$2.50 gallon gasoline and energy independence
America needs three goals in energy:
• Independence from dictatorships so no American President ever again bows to a Saudi king.
• Enough energy that Iranian efforts to disrupt the flow of oil through the Strait of Hormuz have no impact on America.
• Enough production to bring down the cost of gasoline for American motorists.
All three goals can be achieved with an all-of-the- above American energy plan.
During the four years I was speaker, the average price for a gallon of gasoline was $1.13. When President Obama took office in January 2009, the average price nationwide was $1.89 a gallon. Three years into the Obama presidency, the average is $3.47 a gallon.
Today, prices like those we enjoyed three years ago seem like a fantasy—and under the president’s current policies, they are. But these were prices Americans paid in the relatively recent past. Many Americans used to pay just $35 to fill up the very same cars that are today costing them over $60.
While some of the increase in gas prices comes from growing demand, the demand pressures on price can and should be offset by increasing domestic supplies. Yet the Obama administration’s ideological refusal to expand American energy production continues to block the development of resources which could lower prices dramatically. As we saw most recently with the administration’s rejection of the Keystone XL pipeline, the president is more interested in playing favorites with environmental extremists rather than embracing the “all-of-the-above” strategy that could achieve energy independence and help all Americans now.
The fact that Americans must cope with ballooning gas prices and energy vulnerability while living in a country with some of the richest untapped energy resources on the planet is an absurdity that can only be accomplished by bad government. By unleashing the American people from regulations and bureaucracy designed to promote the agenda of radical environmentalists, we can tap our enormous oil and natural gas supplies to drive fuel prices down.
Most Americans have no idea that the United States is sitting on enough technically recoverable oil to power us at current rates of consumption for over 250 years. We are estimated to have 1.4 trillion barrels of oil—or 1.7 trillion, adding in the resources of Canada and Mexico.
That amount of oil, as a report from the Institute for Energy Research recently explained, is “more than the world has used since the first oil well was drilled over 150 years ago in Titusville, Pennsylvania” and 6 ½ times the proved oil reserves of Saudi Arabia.
The true size of the oil supply could be even larger still than these estimates suggest. In many cases, far more oil has been recovered than was predicted to be available when development began. In 1985, for instance, the Minerals Management Service estimated the Gulf of Mexico had 9 billion barrels of undiscovered oil. Twenty-seven years later, after many billions of barrels have been pumped, the federal government estimates there are 45 billion undiscovered barrels.
In another example, the estimate of the Bakken formation in North Dakota has jumped an astonishing 2,500 percent since 1995 due to new technology. The Bakken along with other emerging unconventional oil and gas “plays” in Texas, New Mexico, Ohio, West Virginia, Louisiana, California, Colorado, Nebraska, Pennsylvania, New York, and in other states, have allowed the U.S. to begin increasing oil production after 40 years of steady production declines. Unlocked by the new technologies of hydraulic fracturing and horizontal drilling, the full potential of these new resource plays is yet to be fully comprehended or realized.
Without opening up more areas to drilling, we have no way of knowing how many more Bakken-sized discoveries are waiting for us. But we do know this. The potential to increase American oil and gas supplies dramatically and become energy secure and independent is real. Increasing oil supplies will lower fuel prices significantly. And the biggest thing standing in the way is government obstruction.
A recent analysis by Goldman Sachs projects that the United States could become the world leader in oil production by 2017. But if the President continues his assault on American energy, including his proposals to raise taxes on domestic oil and gas and his own EPA’s attempts to regulate hydraulic fracturing, that future will be arbitrarily and unnecessarily upended.
The administration is determined to ban additional development of America’s most promising oil and gas resources, such as offshore Alaska in the Beaufort and Chuckchi Seas, and off the East and West Coasts of the lower 48 on the Outer Continental Shelf. Overall, there is an estimated 88.6 billion barrels of oil, but only 2.2 percent of federal offshore land is currently being leased for production, and the president is refusing to allow more.
On land, the administration’s obstruction is just as damaging. Among the 30.5 billion barrels of oil located onshore on Federal lands (not including oil shale), 92 percent of them are inaccessible or under restrictions above and beyond standard regulatory and administrative hurdles, according to the most recent assessment by the Bureau of Land Management.
