Squandering Public Resources, Squandering Our Energy Opportunity

Mark Green
Posted January 15, 2016

Federal officials followed President Obama’s State of the Union pledge to change Washington’s management of fossil fuel resources by announcing the government will stop issuing new coal leases on federal lands. The president’s keep-it-in-the-ground energy strategy, first voiced when he rejected the Keystone XL pipeline last fall, continues unfolding.

Unfortunately, the president doesn’t seem aware that his administration could blow a generational opportunity for America, one that’s being provided by the ongoing revolution in domestic oil and natural gas production. That he doesn’t see it helps explain the disconnect in his connecting of these thoughts during the State of the Union:

“… we’ve cut our imports of foreign oil by nearly 60 percent, and cut carbon pollution more than any other country on Earth. Gas under two bucks a gallon ain’t bad, either. Now we’ve got to accelerate the transition away from old, dirtier energy sources.”

Respectfully, Mr. President, falling oil imports, reduced U.S. carbon emissions and $2 gasoline are reasons to sustain and grow America’s energy revolution – not reasons to kneecap it.

Too often President Obama has cloaked himself in the benefits of an energy revolution that actually is being hindered by his policies. So surely, this is a true axiom: As those who don’t know history are doomed to repeat it, those who don’t recognize the contributions of the U.S. energy revolution will likely undermine it.

That’s bad news for U.S. energy security, bad news for America’s climate efforts, bad news for consumers.

Consumers first. As the president noted, gasoline prices are down. The U.S. Energy Information Administration reports that the average price of a gallon of gas dropped to $1.996 on Jan. 11 – below $2 per gallon for the first time since shortly after the president took office in 2009:

More good news for consumers: EIA says wholesale electricity prices at major trading hubs were down a range of 27 percent to 37 percent across the country last year compared to 2014 – largely because of lower natural gas prices:

And more from EIA – lower energy prices reducing home heating costs (we especially note the graphs for propane, heating oil and natural gas):

The U.S. oil and natural gas revolution isn’t the only factor in these trends, but it’s the leading factor. Yet, the president charts a course to transition away from an energy revolution that is strengthening our economy and making modern living possible.

The president’s energy leadership could weaken our economy – by $138 billion in GDP in 2025, according to Wood Mackenzie – and make Americans’ daily lives harder and costlier.

The president’s path ignores EIA analysis that oil and natural gas are the energy engines of American life today and will be for decades to come – 63 percent of our energy now, projected to be 62 percent in 2040:

It’s a path that will hold back energy development in federal areas, onshore and offshore, that already trails production on state and private lands …

… potentially reducing revenues to government a cumulative $260 billion from now until 2025. From an energy standpoint the president’s regulatory-constrained approach, which Wood Mackenzie says could reduce U.S. oil and natural gas production 2.6 million barrels of oil equivalent per day in 2025, is simply misguided. Look again at the EIA chart above, which is based on science, not aspiration. Every barrel of American oil not produced is another barrel of oil to be imported – with the U.S. becoming more dependent and less secure.

Let’s discuss emissions reductions. There’s no need for another global summit, no need for a blue-ribbon panel, no need for a congressional hearing: The United States already has an energy-producing, economy-lifting, emissions-lowering model in place that’s working. The U.S. is both the world’s leading producer of oil and natural gas and the leader of the world's top 20 economies in reducing carbon emissions from energy:

The U.S. model proves false the notion that energy development and emissions reduction are mutually exclusive. Such thinking by the president and others has been rendered obsolete by the facts, and policies based on that flawed idea are likely to damage the economy, weaken our national security and raise consumer costs. API President and CEO Jack Gerard:

“The fact is our nation has become a global leader in energy production and leading the way in climate change mitigation disproves the overheated rhetoric of anti-fossil fuel groups who continue to peddle the unrealistic notion that our modern society and way of life would be possible without a true all-of-the-above energy policy that is built upon a foundation of responsible fossil fuel use. The false choices some have suggested contradict our energy reality. We are producing more affordable and reliable energy. We are creating jobs, helping the economy and generating billions in revenue for the government. And, we are leading the world on carbon reductions. … The energy policy choices we make today will impact our nation’s consumers in the future. … There is a vocal minority who believe that instead of growing our economy to lift people out of poverty we should reduce our current standard of living and cap our potential. We reject this notion and encourage policy makers to continue down the path we have shown to work, supplying abundant, affordable, and reliable energy to consumers while lowering our impact on the environment.”

Because of the U.S. energy revolution, Americans today have the opportunity for a more prosperous, more secure, self-sufficient future – opportunity that less than a decade ago seemed hopelessly beyond their reach. For more than four decades Americans have aspired to an energy-secure reality. It is at hand, and national leadership that would waste this opportunity is doing worse than taking a flawed approach to energy. It is failing the American people.