Energy research firm Wood Mackenzie released a report on Wednesday that lends weight to arguments for greater energy exploration and production in the United States. The economic effects of such a policy, the report asserts, would be uniformly positive.
The report summarizes its findings thusly:
Wood Mackenzie’s analysis found that U.S. policies which encourage the development of new and existing resources could, by 2030, increase domestic oil and natural gas production by over 10 million boed [barrels of oil equivalent per day], support an additional 1.4 million jobs, and raise over $800 billion of cumulative additional government revenue. Whereas increasing regulatory burdens on the oil and gas upstream sector will result in higher development, costs which can potentially hinder the growth of production tax revenues and job creation.
Continuing the current path of policies which slow down the issuance of leases and drilling permits, increase the cost of hydraulic fracturing through duplicative water or air quality regulations, or delay the construction of oil sands export pipelines such as Keystone XL, will have a detrimental effect on production, jobs and government revenues.
An energy policy that stresses increased exploration and production of existing resources, in other words, would not only address the immediate national security and energy cost issues, it would also help mitigate arguably the two largest challenges the country currently faces: persistently high unemployment, and a massive federal budget deficit.
Continuing on the current path would exacerbate all of those problems, the report notes.
The report was released at a summit held by the American Petroleum Institute and The Hill newspaper. Speaking at the summit, Rep. Doc Hastings (R-WA), chairman of the House Energy and Natural Resources Committee, said he would push for the Joint Select Committee on Deficit Reduction, commonly known as the Super Committee, to incorporate proposals that advance energy policies that spur domestic production of oil and natural gas.
Hastings estimated that one proposal to expand oil exploration in the Arctic National Wildlife Refuge could generate between $150 and $300 billion in new federal revenues and create between 55,000 and 130,000 new jobs. Further, the increase in ANWR exploration could be done “safely, responsibly, [and] with minimal environmental impact” by utilizing only 500,000 of the 19 million square acres of land in ANWR.
Hastings spoke out against what he characterized as an overly restrictive and economically damaging approach to energy policy undertaken by the current White House. The Heritage Foundation has extensively documented President Obama’s “war on Gulf drilling” and other punitive energy policies that have stunted production in some of the country’s most oil-rich regions. Heritage has also spoken with some of the businesses hardest hit by the administration’s energy policies.
John Watson, president and CEO of Chevron, who also spoke at the summit, underscored the potential damage of those policies in his discussion of the company’s recent discovery of oil at the Moccasin prospect in the Gulf of Mexico. While significant, the oil rig that made the discovery received its drilling permit before the moratorium and subsequent permatorium on new Gulf drilling permits.
The discovery is an apt demonstration both of the potential for greater oil production in the Gulf, and the losses in potential production that the administration’s approach to energy policy will yield.