American Energy, The Texas Way?

Following Rick Perry's Senate confirmation as Secretary of Energy, many energy businesses are eagerly anticipating the changes promised by the new administration.

The former Texas governor enters the role with no previous federal agency experience. However, during his 14 years in the Texas Capitol, Perry oversaw energy advancement for Texas that many hope he will also bring to Washington. President Donald Trump’s selection of Perry gives a nod of confidence to energy leaders and investors.

To understand Perry's charge in his new role, one must first examine the creation of the Department of Energy. In the years before the department was created, the government held a laissez faire approach to the nation’s energy. However, the energy crisis in the mid-1970s prompted the Carter Administration to develop a comprehensive strategy to oversee the country’s energy grid, including the nuclear program. In 1977, the department was formed and headed by James Schlesinger, whose resume included Secretary of Defense and Director of the Central Intelligence Agency.

While every President is free to appoint who they please, past nominees have included individuals with heavy executive experience in managing federal agencies. Trump’s appointment of Perry, which was confirmed by the Senate March 2, goes against this tradition, as Perry is a newcomer to the federal government. The nomination was not without wisdom, however, and following the ‘shaking the establishment’ trend, Perry may prove to be a step in the right direction.

Could Perry Bring Balance to American Energy?

As Secretary of Energy, Governor Perry now oversees a vast bureaucracy with 93,000 employees and a $27 billion budget. The Secretary of Energy’s charge isn’t to rely only on one source or limit another; rather it’s to safeguard the United States from another energy crisis. Such a role would be remarkably different compared to Perry’s former responsibilities as Governor of Texas, especially in his oversight of the nuclear program. Perry did, however, oversee Texas’s largely independent power grid, the Electric Reliability Council of Texas (ERCOT), and did so while increasing energy production for the state. His experience may be useful for overseeing the nation as a whole, especially when it applies to balancing the country’s varied sources of energy.

In examining Perry’s contributions to energy in Texas—underscored with booms in fossil fuels and renewables during his tenure—one may hope that a similar outcome awaits the United States. For example, the former governor signed legislation for the development of new transmission lines and over two thousand miles of high voltage electricity lines. To utilize both renewable and traditional energy sources, Perry signed legislation creating competitive renewable energy zones (CREZ). The additional of wind energy to the Texas power grid provided West Texas with a reliable source of energy for oil and gas production. Under Perry’s watch, Texas led the nation in market-based solutions for energy policy.

Perry’s later years as governor included a nationwide tour promoting Texas as a state that meant business. In tax-burdened economies, such as California and New York, the governor encouraged businesses to relocate to the tax-friendlier, Lone Star State. While not a businessman himself, Perry recognizes the responsibility of the government to encourage economic growth and competition. During his tenure as governor, Perry remained a friend of Texas business by instituting sate-wide policies limiting regulation, especially in the energy sector.

Would an “All of the Above” Policy Really Work?

As a member of Trump’s cabinet, Perry’s most important duty would be advising the President on successful energy policy. A potential challenge Perry will face is negotiating for an “all the above” energy policy with the President. Over his 14 years as Texas' governor, Perry instituted an "all of the above" plan for Texas and many hope to see this policy at the national level for the first time.

However, on the campaign trail Trump promised to make the United States a global leader in energy production, while paying special attention to the coal industry. Trump’s campaign suggests a desire to revive coal’s dominance in the energy sector, which could conflict with Perry’s preference for diversifying and balancing American energy sources. As Perry’s policies indicate, the former governor relied on natural gas and renewable sources, both of which are a threat to coal as an energy leader. Perry doesn’t plan on abandoning coal; he would rather incorporate as part of America’s energy balance as well.

Assuming Perry's policies pass the new President’s judgment without conflict—energy leaders can expect increased infrastructure and a balanced faith in fossil fuels and renewable energy. While it remains to be seen how Perry’s contribution to the Department of Energy would impact the industry, his time in Texas did provide an understanding that it would be a role that sometimes requires walking the tightrope—and at others a true balancing act.

Del Mixon worked on Capitol Hill on a number of policy issues, including telecommunications, cyber-security and space-related research and development prior to joining Pierpont as an Assistant Account Executive