By Jack Gerard When Congress last approved comprehensive energy legislation, in 2007, it was a different world. That year’s annual energy review recorded domestic crude oil statistics at “the lowest level since the Energy Information Administration began reporting oil well productivity.”1 The best that could be said of natural gas productivity is that it “turned up slightly” after almost a decade of decline.2
What a difference an energy revolution makes. Due to advanced hydraulic fracturing and horizontal drilling, U.S. oil production has increased about 80 percent since 2006, and we now lead the world in natural gas production. Net petroleum imports are at their lowest levels in decades, and EIA’s latest energy outlook projects gasoline prices will remain below $3 per gallon through 2025.
It’s a new energy reality that requires a new energy policy approach.
A just-released study from Wood Mackenzie shows what we have to gain – or lose – with energy policy choices. By 2035, pro-energy policies could boost U.S. oil and natural gas production by approximately 8 million barrels of oil equivalent per day and support 2.3 million more American jobs. A regulatory path that keeps energy out of reach and constrains refining will cost the economy approximately 3.4 million barrels of oil equivalent per day and 830,000 potential jobs. The net difference between the two paths is over 3 million jobs – more than the population of Chicago.
Achieving the full possible scope of economic and energy security benefits requires greater access to our energy resources. A full 87 percent of federal offshore acreage is off limits – including promising areas in the eastern Gulf of Mexico, Pacific and Atlantic that could generate 840,000 new American jobs and $200 billion in government revenue by 2035. Waters off the northern coast of Alaska could be home to more oil and natural gas than all those areas combined, according to Interior Department estimates.
Each small step toward increased access is accompanied by so many conditions and additional restrictions that it’s up to Congress to take decisive action to unlock restricted resources.
A pro-energy path also means avoiding an onslaught of scientifically baseless and costly overregulation. Like new ozone restrictions that could prohibit virtually any new economic activity -- from producing energy to building hospitals. Ozone levels have dropped 33 percent since 1980 and 18 percent since 2000; there’s no reason to replace the strictest ozone regulations in history with new standards even pristine Yellowstone National Park barely meets. The same goes for new federal hydraulic fracturing regulations demonstrated superfluous by an extensive new EPA study on drinking water that should remove any doubt that strict state regulations are effective.
We also need to do away with any policy rooted in an energy scarcity outlook, starting with export policy. The ban on crude oil exports is a relic from the 1970s oil embargo that has no justification in 2015. A new Harvard Business School study is the latest of several reports that detail the needless economic damage incurred by maintaining the ban. Lifting restrictions could add an additional $23 billion to the GDP and around 125,000 new U.S. jobs by 2030, the study says. Plus, the researchers found that “the overall effect of lifting the oil export ban could actually reduce global prices for gasoline by increasing the global availability of crude oil.”
The Renewable Fuel Standard only dates back to the 2007 bill, but its mandate to steadily increase the amount of ethanol in the nation’s fuel supply has been rendered obsolete and proven economically and environmentally damaging. Corn-based ethanol yields 27 percent more greenhouse gases over its full lifecycle compared to regular gasoline, according to EPA analysis. Meanwhile, converting 40 percent of the U.S. corn crop from food to fuel has led to a 25 percent increase in the consumer price index for food since 2005. If we continue to force increasing amounts of ethanol into shrinking quantities of fuel – regardless of market demand — American consumers could face engine damage and further economic costs.
There may be no clearer marker of America’s transition to energy abundance than the fact that our barriers to energy production are now all self-imposed. Previous Congresses didn’t have the choice to achieve lasting energy security. Now, we have the resources and technology to achieve unprecedented energy self-sufficiency, create millions of jobs, and claim a position as a global energy leader. Any energy policy that falls short of those goals will be a failure.
Jack N. Gerard is president and CEO of the American Petroleum Institute.