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Outside the Box: The U.S. needs a unified energy industry to deal with soaring oil prices, OPEC+ and climate change

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Americans are paying 25% more for gasoline than they did a year ago. Higher gas prices force difficult decisions about buying food, paying rent and other essentials. Some argue it’s an insufficient supply issue, while others contend that the U.S. must transition to a cleaner-burning fuel economy.

The real issue around gasoline prices and the costs of all types of energy is that the U.S. has no clear, coherent and consistent energy policy. 

The energy policy debate spans decades and with it a seesaw of energy policy from one administration to the next. Presidents Jimmy Carter, Bill Clinton, Barack Obama, and Joe Biden all advocated new and cleaner sources of energy, while Ronald Reagan, George W. Bush, and Donald Trump largely trusted the marketplace, technology, and reducing dependency on foreign oil. Former President George H.W. Bush signed the revised Clean Air Act into law in 1990 and he also relied on the marketplace for solutions. The back and forth on energy policy leads to inconsistency, policy uncertainty, and at times higher gasoline and energy prices. 

The U.S. has experienced considerable volatility and change over the past two decades. That is nothing new; volatility and change are part of U.S. history. But what does seem to be new and unique to this era is the speed at which changes are happening, and how quickly everyone is aware of them. The speed of change and policy uncertainty opens the door to reimagination, especially when it comes to U.S.-produced energy. 

The likely way forward is by tapping into the intellectual capital of all aspects of the entire energy industry, including nuclear, solar, biomass, wind, oil, coal, hydroelectric, natural gas, hydrogen and fuel cells. The effort could develop precompetitive strategies that allow each of the energy sectors to shape a practical and viable energy policy. With this scale, the entire energy generation, storage and transmission industry could build a long term strategy, an implementation roadmap, and a viable transition plan to a different future.

An effort like this brings the capacity, expertise, wisdom, insights, and scale necessary to build practical and durable energy policy and viable strategies. It could include structural frameworks consisting of energy supply chains to study points of innovation and opportunity to add capacity and supply of all forms of energy. 

The most fertile ground for building strategic partnerships within industries is through trade associations. Strategic partnerships through trade associations are among the most reliable and influential resources at our disposal. They can serve as neutral integrators, collect information on points of opportunity throughout the entire energy supply chain.

From there, they develop policy solutions, implement advocacy strategies, and deliver roadmaps to the public which incorporate a transition to a cleaner energy footprint in a manageable timeframe.

Strategic partnerships between industries and their trade associations already help deliver unified advocacy strategies, and convene industries to design and deliver  precompetitive solutions. For example:

  • The recreational boating industry captures the allegiance of a growing list of consumers through their partnership with the National Marine Manufacturers Association. Their all-for-one focus throughout the supply chain extends the recreational boating industry’s reach to the entire outdoor recreation ecosystem, not to mention impressive boat sales.
  • The asphalt pavement industry, which could be described as a community of data-driven engineers dedicated to doing good for everyone. From sustainability to safety to highway design, the National Asphalt Pavement Association is where and how new research and development takes place. It is also a point of connection for the industry to learn from one another and seek ways to continuously improve local, regional, and national road and highway systems that traverse and connect America.
  • The frozen foods industry, which is growing into a significant provider of food for the U.S. Offering a wide array of healthy choices and consumer tastes, the industry is focused on becoming the No. 1 food packaging and delivery choice for food service businesses and consumers alike through the American Frozen Food Institute.

Every energy trade association has a similar opportunity to collaborate and build precompetitive solutions that lead to a clear and consistent energy policy. These types of partnerships provide a way forward on everything from shared “rights of way” on energy transmission, practical permitting, transportation, distribution, and storage of all forms of energy. 

Each strategic partnership can:

  • Engage the supply chains of all energy providers and build practical solutions that help residential and commercial users reduce consumption and stabilize supply and costs.
  • Develop fail-safe energy options and determine where and how to store excess generation capacity in case of a national emergency. 
  • Identify ambitious carbon footprint reduction goals and work together to ensure they are achieved in realistic timeframes.
  • Leverage their strategic partnerships to build cooperative federal, state, and local government relationships all geared toward the delivery of environmentally safe, effective, and efficient delivery of all types of energy. 

The laws of supply and demand influence energy policy. However, one of the clearest pathways to energy price stability comes from certainty around energy policy. It’s time for the energy industry and their suppliers to reimagine energy policy by leveraging their collective assets and employ strategic partnerships with trade associations.

Utilizing the collective wisdom and innovation through these strategic partnerships creates a path forward that does not exist today. It also presents a new opportunity for the energy industry to work with future administrations, Congress, and regulators to collaborate and finally deliver clear and consistent energy policy, reliable and multiple sources of cleaner burning energy, and pricing stability for consumers.

Dan Varroney is the author of “Reimagining Industry Growth: Partnership Strategies in an Era of Uncertainty.” (Wiley, 2022) He is president and CEO of Potomac Core, a strategic consulting firm that specializes in association transformation and industry focused strategic partnerships.

More: Biden official says ban on gasoline exports still on the table, as White House responds to OPEC+ supply cut

Also read: What’s next for oil prices after OPEC+ delivers a big production cut

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