New production from oil and gas resources has come overwhelmingly from private lands, such as the huge increases from oil and gas in shale. These achievements did not come because the government decided to permit more leases, but rather because the lands were privately held. Yet even when the government does not own the land, government can still aid obstruction America’s energy potential. The gigantic Monterey shale oil field in California, for instance, which the Energy Information Administration estimates holds 64 percent of the recoverable shale oil in the U.S., has been slowed dramatically by environmentalist lawsuits California’s go-it-alone global warming law.
The federal government owns most of the world’s oil shale reserves, located in the Green River Basin in Utah, Colorado and Wyoming. This immense source of future oil supply is being held off-limits to leasing by Obama’s Bureau of Land Management. Recoverable U.S. oil shale reserves are estimated to approach if not exceed 1 trillion barrels of American oil.
A stunningly small percentage of the enormous federal land (which is owned by the American people) is available for energy exploration that could yield new discoveries. Eight-six percent of Nevada is owned by the federal government. That is almost 40 percent the area of Texas. If these lands were properly marketed by the U.S. Bureau of Land Management, opening even half this promising acreage to exploration, we’d add an area a fifth the size of Texas for oil and gas prospecting.
What’s even more baffling is that these lands are potentially a huge source of revenue for the federal government –revenue that doesn’t involve raising taxes on the American people. Experts in the private-sector royalties industry estimate that implementing commercial standards in federal leasing of oil and gas royalties could bring over $100 billion into the federal treasury over the next decade. Harold Hamm, who discovered the Bakken formation, recently told the Wall Street Journal that with expanded drilling for oil and gas on federal lands, onshore and offshore, “I truly believe the federal government could over time raise $18 trillion in royalties.” That’s more than the U.S. national debt, $15.4 trillion.
Rather than leasing programs expanding as gasoline prices rose, oil and natural gas production on federal lands under the Obama administration has diminished by 40 percent. With so much unused potential and gasoline approaching $4.00 a gallon nationwide, the president’s failure to tap the energy we have here in America is inexcusable. Considering the abundance of our energy resources and their potential to drive down prices, create jobs, stimulate economic growth and a sustainable manufacturing boom, provide a steady source of state and federal revenue, and bolster national security, the administration’s refusal to permit development borders on insanity.
Not content to confine its hostilities to curtailing new leases, the administration frequently demonizes energy companies for political purposes and advocates new taxes and fees on producers. But the United States is already one of the worst places in the world for oil and gas companies to do business. As the American Enterprise Institute’s Steve Hayward writes, “when compared properly with the royalty and tax systems of 29 other nations, only Venezuela extracts a higher take from oil and gas production than the United States.” New taxes will just drive producers abroad even further.
We must embrace an all-of-the-above energy strategy of oil, natural gas, coal, nuclear, biofuels, wind, and oil shale if we are to achieve energy independence, lower gasoline prices, power a renewed boom in American manufacturing, and raise government revenues with no new taxes.
Pursuant to this plan, we should take eight steps immediately to address these skyrocketing gas prices and jumpstart production of American energy:
1. Approve the Keystone XL pipeline.
2. Replace the EPA with a new economically rational Environmental Solutions Agency.
3. Condense regulations to make it easier to build new refineries. We haven’t built a major
new refinery in the U.S. since 1977, in part because federal restrictions and regulatory
uncertainty make it so difficult.
4. Overhaul the Department of Interior processes to expedite approval of leases.
5. Move to 100% expensing for all new equipment so companies could write it off in one year, making it easier for companies to build new extraction sites.
6. Eliminate the capital gains tax to promote investment.
7. Adopt a 12.5% corporate tax rate to make America the best country in the world to do business.
8. Abolish the death tax.
$2.50 a gallon gas is not a dream. It’s achievable with the right policies. If we take these steps, we can quickly and dramatically reduce the price of gas by tapping America’s incredible oil and gas resources to increase supply. That would mean more money in Americans’ pockets, lower costs for millions of businesses, and tens of thousands of jobs across the country in an industry poised to take off.
It should tell you everything you need to know about the president and his administration that they want to double-down with giant bets on green start-up companies like Solyndra while refusing to take the simple steps required to unleash American energy production to help millions of Americans now.