Responsible Domestic Energy Development

The Western Caucus believes America needs to increase its energy independence through environmentally responsible development of our huge untapped domestic energy resources. We do our nation and the world a disservice when we continue to rely on foreign sources of oil. Based on the statements of President-elect Obama and the record of the newly expanded Congressional Democratic Majority, there is little doubt that the momentum for increasing domestic energy production will come to a grinding halt. This effort to reduce domestic energy production – from all sources – is shortsighted and not in the long-term interest of the public.

Members of the Western Caucus support policies that increase, diversify, and facilitate the production and delivery of reliable and affordable energy supplies from all domestic energy sources. We introduced a comprehensive energy package, the Americans for American Energy Act, during the 110th Congress to address these issues. Our energy proposals include:

• Support Domestic Energy Resources Such as Oil Shale
  It is estimated that more than 2 trillion barrels of oil are held in oil shale deposits most of which is located in Utah, Colorado and Wyoming. Oil shale is a sedimentary rock that releases a liquid that can be processed into oil when heated. The Department of the Interior owns more than 80 percent of the land where the richest and most easily recoverable deposits are currently found. These oil shale deposits represent more oil reserves than are contained in all the countries in the Middle East combined, and this resource is believed to be capable of eventually producing 10 million barrels a day for more than 100 years. The Western Caucus supports the development of these deposits into usable fuel for energy independence.
  
  America’s Western oil shale deposit is the largest unexploited hydrocarbon resource on earth. It is estimated that more than two trillion barrels of oil are held in oil shale deposits scattered across the nation. That represents more oil reserves than are contained in all the countries in the Middle East combined.
  
  The richest and most easily recoverable deposits are currently found in the Green River formation in Northeastern Utah, Northwestern Colorado, and Southwestern Wyoming. Estimates suggest Colorado’s total resources alone approach one trillion barrels of oil, which is four times as much oil as Saudi Arabia’s proven oil reserves. Today, the U.S. Department of the Interior owns more than 80 percent of this area. This resource base is believed to be capable of eventually producing 10 million barrels a day for more than 100 years.
  
  While this gigantic resource of oil shale and tar sands is well known by geologists and energy experts, it has not been counted among our nation’s oil reserve because it is not yet being developed commercially. Companies have been waiting for the federal government to recognize publicly the existence of this resource as a potential reserve and to allow industry access to it.

• Responsible Energy Development in ANWR
  Most geologists agree that the potential of recoverable oil and gas on the Coastal Plain of the Arctic National Wildlife Refuge (ANWR) may rival the initial reserves at Prudhoe Bay. In 1980, the U.S. Geological Survey estimated the Coastal Plain could contain up to 17 billion barrels of oil and 34 trillion cubic feet of natural gas. However, before oil and gas development in ANWR can proceed, Congress and the President need to authorize leasing and development. Should leasing be permitted and subsequent commercial discoveries be made, it will be an estimated 15 years or more before oil and gas production from ANWR reaches market. That production will then be urgently needed to help meet domestic demand, so taking advantage of this key resource is critical to our national energy security.
  
  In 1996, the North Slope oil fields produced about 1.5 million barrels of oil per day, or approximately 25 percent of the U.S. domestic production. However, Prudhoe Bay, which accounts for over half of North Slope production, began to decline in 1988, and no new fields have yet been discovered with the potential to compensate for that decline. ANWR development offers us the best chance to replace this lost oil production. With oil prices now at over $70 per barrel, establishing reliable and productive domestic sources of oil and gas should and must be a high national priority.
  
  Skyrocketing energy costs are taking a toll on families throughout the nation. Higher energy prices mean increased costs to farmers and ranchers, manufacturers, and residential consumers, many of whom already face tremendous economic challenges. Without new access to America’s vast oil and gas resources in the OCS, domestic oil and natural gas production will decline and costs will continue to escalate.

• Promoting Renewable Energy
  With domestic energy demands on the rise, renewable energy sources are becoming an increasingly important contributor to the nation's fuel mix. However, renewable energy constitutes just one element of a balanced fuel portfolio: clean coal, natural gas, nuclear and hydro power all are necessary components as well.
  
