RPC Must Read August 30, 2011

 

Putting American Energy to Work

 

Fossil fuels remain an overwhelming source of energy consumed in the United States.  Of total energy consumption in 2009, the U.S. Energy Information Administration reports that oil and natural gas constituted 62 percent while renewable resources, primarily hydroelectric and biomass, were a mere 8 percent.   

 

The oil and gas industry directly contributed over $470 billion to the United States economy in 2010, more than half the size of the failed 2009 federal stimulus package, and without an act of Congress.  This is over and above the industry’s tax and royalty payments to the U.S. Treasury, averaging $86 million a day.  According to the March 7, 2011 edition of the Oil and Gas Journal, the industry in 2010:

 

  • Spent $266 billion to open and develop new energy projects and to improve existing ones, and to enhance refinery and other downstream operations (all this in the midst of a “permitorium” on exploration and development).
  • Paid $176 billion to 2.1 million U.S. employees in wages, salaries, and benefits, and payments to leaseholders.
  • Distributed approximately $35 billion in dividend payments to shareholders.

 

The oil and natural gas sector is “shovel-ready” to contribute further to the economy.  With the right policies allowing for exploration and development of our domestic energy resources, millions of jobs could be created.

 

  • A 2011 Quest Offshore study estimates 190,000 new jobs could be created in the Gulf of Mexico if drilling returns to pre-2010 levels.
  • A 2011 Wood Mackenzie report estimates 530,000 direct and indirect new jobs could be created by 2025 with the right government decisions on access to resources.  The study also estimates an increase to the government in taxes, royalties, and other revenue of $150 billion and a boost in domestic production by four million barrels of oil equivalent a day over the same period.
  • A 2011 Natural Resource Economics, Inc. study estimates over 282,000 new jobs could be created by 2020 developing the Marcellus Shale gas in New York, Pennsylvania, and West Virginia.  Additional economic value of $25 billion and tax revenue of over $6 billion could also be generated.
  • A 2011 Canadian Energy Research Institute study estimates that more than 600,000 new jobs, generating CAD$368 billion in employee compensation, could be created and preserved by 2035 from Canadian oil sands operations and development of associated infrastructure in the United States.  The study also estimates Canadian tar sands could impact the U.S. GDP by CAD$774 billion over the same period.

 

The Republican-led House of Representatives has been at the vanguard to combat high energy costs and foster job creation.  Currently awaiting action by the Senate are the following bills:

 

  • H.R. 1229, the Putting the Gulf of Mexico Back to Work Act, ends the Obama Administration’s de facto moratorium on issuing offshore drilling permits in the Gulf of Mexico, sets firm timelines for the Secretary of Interior to take action on permits, and elevates safety requirements for new permits.
  • H.R. 1230, the Restarting American Offshore Leasing Now Act, directs the Secretary of the Interior to conduct proposed offshore oil and gas lease sales in the Central and Western Gulf of Mexico and on the Outer Continental Shelf of Virginia.
  • H.R. 1231, the Reversing President Obama’s Offshore Moratorium Act, amends the Outer Continental Shelf Lands Act to require the Secretary of the Interior to open up for drilling currently unleased acreage considered to have the largest undiscovered, technically recoverable oil and gas resources.  Any state subdivision of an Outer Continental Shelf planning area must also be made available for leasing.
  • H.R. 1938, theNorth American-Made Energy Security Act, directs the President, not later than November 1, 2011, to issue a final order granting or denying the Presidential Permit for the Keystone XL pipeline.
  • H.R. 2021, theJobs and Energy Permitting Act of 2011, eliminates needless permitting delays that have stalled important energy production opportunities off the coast of Alaska. 

 

The right energy policies will allow the U.S. oil and gas sector to increase investment in America and to answer the president’s call for more jobs and economic growth, with increases in tax revenues and royalties contributing to deficit reduction.  The current policies, such as punitive taxes, a “permitorium”, restricting access to resource areas, and increasing regulatory burdens, will only serve to further drive investment out of the United States.