Why We Aren't Producing Enough Domestic Energy
President Barack Obama and Governor Mitt Romney had a heated exchange about energy in the most recent debate. The President repeated his refrain that oil and gas production is the highest it has been in eight years, but Romney was right to point out that this was driven by production on private and state lands.
The vast majority of America’s new oil and gas production is happening on private lands in states like North Dakota, Alaska and Texas. The environmental review and permitting process on federal lands, however, is burdensome and keeps resources untapped.
As Heritage’s Michael Sandoval has reported:
…oil production on federal lands has decreased between fiscal 2010 and fiscal 2011 by 11 percent. Natural gas production has decreased by 6 percent in the same one-year span. It is down nearly 27 percent from fiscal 2009. Meanwhile, oil and gas production have increased by 14 percent and 12 percent, respectively, on private and state-owned land.
How did North Dakota pass Alaska and California to become the second-largest producer of domestic crude oil? Answer: sensible state regulations, advancements in technology, and the ability to drill on private lands.
In addition to the much-heralded energy security that domestic energy could bring, these efforts produce jobs. North Dakota’s boom has put people to work. The state has the lowest unemployment rate in the nation, at just 3 percent.
>>> Watch our video about the North Dakota oil boom
In contrast, regions where energy production has been restrained have suffered. Heritage energy expert Nicolas Loris explained the effects of halting drilling in the Gulf of Mexico and elsewhere:
The official moratorium and de facto moratorium as a result of a molasses-like permitting process reduced planned capital and operating investments by $18.3 billion and cost the Gulf more than 162,000 jobs in just the past two years. Federal production in the West has experienced a similar fate: The Administration’s delays on permitting oil and gas projects public lands are preventing economic activity. In Utah and Wyoming, for instance, projects held up by the National Environmental Policy Act process are preventing the creation 64,805 jobs, $4.3 billion in wages, and $14.9 billion in economic impact every year.
The most recent battle is taking place over uranium mining. The federal government banned uranium mining on more than 1 million acres of federal land in Arizona. Virginia lawmakers are considering doing the same in their own state, but the land in question is privately owned. That means the state legislature, not federal bureaucrats, will decide whether the mining moves forward.
In a new paper, Heritage’s Jack Spencer and Katie Tubb reveal that “studies show that the net economic benefit of construction and operations will yield almost $5 billion for Virginians over the life of the mine—around 35 years.” The site is “the nation’s largest known deposit of uranium, and the seventh largest in the world. At current uranium prices, the deposit is valued at approximately $6 billion and is enough to fuel each of America’s 104 nuclear reactors for two years.”
Spencer and Tubb note that it isn’t the state legislature’s responsibility to decide whether mining is a good idea: “The job of the Assembly should not be to ban or promote mining, but rather to set strong regulations that protect public health and safety. Then, given those regulations, private investors can determine whether the mining is worth pursuing.”
While the federal government makes energy production difficult or impossible on federal lands—as it has done under the Obama Administration—private lands can provide much-needed energy resources and economic revitalization. All government needs to do is get out of the way.