Roadblocking America’s Energy Revolution

Mark Green
Posted March 24, 2015

Last week’s release of the federal Bureau of Land Management’s new hydraulic fracturing rule suggests it’s time to update an infographic we posted last summer on the administration’s regulatory march that could impede America’s energy revolution. Below, the update (clickable for a larger view).

Unfortunately, the administration’s plans for energy regulation aren’t encouraging – not if you truly grasp the historic opportunity that surging domestic production of oil and natural gas is providing the United States.

We’re talking about the complete rewrite of America’s energy narrative, from one of scarcity – limiting America’s economic possibilities and overshadowing its national security concerns – to one of abundance in which the U.S. is more self-sufficient, more prosperous and more secure in the world.

We call that historic, revolutionary, a true renaissance in American energy.

Unfortunately, instead of harnessing this energy revolution – to create jobs, grow the economy and increase American foreign policy influence – the administration’s consistent response has been: Let’s limit it. Let’s restrict the very oil and natural gas development that was key to the economy’s recovery from recession, a revitalization for which the administration often claims credit. This, from the annual report of the president’s Council of Economic Advisers, can’t be repeated enough:

Over the past ten years, the U.S. economy has undergone a revolution in the production and consumption of energy. Increasing production of oil, natural gas, and renewable energy has contributed broadly to employment and gross domestic product (GDP) growth during the recovery from the Great Recession. … Declining net oil imports have helped reduce the U.S. trade deficit and improve energy security. … The combined effect of increased production of natural gas, oil, and liquid biofuels has positioned the United States as the leading petroleum, natural gas, and biofuels producer in the world.

Instead of encouraging safe and responsible energy development with common-sense regulation and efficient, predictable oversight structures, we see roadblocks, complications, delays and unnecessary cost burdens.

We see it in BLM’s newly unveiled fracking rule, which could slow game-changing shale energy production with new costs and red tape imposed on oil and natural gas activity on federal lands – without improving existing state and federal regulations.

We see it in EPA’s proposed stricter ozone standards, which the agency wants to deploy before existing standards – which are being effective in making our air cleaner – are fully implemented. The proposed standards could reduce U.S. GDP by $270 billion per year and $3.4 trillion from 2017 to 2040, resulting in 2.9 million fewer jobs or job equivalents per year on average through 2040, according to a study by NERA Economic Consulting – while providing little or no health benefit. Howard Feldman, API senior director of regulatory and scientific affairs:

“The president talks about America’s energy renaissance. He even tries to take credit for it. But, policy after policy stands to threaten our energy development and our competitiveness around the world. We need policies that make sense. … The administration must support the energy renaissance and America as an energy superpower and not stand in the way of it.”

We see it in the draft offshore leasing program announced by the Bureau of Ocean Energy Management that falls short of the kind of robust offshore oil and natural gas vision you’d expect from an energy superpower. Instead of a visionary framework for future offshore development, the plan offers the possibility of just one lease sale for the Atlantic coast, would continue limiting development off Alaska and blocks development altogether off California and in the eastern Gulf of Mexico. Erik Milito, API director of upstream and industry operations:

“Considering the enormous benefits that oil and natural gas development brings to our economy – including millions of jobs, billions of dollars for the government and the widespread impact of greater energy security – one might wonder why the government keeps 87 percent of federal waters off-limits to oil and gas exploration. … By keeping so much locked away, the U.S. government is saying ‘No thanks’ to 840,000 new American jobs, 3.5 million barrels of oil equivalent per day, and more than $200 billion in government revenue.”

We see it in the unworkable, mismanaged Renewable Fuel Standard, with its mandates for ever-increasing ethanol use, untethered from the realities of the marketplace’s fuel needs, which could impact consumers and the broader economy. This ad brings these issues and others into focus:

It’s also seen in rumblings that the administration plans to impose new regulations on methane emissions – despite the fact that recent field studies show emissions from natural gas production already are being reduced significantly.

All are symptomatic of an energy vision that’s really no vision at all. Indeed, the cumulative impact of the administration’s regulatory assault likely will be to chill investment, stymie growth and squander the opportunity provided by abundant U.S. energy. An administration that has embraced surging oil and natural gas production in its rhetoric is showing, by its regulatory agenda, that it has different priorities. Frank Verrastro of the Center for Strategic and International Studies:

“I think the administration’s position has changed. … I think in 2011 we were in a certain place and we’ve move beyond that place now. Natural gas was helpful, but they’re (now) going to ratchet down on fossil fuels and ratchet up on emissions commitments.”

America is in the midst of a 21^st-century energy renaissance that could help ensure prosperity for the nation for decades to come – with the right vision and the right policies. Unfortunately, the administration doesn’t see it that way. Needed is a vision for safely and efficiently harnessing abundant American energy. A growth agenda instead of a no-growth agenda. API President and CEO Jack Gerard from earlier this year:

“Getting our nation’s energy policy right means putting polices in place that encourage America’s 21st century energy renaissance and augment American global energy leadership. It means ensuring that our energy policies are closely aligned with our status as a leading global energy producer … Getting America’s energy policy right requires that it is rooted in this nation’s new energy reality; grounded by market principles and based on the best science available.”