An Energy, Jobs, Security and Growth Agenda

Mark Green
Posted January 27, 2014

Indications are that President Obama’s State of the Union message tomorrow night will key in on making 2014 a “year of action” to create jobs and grow the economy, which he addressed earlier this month in one of his weekly radio addresses:

 “… we’ve got to keep our economy growing, and make sure more Americans have the opportunity to share in that growth.  We’ve got to keep creating jobs that offer new opportunity, and make sure those jobs offer the wages and benefits that let you rebuild some security. … This will be a year of action.  I’ll keep doing everything I can to create new jobs and new opportunities for American families – with Congress, on my own, and with everyone willing to play their part.”

America’s oil and natural industry is ready to play a part in an action agenda that helps advance a number of the president’s goals, including job creation, economic growth, income inequality, environmental protection and energy security.

Already our industry is a leading driver of economic growth, supporting 9.8 million jobs in 2011, according to a PwC study – an increase of more than 600,000 from 2009. Increased domestic energy production – done safely and responsibly – already is helping make America stronger and more prosperous, revitalizing the manufacturing and other sectors, while playing a major role in reducing emissions to a two-decade low. More can be done. Here’s how:

Build the Keystone XL Pipeline

It’s time for action on a project that has been under federal review for more than five years. On his own the president could approve the full Keystone XL pipeline, clearing the way for broad, national benefits:

• More than 42,000 jobs during the pipeline’s construction phase, according to the U.S. State Department.
• More than $3 billion in industry spending on construction and materials.
• Stronger U.S. energy security resulting when the pipeline starts bringing more than 800,000 barrels of oil a day from neighbor and ally Canada and the U.S. Bakken region. The pipeline would be part of an overall energy strategy that could see 100 percent of U.S. liquid fuel needs met domestically and from Canada by 2024.

Increase Access to Domestic Oil and Natural Gas Reserves

Thanks to vast reserves of energy found in shale and other tight-rock formations, the U.S. was estimated to be the No. 1 producer of oil and natural gas in 2013, according to the U.S. Energy Information Administration (EIA). EIA projects that U.S. oil production will near 9.6 million barrels per day by 2016, output last seen four decades ago. 

This is great news – a generational opportunity – but we need policies to sustain America’s energy renaissance and build on it through:

• Offshore drilling: Open more of our outer continental shelf (OCS) to exploration and development. Currently, about 87 percent of the federal offshore acreage is off limits to development – limiting potential job and economic growth and increased domestic supply. The president can take action, starting with granting permission to conduct seismic surveying off the Atlantic coast that would update decades-old information on the oil and natural gas reserves there.
• Permitting: Most of America’s recent energy gains have come from development on private or state lands, largely reflecting limited access to federal areas and the pace of permitting in areas that are open. Indeed, last year EIA reported declining sales of oil and natural gas from production on federal lands (2003-2012). The president could act by following up on previous pledges to streamline the permitting processes.
• Fracking: IHS estimates development of unconventional oil and natural gas from shale and other tight-rock formations will support 3.3 million jobs by 2020 and more than $468 billion in annual contributions to GDP. The president can act by ensuring that agencies under his authority don’t impose new regulatory layers – in addition to effective state regulations and existing federal rules – that could slow or discourage energy development.

U.S. Energy Exports

Our energy revolution is creating export opportunities that would have been unimaginable less than a decade ago. Exporting valued U.S. energy commodities would stimulate domestic output and generate job creation and new investment. It would bring overseas wealth into this country, strengthening America’s trade balance. The opportunities include:

• Liquefied natural gas (LNG): Earlier this year ICF International found that LNG exports would generate significant economic benefits in terms of jobs – adding between 73,000 and 452,300 jobs between 2016 and 2035 – and in terms of economic growth – the net effect on U.S. GDP projected to range from $15.6 billion a year to $73.6 billion by 2035. ICF and other studies project that U.S. natural gas reserves can amply meet domestic needs and supply friendly buyers overseas.
• Crude oil:  Because U.S. refining capacity is largely designed to accommodate foreign, heavy crude, surging domestic production of light tight crude could leave significant amounts of U.S. crude with no place to go because of a 1970s ban on crude exports, the International Energy Agency recently concluded. Crude exports would provide a market for that oil and keep domestic output from hitting this self-imposed wall.

The president could act by directing his Department of Energy Department to approve pending applications for LNG export facilities, so that the United States has the best opportunity to be a leader in the newly developing global LNG market. Likewise, the president can act by working with those who believe the time has come to end the crude export ban, implemented four decades ago when the country faced an energy crisis but rendered obsolete by increased domestic crude production.

There’s more action the president could take, falling chiefly under the category of “do no harm.” He could oppose new energy tax increases that could slow domestic production and cost jobs to the economy. He could direct EPA to set ethanol requirements under the Renewable Fuel Standard (RFS) to levels that would avoid crashing into the ethanol “blend wall,” potentially harming consumers and the economy. He then could work with Congress to repeal the RFS, which is fundamentally broken.

Each of these action items would in some way acknowledge America’s new energy reality: that we have the oil and natural gas reserves to run our economy and ensure our modern way of living, both now and 25 years from now, when EIA says oil and natural gas will provide nearly 60 percent of the country’s energy and more than 90 percent of its transportation fuels.

America is in position of energy strength – if it makes choices and takes action to deploy that strength. API President and CEO Jack Gerard, from his State of American Energy speech earlier this month:

“It should be a simple choice: do we as a nation decide to use our vast energy resources to help meet the world’s growing energy needs and in the process boost our global competitiveness, realign our foreign policy goals and national security priorities, encourage America’s 21st century manufacturing renaissance, provide millions-more Americans with good-paying jobs and provide billions of dollars in revenue to local, state and federal governments in the coming decades – or not?”

 Time to choose energy – and act. For more, see ChooseEnergy.org.