The Associated Petroleum Industry held a conference call with reporters this morning in anticipation of President Obama’s speech on energy. The API’s top policy expert on upstream operations, Erik Milito, discussed the many policy and regulatory decisions by the Obama Administration that have prevented domestic energy development, especially offshore oil and natural gas.
Yesterday, the President’ point person for oil and natural gas development, Secretary Salazar, released a politically motivated and deeply flawed report on so-called idle leases. Among other things, it lists offshore leases that do not yet have approved exploration or development plans as “inactive,” regardless of whether there is exploration or pre-production activity going on such as seismic or technical reviews of the geography. This preparation work is necessary to determine whether natural resources exist on a lease and how to produce any oil and natural gas safely.
The Administration’s report assumes that oil and natural gas are spread uniformly across a lease acreage, suggesting that 70 percent of idled leases equates to 70 percent idled resources – as if finding oil were no more difficult than sticking a pipe in the ground.
The report completely whitewashes the fact that in many cases the reason that these leases have no exploration plans is that the BOEMRE is sitting on those plans. This is like leasing an apartment from the government for $20 million, the government refusing to give you the keys to the apartment, and the government proceeding to complain because you are not occupying the premises. [Good line!]
The disturbing reality is that 2011 may well go down as the first year since 1957 that there has not been at least one offshore lease sale, not one.
The National Association of Manufacturers released a statement criticizing and refuting Interior’s report, “Manufacturers: Interior Department Findings on Permitting Process Are Flawed.”
One can obviously disagree on energy policy in good faith. One can honestly argue that America benefits from policies that discourage domestic energy development, that the higher prices of oil and natural gas represent a painful necessity that will move the U.S. economy from fossil fuels. True, it’s harder to make that case politically when gasoline is at $4.25 a gallon before the summer driving season, but the argument can be made legitimately and sincerely.
But the attempt to blame lack of domestic energy development on the oil and gas industry through a rigged report on “unused leases” and the concomitant “use it or lose it” attacks is cynical and deceptive, fake populism meant only for political cover. It’s playing the American people for saps.