Bernard L. Weinstein
Over the past three years, we have seen a dramatic rebound in America’s oil and natural gas production after a hiatus of almost 40 years. This has occurred despite falling output in Alaska, the moratorium on deep-water drilling imposed in the wake of the Gulf of Mexico oil rig blowout last year, and extremely low prices for natural gas.
New technologies for extracting oil and gas from deep under the ocean floor as well as shale formations have been largely responsible for the country’s fossil fuel renaissance.
All this is good news for America’s consumers. Though gasoline and diesel prices have jumped 30 percent over the past year, absent the 11 percent increase in oil production from U.S. fields consumers might be paying even more.
At the same time, falling imports chopped about $20 billion off America’s import bill last year. Abundant new supplies of natural gas at low cost have reduced the home heating and electric bills for millions of American households.
In a sluggish economy, energy producing states like Texas, Oklahoma, Arkansas and Louisiana are benefiting from the job and income growth associated with the resurgent energy sector.
Each of these states currently posts unemployment rates below the U.S. average of 9.1 percent and each has posted job gains over the past year, led by the energy sector.
According to a recently-released study by Quest Offshore Resources, drilling and production in the Gulf of Mexico currently support about 182,000 jobs in Texas, Louisiana, Mississippi and Alabama — a number that would have been even higher in the absence of the deep-water moratorium. Should drilling permits return to their pre-Macondo pace, by 2013 Gulf of Mexico operations could support 320,000 jobs in these states.
Non-energy states are also benefiting from the nation’s fossil fuel revival. According to the American Petroleum Institute, 9.2 million jobs across the county can be attributed directly and indirectly to spending by the oil and gas industry.
Developing oil and gas resources currently off-limits in the Outer Continental Shelf (OCS), Alaska and the Rockies could create another 160,000 jobs by 2030 while expanding production in the Marcellus Shale and Canadian oil sands could add a further 620,000 over the next 20 years.
President Obama can help create these jobs by dropping his perennial call for higher taxes on U.S. oil and gas producers. These companies already fight an uphill battle against foreign firms who receive sweetheart tax and regulatory deals from their home governments.
Second, the OCS and other areas currently off-limits but rich in fossil fuels should be opened for environmentally-responsible exploration, drilling and production. Finally, the proposed Keystone XL pipeline that will bring oil from Alberta to refineries on the Gulf Coast should be approved without further delay.
The Energy Information Agency believes more than 59 billion barrels of recoverable oil reside in U.S. offshore waters. The U.S. Geological Survey recently estimated total recoverable oil reserves in North Dakota, home to the Bakken Formation, at four billion barrels.
Alaska, California, Pennsylvania, New York and Texas also possess great potential for additional oil and gas recovery, if only we have the political will.
Investing in North America’s energy resources, especially oil and gas, can revive our economy, lessen our dependence on imports, and increase our national security. But the current energy boom will only become sustainable if public policy becomes accommodating rather than inhibiting.