How To Restore Health To The American Economy: Produce More Oil and Gas

How can we restore the health of the American economy? A good place to begin would be producing more oil and gas here in the United States. This would create jobs, keep our dollars here in America rather than sending them to foreign countries, and generate much-needed revenue for Federal, State and local governments. It can be done.
Peter


Why We Need to Add to Production

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In an energy interdependent world, we need common sense energy policies that provide access to conventional energy supplies, encourage energy efficiency, and promote continued development of new energy technologies. Common sense dictates that increasing our ability to produce energy from American resources – including crude oil and natural gas -- must be part of the mix. If energy companies are prevented from exploring for and producing oil and natural gas here at home in the United States, they face stiff competition overseas from national oil companies for untapped resources.

We currently import more than 60 percent of the crude oil and petroleum products we use. U.S. oil and natural gas companies don’t set crude oil prices -- the world market does. While we should not expect to be able to generate all the energy we need from within our own borders, each unit of energy we produce here at home is one we do not have to import. In particular, as long as demand for clean burning natural gas continues to increase, we will need access to new supplies of natural gas. We are fortunate to have considerable natural gas resources in the United States and elsewhere in North America. Federal lands are estimated to hold an estimated 656 trillion cubic feet of recoverable natural gas, enough to heat 60 million homes for 160 years (60 million homes in the United States are heated by natural gas).

If we stopped drilling new wells, U.S. production would fall rapidly and likely cease altogether within 20-25 years. As old wells reach the point where they are no longer economic to produce, they have to be replaced by new ones. This makes it important that we continue to explore for oil and gas, adding new production sources to those that are already on their inevitable decline. Without new wells adding to U.S. supplies, our volume of imports will have to continue to increase to make up the shortfall.

A report prepared in July 2000 by the Energy Information Administration titled Accelerated Depletion: Assessing Its Impacts on Domestic Oil and Natural Gas Prices and Production remains very relevant today. This report explains why we have to work harder just to stay even when it comes to oil and gas production:
The Energy Information Administration (EIA) report was designed to examine the trend of accelerated depletion and its impacts. Accelerated depletion means that resources found today tend to have much steeper (rapid) decline curves than those found 20 years ago. After a detailed analysis of various alternative scenarios, EIA underscored the importance and interplay of two factors: technology and access to resources on government lands. The EIA report indicates that, for at least the next two decades, the potential negative effects from the accelerated depletion of existing reserves could be offset by an increase in the rate at which new technologies are introduced in the oil and gas industry and by a relaxation of restrictions on drilling on federal [government] lands.


Federal restrictions -- including the decades-old Outer Continental Shelf leasing moratoria lifted Oct. 1, 2008 - have kept significant volumes of our oil and natural gas resources off-limits. These are vital resources that Americans rely upon for our economy and our way of life. Even where leases are granted, restrictions on how those leases are developed essentially preclude development of the resources. We can no longer afford to place off-limits access to vast federal oil and natural gas resources.

Although “energy independence” may not be possible, “energy interdependence” is a reality, and producing more oil and natural gas resources within our borders will be the key to enabling us to maintain a healthy economy in an interdependent world.