ENR GOP: Crocodile Tears
We noted with interest President Obama’s statements about energy during the press conference he held yesterday at the White House. After hailing the United States’ imminent overtaking of Russia as the world’s largest oil and natural gas producer something we should all be proud of he couldn’t resist taking several needless partisan jabs.
Said the president: “You know, the Republicans say they¹re very concerned about drilling. They say Obama’s been restricting oil production, despite the fact that oil production is at its highest levels it has been in years and is continuing to zoom up. But they say, you know, the Democrats are holding back oil production in this country. Well, you know, one of the things that happens when the government's shut down is new drilling permits aren¹t processed. So why would the Republicans say to the folks who are interested in drilling for oil, sorry, we can¹t let those things be processed until we have some negotiations and we have some cover to do what we're supposed to be doing anyway? That doesn’t make sense.”
The president yet again implying that he¹s responsible for rising domestic production? The president attempting to shift blame away from his party, and onto Republicans, for somehow “holding back” production? As you might imagine, we have some issues with those claims.
The Boom Is Not Federal. We’ve been over this again and again: according to just about everyone except the president, the dramatic increase in American oil and natural gas production has not occurred on federal lands. Instead, it has taken place almost exclusively on state and private lands where the president has no influence. In fact, according to the non-partisan Congressional Research Service, “All of the increase from FY2007 to FY2012 took place on non-federal lands, and the federal share of total U.S. crude oil production fell by about seven percentage points.” Per that same report, both oil and natural gas production on federal lands actually fell yes, fell in both 2011 and 2012. So it’s not hard to understand why we assert that President Obama is “holding back” production: that is exactly what he has done.
The Shutdown Isn’t the Problem (Yet). Forgive us for thinking it slightly insincere of the president to suddenly claim concern about federal oil and natural gas permitting. We simply cannot reconcile how a nine-day-and-counting government shutdown compares to a nearly five-year-and-counting government slowdown in granting permission for producers to proceed. There is no question that federal permitting is slow and becoming more onerous as a result of this administration’s policies. Consider this: it took approximately 228 days for the average Application for Permit to Drill (APD) to be completed for federal BLM lands in Fiscal Year 2012 compared to just 10 days for a similar permit from the state of North Dakota. And if you live in a place like Alaska, where zero drilling is currently allowed on federal lands, we could hardly blame you for thinking that the “shutdown” in permitting actually began right around January 20, 2009.
There are Valid Reasons to be Concerned. State and private production has been an incredible success story and a most welcome bright spot in our nation’s struggling economy. But when federal lands don’t keep pace and production actually falls, as has happened each of the past two years that means we are missing out on huge opportunities. Less federal production means fewer jobs and a prolonged dependence on foreign oil. Since supply does matter to prices, it also means higher and more volatile prices for families and businesses. In the midst of a shutdown with a federal government that has again reached its debt limit, we would be remiss not to point out that federal production can yield tens of billions of dollars for the federal Treasury in the years ahead. Given where we are today, that seems like a pretty good idea. But as we work to increase federal energy production, let’s not confuse the current short-term stoppage with a much longer-term problem.
For more on the level of oil and gas production on federal lands, see the EIA report.
Posted: October 9, 2013