  In recent years, renewable energy proponents have become aggressive in pursuing State and federal purchase mandates (so-called renewable portfolio standards). Though no federal mandate has yet been approved, a number of State portfolio standards are now on the books. Such mandates put energy providers in a difficult spot. They remove the flexibility that providers need to ensure they can reliably provide energy to consumers at the lowest possible price. There are a variety of policies besides rigid mandates that can be adopted to effectively promote renewable energy production. Production incentives are highly effective and should be made available for all forms of renewable energy, including hydroelectric facilities. Also important is regulatory reform. Because many of the renewable resources in the nation are located in public lands, a streamlined NEPA process would reduce the regulatory costs associated with permitting new renewable generation.
  
  In order to ensure reliability and avoid rate increases to customers, companies need flexibility to determine how best to integrate renewable energy resources into their generation portfolios. The market, not mandates, should decide what economic burdens consumers are asked to pay for renewable sources.

• Support the Environmentally-Sound Energy Development of the OCS
  In the last 25 years, U.S. energy needs have grown dramatically while supplies have stayed virtually steady. In just the past decade alone energy demand increased by more than 12 percent while domestic production increased by less than one percent.
  
  The Outer Continental Shelf (OCS) is estimated to hold nearly 500 trillion cubic feet of recoverable natural gas resources and 90 billion barrels of oil. This is enough natural gas to heat 100 million homes for 60 years or enough oil to replace current Persian Gulf imports for 59 years.
  
  Up until this last year, over 80 percent of the nation’s oil and natural gas resources on the OCS were completely off -limits to energy exploration and production due to Congressional moratoria and administrative withdrawals, despite a proven record of safety and environmental responsibility. Fortunately, President Bush withdrew the executive moratorium and Congress ended the shortsighted congressionally established moratorium. Unfortunately, many in Congress seek to re-impose both of these bans and once again lock up these valuable resources of the American people.
  
  The Western Caucus believes that our nation does not suffer from a lack of domestic energy resources. However, many of our federal energy policies stop us from adequately accessing our domestic resources and increasing our nation's energy independence. Instead of putting our energy security in the hands of unstable foreign sources of oil, America should first utilize its own vast domestic energy sources.

• Maintain Accessibility to Clean Coal
  As our most abundant, most stable source of affordable electricity, coal continues to be the top source of energy for American homes, businesses, and manufacturing.  The United States boasts enormous recoverable coal reserves, so much so that U.S. coal producers can meet domestic demand and export thousands of tons to help bring electricity to the estimated 1.3 billion people in the world who currently live with no electricity at all.  New technologies to convert coal to liquid fuel and to gasify deep coal seams promises to bring clean-coal resources to the market.  Rather than seeking to marginalize coal production through regulatory strangulation, the United States should support the affordability and reliability of coal as an energy source.

• Reject Counterproductive Taxes on U.S. Energy Producers
  More than 60 percent of the oil used in the United States is imported. In the next 20 years, if American oil dependence is allowed to continue as it has in the past and the price of oil continues to increase as expected, more than three trillion dollars will be transferred from the United States economy to foreign countries for imported oil. America’s increased dependence on foreign sources of energy weakens our economy and our national security. Energy independence is a critical matter of national security, and the government needs to treat efforts to increase our independence with the same priority as any other national security issue.
  
  At the same time, the oil and gas industry is of crucial importance to our economy and our nation’s energy security. It contributes billions of dollars to our GDP and provides 1.5 million jobs for American citizens. The last thing we need to be doing today is discouraging domestic energy production. Unfortunately, that’s exactly what many federal policymakers want to do.
  
  With the recent increase in oil prices, some have called for enacting a revised version of the old Windfall Profit Tax. The Windfall Profits Tax was enacted in 1980 to raise revenue and to ensure that oil companies did not benefit unduly in a period of relatively high crude oil prices. It accomplished neither. What the Windfall Profits Tax did do, however, was to drain billions of dollars in industry revenues that could have been used to invest in new oil and gas production. By some estimates, as much as 1.6 billion fewer barrels of oil were produced domestically due to the Tax.
  
  The tax penalties being suggested for the 111th Congress would substantially increase tax costs for U.S. oil and gas companies that compete for energy resources in the global marketplace. The U.S. needs to support policies that encourage, rather than discourage, responsible production of energy from domestic sources.
  
  The oil and natural gas industry is not earning “windfall profits.” The reality is that the industry’s earnings have been very much in line with other industries, and often are lower. In fact, the oil and natural gas industry earned 5.7 cents for every dollar of sales compared to an average of 5.5 cents for all U.S. industry over the past five years.