Energy Policy at the Crossroads


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Total recoverable United State offshore oil reserves are estimated to be over 100 billion barrels. As a point of comparison, consider that total Saudi Arabian oil reserves are estimated at a little more than 250 billion barrels. If one counts oil that is potentially recoverable from western shale formations, total United States reserves are close to one trillion barrels. Natural gas reserves in the United States are now estimated at over 650 trillion cubic feet, leading some to describe America as the “Saudi Arabia of natural gas”.

According to the API commissioned study conducted by the consulting firm Wood Mackenzie, allowing the industry access to those resources and keeping energy taxes where they are would: increase domestic energy production by the energy equivalent of 4 million barrels of oil per day , increase government revenues (through taxes and leases) by $150 billion per year and create over 700,000 new jobs – all by the year 2025. On the other hand, continuing to restrict access or levying new energy taxes could be disastrous, according to API and Wood Mackenzie.

“Here’s what this study shows: increasing taxes on the oil and natural gas industry actually decreases government revenue,” Gerard said. “In the long run, the negative economic consequences of higher taxes more than offset any short-term tax revenue gains. An additional $5 billion in new, annual taxes – similar to what’s been proposed by the administration, or some in Congress – could actually decrease cumulative government revenue by $128 billion by 2025.”

Industry critics will undoubtedly be skeptical of API’s positions and of the study that it is using to support those positions – and that’s fair. Free market advocates who are not particularly concerned about global warming like myself will find Gerard’s arguments familiar and compelling. Those on the other end of the ideological spectrum will instinctively find his comments and the Wood Mackenzie study self serving and flawed. Both reactions are predictable, but hopefully what API has done in releasing this study is to alter the nature of the debate. Or, more properly, we can think of this discussion as two successive debates.

The first involves the proposition that we are going to use oil and natural gas derived energy in large amounts anyway. If that is the case, doesn’t it make a lot more sense to use domestic resources instead of paying foreign countries and making them rich? And, if we answer that question in the affirmative, then how much will increasing energy taxes actually hurt the economy and decrease revenues? If Congress can approach and answer those two questions in a truly bi-partisan manner, we could have an energy policy that would take America to a much brighter future. If not? Well, nobody is going to invent a windmill-powered car or solar panels that will heat your home in the winter anytime soon. So we’re going to need oil and natural gas for a long time to come and it’s hard to see how buying more of it abroad is going to help our economy or to create jobs.

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  • Wesley69

    This administration is not interested in energy independence. That IS NOT Mr. O's game Heavy regulations, taxes, reductions in oil and natural gas drilling are. Look at this administrations actions:

    While there was the five month moratorium on drilling in the Gulf due to the BP Platform disaster, Interior Secretary Salazar was slowing down onshore drilling with new regulations. http://thedenverdailynews.com/article.php?aID=849….

    Regulations passed by the EPA to regulate Greenhouse Gases, will send electricity rates higher, hurting all customers & industry. Say good-bye to the Economic Recovery. Studies have shown that the reductions will cause almost no change in the atmosphere. Here is a good link to discuss what EPA has in mind. http://www.time.com/time/health/article/0,8599,20

  • Wesley69

    And President Obama is on record for supporting this scheme: "When I was asked earlier about the issue of coal…under my plan of a cap and trade system, electricity rates would necessarily skyrocket…even regardless of what I say about whether coal is good or bad, because I’m capping greenhouse gasses, coal power plants, natural gas…you name it…whatever the plants were, whatever the industry was, they would have to retro-fit their operations… That will cost money…they will pass that money on to the consumers.
    http://newsbusters.org/blogs/kerry-picket/2008/11

  • Wesley69

    And in another statement: “Cap and trade was just one way of skinning the cat." http://www.bloomberg.com/news/2010-11-04/obama-ca… So we know where Obama stands. But why??? Why stall the economic recovery? Why jeopardize his own chances of reelection?

    They know if they cripple the energy industry upon which industry depends, they can take down the economy and create a crisis of unbelievable proportions. Their actions are in accord with the Cloward-Piven Strategy: to cause the fall of capitalism by overloading the government with demand after demand after demand.

    Republicans MUST education all citizens showing what is at stake. Only with massive citizen opposition can there be any hope for stopping this administration's destructive course of action. Republicans must investigate, develop legislation to stop or delay these measures from going into effect. They will need the help of Democrats interested in this country and not their party to pull it off. The regulations can also be tied up in the courts as well. The Republicans MUST put the President and his administration on the spot and have them DEFEND their harmful actions.

  • Wesley69

    CONGRESS HAD BETTER REIN IN THE EPA!!!!!!!!! It is an unelected bureaucracy dominated by environmental wackos, hell-bent on destroying the energy industry.

    Lisa Jackson clearly enjoys her role as Queen Bee. Listen up, Baby, do you think for a minute the American people are going to support your abuse of power?

    IF CONGRESS WILL NOT TAKE ACTION, THE STATES NEED TO!!!!

    ANOTHER SOLUTION – THE REPEAL AMENDMENT – THE STATES'S VETO

    "Any provision of law or regulation of the United States may be repealed by the several states, and such repeal shall be effective when the legislatures of two-thirds of the several states approve resolutions for this purpose that particularly describe the same provision or provisions of law or regulation to be repealed."

    For more info check http://www.cato.org/pub_display.php?pub_id=12144

    Is this became an amendment to the Constitution, the States by a 2/3rds vote of state legislatures could repeal the bill authorizing the existence of the EPA and hand Lisa Jackson her pink slip.

  • scum

    Great! Hey, let's get Haliburton to oversee the increase in production. They did a great job in the gulf.

  • Wesley69

    Right, let's end all exploration in the Gulf, scum. We don't need the energy. Don't worry, the administration's views about energy seem closer to yours.