The People of America's Oil and Natural Gas Indusry

A Self-Destructive Pattern

Jane Van Ryan

Jane Van Ryan
Posted October 13, 2009

U.S. oil and natural gas drilling rose slightly in the third quarter of 2009, but it still was quite sluggish. "API's Quarterly Well Completion Report: Third Quarter" showed that total well completions rose 10.2 percent from the second quarter of this year, but the total number of wells and dry holes was down 46 percent from 2008's third quarter.

Hazem Arafa, API's director of statistics, said the trend is a "clear indication that oil and gas companies, which are facing declining earnings and threats of increased taxes, continued to carefully monitor their expenditures" in the third quarter.

Yesterday on this blog, I outlined some of the new taxes that have been proposed by the administration, but there are other items that also threaten drilling plans of U.S. energy companies. Among them are the Waxman-Markey and the Kerry-Boxer climate bills, the administration's ongoing delay on the latest offshore leasing plan, a court decision to delay drilling on some Alaskan offshore leases, and Interior Secretary Salazar's directive to permanently ban drilling in some areas in Utah.

Decisions that create an adverse business environment are likely to have serious repercussions. The U.S. Department of Energy says America will continue to need oil and natural gas for many years to come. But if companies believe they can't get access to energy-rich land or make a profit, fewer wells will be drilled, and over a period of time it's likely that U.S. oil and natural gas production will decline. America will become more reliant on other countries for energy, and this country will continue to send millions of dollars a day overseas for energy that could be produced at home.

Government energy policies have created a self-destructive pattern that has persisted for more than 30 years. Rather than erect obstacles to stop or delay drilling, the U.S. government should encourage domestic energy production.

Opening more onshore and offshore areas to energy development would be a huge stimulus to the economy. Increased drilling would create thousands of jobs, lead to massive investments in the United States and generate billions of dollars in federal, state and local tax revenues to support schools, hospitals, public safety programs--and a better standard of living for everyone.