What Could Go Wrong for U.S. Energy in 2013?

We appear to be leaving 2012 amid an atmosphere of unusual tranquility for our domestic energy industry. With crude prices having remained relatively steady of late, natural gas levies sliding once again, and pain at the pump diminishing for drivers, it's as if we no longer have any significant energy woes to contend with.

Are we apt to sail through 2013 in a similarly uneventful state? Maybe, but also maybe not.

Stepping on the gas
For starters, as The Wall Street Journal noted not long ago, now that our quadrennial presidential election is behind us, it's hard to anticipate a perpetuation of the recent regulatory calm from the newly muscular Environmental Protection Agency. The Journal said in a late November opinion piece that "... EPA chief Lisa Jackson has the run of the place." One potential result noted by the paper could be the setting of greenhouse gas standards for planned new power plants at such a restrictive level that their construction will actually be thwarted.

Perhaps even more important from my perspective is the prospect that the agency will use next year to tighten the federal regulatory clamps on hydraulic fracturing, or fracking. This, of course, wouldn't be a new initiative. Back in April, when the EPA issued the final rule for fracking operations, it appeared sufficiently onerous from an industry perspective that the Washington, D.C.-based Institute for Energy Research said: "Once again, the Obama administration is using the (EPA) to execute its war on affordable energy."

As I've told Fools, there's a Hollywood flick about fracking called Promised Land waiting in the wings for release later this month. While I'm hardly certain that the Matt Damon film will take shots at the safety inherent in fracking, neither am I willing to bet many shekels that it won't. An anti-fracking tilt in theaters around the country would, of course, tend to invigorate those who believe that the EPA should push state-by-state regulation of fracturing aside and implement far more severe federal strictures in its place.

Unfortunately for those of us who believe that fracking warrants regulation -- albeit not at the federal level -- that's a creep that I expect to progress during the coming year anyway. It's also one that clearly wouldn't inure to the benefit of the likes of Chesapeake Energy (NYSE: CHK  ) , Halliburton (NYSE: HAL  ) and even ExxonMobil (NYSE: XOM  ) .

Pipeline's potential permit
Then there's the issue of either permitting or blocking the Keystone XL pipeline, which TransCanada (NYSE: TRP  ) would like to build to transfer crude from both the tar sands of Alberta and the Bakken Shale of North Dakota to refineries near the Gulf of Mexico. As you know, construction of the line has been blocked by the president, but, following the submission of a supposedly more environmentally palatable route, a new decision on whether to permit it is being awaited.

The betting is generally for an imprimatur for the line, but I'm not so sure. Environmental groups remain firmly "agin" it, and they continue to hold lots of sway with the administration. For now it's a wait-and-see issue for our citizenry and, frankly, for our relationship with our neighbors to the north.

A slippery slide
Beyond those two well-known issues, John Hofmeister, the erstwhile head of Royal Dutch Shell's (NYSE: RDS-B  ) U.S. operations is less upbeat about the staying power of our positive energy circumstances. For starters, he's convinced that the energy industry is overly optimistic vis-a-vis the decline rates for shale fields. If he's right, our newly heightened unconventional oil and gas production will fall off faster than is expected. Indeed, we'd likely begin to see some evidence of this trend next year.

The obvious way to counter the steeper than anticipated falloff would be to drill significantly more wells than are currently projected. But Hofmeister points out that the industry currently has nowhere near the infrastructure to accommodate such increased drilling. In fact, he also says that we're lacking in a sufficiency of pipelines -- the pending decision on Keystone notwithstanding -- to transport crude efficiently from the fields to the refineries.

Foolish takeaway
These, of course, are all domestic considerations. They don't really take into account the current -- perhaps "unsettling" is a preferable term -- chaos in the Middle East and North Africa. Obviously, growing eruptions in such garden spots as Syria, Iran, Iraq, and Egypt could easily spread across the region and loft crude prices into the stratosphere. I'll talk about those geopolitical uncertainties in upcoming articles.

For now, despite our current calm relative to energy, there's at least a moderate possibility that 2013 could bring with it changed circumstances. On that basis alone, I urge Fools not to neglect energy companies as key components of their investment portfolios.

You'll note that Halliburton is mentioned in this article. Assuming a relative steadiness in the domestic oil and gas markets, investors would be wise to consider Halliburton, one of the top companies in the business, and one that is most in tune with the domestic market. To access The Motley Fool's new premium research report on this industry stalwart, simply click here now and learn everything you need to know about how Halliburton is positioning itself both at home and abroad.

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