What the President can learn from Saudi Arabia

The United States is the new Saudi Arabia. At least with regards to oil and natural gas deposits. To take full advantage of our nation’s energy bounty, however, the federal government must allow the same kind of careful, responsible exploration and production now occurring on private lands to take place on public lands

The federal government owns about 650 million acres of property -- around 29 percent of the country. Over 35 percent of this land is in Alaska alone.

Yet the government inexplicably restricts oil and gas production to just 13 percent of our federally-owned land. As a result, we are failing to reap the full benefit of innovative new technologies that have allowed unprecedented access to underground oil and natural gas.

On private lands, however, the federal government has no authority to block these job creating endeavors. New technologies utilized on private land have created booming growth in an otherwise lackluster economy. At the same time, they’ve reduced energy prices and our dependence on foreign energy.

Further, abundant low-cost natural gas is increasingly crowding out dirtier, more traditional energy sources, bettering the environment.

Already, natural gas and oil are directly responsible for 9.8 million jobs across the country, paying a total of $200 billion in wages. In 2010, during the worst of the Great Recession, the oil and gas industry contributed $476 billion to the U.S. economy. Throughout the recession and recovery, private-sector employment increased by only about 1 percent, but within the oil and natural gas sectors, it skyrocketed by 40 percent.

The future looks even brighter. The Energy Information Administration predicts the United States will produce an additional 8.5 million barrels of oil a day in 2014, increasing to 9.3 million barrels by 2015. Natural gas production is forecast to enjoy a 56 percent increase between 2012 and 2014. If government policy doesn’t restrict growth, oil and gas could easily create an extra 1.4 million direct jobs in the United States by 2030.

The International Energy Agency has reported that the United States is on track to become the top energy producer in the world by 2015. Moreover, natural gas is fast coming to dominate the domestic energy marketplace, contributing to a greener tomorrow.

Sadly, the federal government is doing little to encourage this domestic energy bonanza. The Department of the Interior reports that the number of drilling permits issued on federal lands was slashed by 36 percent between 2008 and 2012. Furthermore, the Congressional Research Service has found that all of the increased production in crude oil between 2007 and 2012 occurred on non-federal lands. During that same period, the federal share of U.S. crude-oil production dropped 7 percent, despite the trumpeting about reducing our dependence on foreign oil.

In fact, in his recent State of the Union Address, Obama praised natural gas as one of the key reasons we are “closer to energy independence than we’ve been in decades,” conveniently failing to mention that this occurred despite his fierce opposition to drilling.

That comes at significant cost to Americans in this struggling economy. An estimated 26 billion barrels of oil are trapped below federal lands, waiting on permits. The Institute for Energy Research estimates that federal lands hold $128 trillion in oil and gas resources, “about 8 times our national debt.” The 10-year royalties, rents, and lease bonuses alone would earn the government around $150 billion total in revenue. And those numbers draw off a widely-considered conservative estimate by the Congressional Budget Office.

This public land must be developed responsibly, taking into consideration both the environment and affected local communities. Though state governments are best positioned to make responsible choices about permits and drilling, current policy puts the authority in the hands of distant federal regulators -- shutting out the local residents and community organizers who are most directly affected by these policies.

As a result, some states are lagging behind as the key to their economic future rests beneath residents’ feet. In Texas, which does not allow the federal government to own territory, oil and natural gas jobs are booming. Meanwhile, Arizona, Utah, and Nevada are left behind in this energy revolution because the federal government controls over 60 percent of the total combined land mass of these states and refuses to approve permitting.

To fully realize our potential, the Obama administration must lift its economic blockade of these affected states. We can’t afford to miss out on this golden opportunity to be energy independent, reduce our federal debt, and create the jobs Americans desperately need.

Michael James Barton is the Director for Energy at ARTIS Research. He previously served as the deputy director of Middle East policy at the Pentagon.

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Published: May 1, 2014 - Volume 13 - Issue 03