The People of America's Oil and Natural Gas Indusry

A Surprising and Wrong Decision

Mark Green

Mark Green
Posted December 13, 2010

(Editor's Note: The following Op-Ed by API President and CEO Jack Gerard was published in The Hill today.)

The Interior Department's surprising decision to place the Atlantic, Pacific and the eastern Gulf of Mexico off-limits to oil and natural gas production for at least seven years takes U.S. energy policy in the wrong direction. Despite long-standing concerns about U.S. energy dependence on oil from other countries, the administration's decision is likely to result in increased imports and a lessening of U.S. energy security.

The decision couldn't have come at a worse time. With unemployment rising to 9.8 percent and an estimated 15 million Americans out of work, it makes no sense to shut the door on one of the nation's best prospects for job creation.

A study by ICF International projected that in 2030 full development of these areas could generate nearly $91 billion in revenue for government, more than 75,000 new U.S. jobs, and the production of nearly one million barrels of additional oil per day. These potentially energy-rich areas could go a long way toward helping to balance the federal budget and ease concerns about the nation's economic future.

Many other countries recognize the value of oil and natural gas and are opening new areas for exploration and production. Cuba, Greenland, and Brazil are just some of the nations that see the link between energy development and prosperity for their citizens. They also are watching the warning signs on the horizon. The U.S. Department of Energy reported this week that oil supplies are tightening worldwide as demand increases abroad, especially in China. The agency also projected higher crude oil prices, which would affect every American family by putting upward pressure on energy costs.

No one wants to pay more for energy, and the American people have made their views clear in poll after poll. A new Rasmussen poll found that 54 percent of voters believe the decision to bar offshore drilling will raise gasoline prices and hurt the economy. Other polls conducted by Harris Interactive for API have shown that voters reject energy tax increases and policies that bar offshore drilling. They know the importance of energy to their daily lives and to their family budgets.

They also know the offshore drilling ban exacerbates the ongoing permit and lease sale delays in the Gulf. Permitting on existing Gulf leases has slowed to a crawl, keeping many workers in the region in unemployment lines. Information released by the Interior Department suggests that new lease sales in the central and western Gulf, where development is allowed, are unlikely to occur next year. That would make 2011 the first year since 1965 when no lease sales are held anywhere in the Gulf.

The administration says the industry should focus on developing oil and natural gas from existing leases, suggesting that America can get the energy its needs from them. The administration's argument is a red herring, and one that could have a negative impact on American consumers.

Energy companies must lease large amounts of new acreage to replace dwindling supplies of oil and natural gas in older wells and ensure the best prospects with the greatest energy potential get developed. They plan 10-to-20 years out to ensure a steady supply for oil and natural gas for consumers. By prohibiting promising areas for oil and natural gas production, the administration is discouraging investment in the United States for many years to come, blocking U.S. job creation, and potentially sending jobs overseas.

When the administration lifted the deepwater drilling moratorium in mid-October, it acknowledged the work done by industry and government to improve safety following the tragic accident in April. If the administration believes it is safe to drill in most of the Gulf, why isn't it safe to drill in other areas as well, where the same new government regulations, heightened oversight, and industry safety improvements would be in place? The answer has more to do with politics than safety.

The Interior Department should reconsider its approach to oil and natural gas development and get energy development back on track. The U.S. government does not have a sound energy strategy, and that must change.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.