According to a report released by the American Petroleum Institute, 2011 could go down as the first year since 1957 that there has not been a single offshore lease sale. Moreover, 85 percent of our nation’s offshore resources continue to be off-limits to development. This is despite the increased uncertainty in world oil markets and a rising worldwide demand for crude oil (think China, India and eventually Japan).
Keep in mind that not only would increased domestic oil and gas production fuel our economy by lowering energy costs, while also creating good-paying private-sector jobs, but more oil production in the Outer Continental Shelf also would result in tens of billions of dollars in new tax revenue for state and local governments — including right here in California and Santa Barbara County, where the budget deficits for fiscal year 2011-12 are $24 billion and $43 million, respectively.
President Barack Obama delivered a speech Wednesday on energy in which he suggested that all is pretty well with our nation’s domestic energy production — i.e., energy crisis? What energy crisis? He even went so far as to boast that under his administration, 2009 saw an increase in domestic oil production. Well, below are some examples of how the Obama administration is handling our nation’s domestic energy needs (source: API).
» The administration delayed the process for finalizing the upcoming Five-Year OCS Oil and Gas Leasing Program (2010-15), despite the fact that thousands of comments in favor of expanded development were already received on the draft proposed program.
» The administration canceled oil and gas leases on 77 parcels of federal land in Utah to add additional review, even though the lease sales already had gone through the necessary, rigorous planning and environmental study process.
» The administration proposed billions of dollars of tax increases and additional fees on U.S. upstream operations. While these proposals were not enacted by Congress, they have been reintroduced with each successive budget (2010 and 2011) and provide a yearly signal to companies that the administration is seeking to raise costs on domestic oil and natural gas operations.
» The administration took unilateral action to shorten the lease terms for certain OCS leases. Shortening the lease terms effectively discourages investment in projects that can take years to develop.
» The administration suspended 61 leases issued in Montana as part of an agreement with special interest groups, despite the fact that environmental analysis already had been conducted.
» The administration canceled the Virginia offshore lease sale, which had bipartisan support from the state’s governor and congressional delegation. The administration also canceled the remaining 2010 Gulf of Mexico lease sales.
» The administration imposed a six-month moratorium on deep-water drilling activities even after all deep-water rigs were inspected for safety. This moratorium was struck down in court. The administration subsequently issued a second moratorium and was held in contempt for taking this unlawful action.
The above examples should prove beyond any doubt the lack of seriousness this administration has about increasing our nation’s oil and gas supply. They also demonstrate a continuing politically motivated bias against domestic oil and gas production, which only ends up leaving America at the mercy of rogue regimes such as Iran, Libya and Venezuela — not to mention that importing 60 percent of our nation’s energy from foreign sources also results in a massive transfer of wealth from American consumers to foreign governments, who in many cases use it against us by funding terrorism and terrorist cells around the globe.
But it isn’t just our federal government that’s the problem when it comes to depressing domestic oil and gas development. State and local governments are just as guilty, and in some cases are even worse when it comes to treating domestic energy producers with what often seems like contempt.
For example, consider the circumstances surrounding a local energy project being considered in Santa Barbara County. The project would result in the creation of a 10-mile onshore oil pipeline to replace an offshore barging operation, something local environmentalists have been calling for. One of the “mitigation” measures calls for the oil company to build a new fire station to respond to potential spills caused by the project. Never mind the fact that by switching from an offshore barging operation to an onshore oil pipeline, the risk of an oil spill is in and of itself mitigated to the point of being almost negligible.
Is this really a reasonable mitigation? Not when you consider the fact that the oil being transported isn’t flammable and the proposed pipeline would run along a stretch of county land where only about 10 people live and 100 cows graze. But the issue isn’t really about mitigating the risk of an oil spill as much as it’s about extorting money from the oil company. Today, oil companies are convenient cash cows for empty government coffers.
This isn’t a regulatory crackdown. It’s a politically motivated smackdown and indicative of how unserious some government agencies are about forging strategic partnership with private industry — who, by the way, are the ones paying the bills that governments at all levels depend on. But to point out such a thing is, well, crude. Pun intended.
Nevertheless, the issue isn’t whether oil and gas projects should be mitigated by regulatory agencies. Of course they should. The issue, rather, is when and where we can produce more domestic energy, and what are the proper and reasonable mitigations that will protect the public health and safety from the actual risks these projects create? And, will the imposed mitigations result in the best use of the resources being siphoned from the oil companies in the first place? In this particular situation, it seems rather clear that the answer is no.
The bottom line is that we all know America, California and, yes, even Santa Barbara County need affordable energy. It’s also safe to say that we need to develop domestic energy sources that are accessible and cost-effective, and that benefit our citizens and the various government entities that exist down the regulatory oversight food chain. To that end, government should act as a strategic partner of our domestic energy industry, as opposed to a cynical adversary that uses domestic energy projects as an opportunity to exploit and extort in order to balance its budget or to grow the bureaucracy.
America’s energy industry knows how to produce energy. Federal, state and local government regulators know how to regulate energy projects to keep the public safe and the natural environment protected. But the politicians who are ultimately responsible for the conduct of government need to recognize the economic value and the overall importance of establishing effective public-private partnerships with the oil and gas industry. Because at the end of the day, the goal should be plentiful, affordable energy, private industry jobs and the new tax revenue that will flow into government coffers at all levels as a result of achieving these complementary objectives.
In other words, the objective of the energy industry is and always has been to produce the energy we need, and the objective of the government regulators should always be to regulate these projects in a reasonable manner. The best role for the politicians? Simple: to follow, or get out of the way.