WASHINGTON, D.C. – The American Petroleum Institute released its “State of American Energy” report today at a media event held at the Newseum in Washington. API President and CEO Jack Gerard outlined the oil and gas industry’s perspective on energy policy and released details of an API commissioned study looking at the effects of natural resource access and tax policy. This reporter was invited to attend the event by API, which paid for my travel expenses.
There is little doubt that America has arrived at another energy policy crossroads. Oil prices are rising because worldwide supply has remained relatively flat while China and India demand more and more crude to fuel their economic growth. While America has far more proven crude oil reserves than anyone suspected even a decade ago, a good deal of those reserves lie offshore in areas that are currently off limits for new drilling. Offsetting that somewhat, domestic natural gas production is robust and supplies and prices have remained very stable. Much of the good news about natural gas supply can be tied to tapping vast reserves of “shale gas” trapped in huge underground formations.
American energy policy will follow one of two roads. The Obama administration’s preferred approach is to continue to ban most new offshore oil exploration and, perhaps, to levy an energy tax as a means of both reducing consumption and raising federal revenues. The other path, of course, runs in exactly the opposite direction: aggressively pursue offshore exploration, in both deep and shallow waters, and avoid any new taxes on petroleum and natural gas. In releasing the “State of American Energy” Gerard and API made their case for the latter course.
Gerard argued that the United States will continue to consume vast amounts of oil and natural gas, far into the future. Industry estimates project that fifty percent of all energy used in America will come from the combustion of natural gas and petroleum products by the year 2035. (Currently, sixty percent of all domestic energy use involves oil and natural gas). “Our nation will require more oil and natural gas for decades to come,” Gerard said. “A lot of it will come from deep sea well – and if it doesn’t come from here, then we’ll import it.” The industry’s perspective is that increased domestic oil and natural gas production can lead the way to economic recovery, but only if it has access to these natural resources and if additional taxes are not imposed on energy production and distribution.
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