT Energy. “Executives believe this drive toward energy independence will be accomplished through a combination of approaches, such as expanding the use of natural gas, increasing domestic production of oil, and expanding the use of renewable natural resources. The optimism in this industry is fueling growth ¯ 85% of energy executives intend to seek financing in 2012.”
Key Findings from the Study:
ENERGY INDEPENDENCE WITHIN REACH: Thanks to improving technologies, new discoveries have eliminated the need to import natural gas. Fully half of the respondents characterize these recent discoveries as a “crucial addition” to the U.S. energy mix. As a result, executives are more open to seeing a path toward U.S. independence—70% believe that such independence could be achieved within 15 years.
FRACKING IS CONTROVERSIAL AND ESSENTIAL: Fracking, the hydraulic fracturing of subterranean rock to facilitate the flow of gas and oil deposits, has become a lightning rod for criticism among many people who fear environmental consequences. Fully 88% of respondents support fracking as either a safe technology or, at worst, agree that it is a developing technology, but that side effects will decrease over time. Almost two-thirds of respondents believe that the industry should educate the population on myths about fracking.
OVERALL OPTIMISM LEADS TO EXPANSION AND REFINANCING: Due to their optimism about the country’s energy potential, 85% of energy executives intend to seek financing in 2012. Of those, 43% plan to use funds for infrastructure and capital expenditures, 36% to expand production, and 14% for exploration.
REGULATORY ENVIRONMENT UNDER FIRE: Many energy industry executives strongly criticize the regulatory environment—66% of respondents say that regulation is a long-term concern facing the industry, while a sizable minority (40%) favors the abolishment of the Department of Energy (DOE). At the core of the anti-DOE sentiment appears to be the divide over ways to handle new climate change and air quality standards issued by the Environmental Protection Agency, cap-and-trade of carbon emissions credits, and national clean energy standards. Fully 55% of executives expect to be affected in a negative way by federal and state legislation in the next year or two.
RENEWABLES ARE PART OF THE ENERGY MIX: Although executives generally believe that renewable energy can and should be a part of the U.S. energy mix moving forward, they are less supportive of subsidizing renewable energy companies, perhaps because there were several controversial failures in 2011. However, nearly one-third of executives agreed with the statement: “Renewable subsidies are necessary: Some problems are inevitable.”