On Energy Policy We Need to Make the Pie Bigger

By March 15, 2013Energy

Today President Obama urged Congress to establish an “energy security trust” which would take a portion of federal revenues from oil and gas production on federal lands and earmark them for research in advanced vehicle technology which would include cars fueled by electricity, bio cells, natural gas and biofuels.  The goal would be to earmark $2 billion over the next 10 years for research in these areas. Initially the President spoke about his plan during the State of the Union speech in February.

The President visited the Argonne National Laboratory in Chicago for his speech today. This federal lab has been working on advanced vehicle technology since the 1990s with a focus on advanced car batteries. During his visit he again spoke about an “energy security trust.” While much of what he said was positive and good we can’t afford to focus on just a few fuels. We need to continue basic research on all types of fuels. Advance vehicle technology research is critical if we are to continue to increase the efficiency of our cars and trucks. The research of today will reduce vehicle fuel consumption and the impact of vehicles on our environment in the future.

As part of his plan the President said he is looking for a pilot program to remove the “bottle necks” from the permitting process in North Dakota’s Bakken Shale Formation. This is great news,  the White House finally understands that the permitting process is taking far too much time and is the “bottle neck” in the production process.  This should not be a surprise. The energy sector has been talking about these permitting bottle necks for years! We hope the Administration and the President understand that it has been the federal government that has created barriers to production and slowed our exploration efforts.

Second, I found it interesting that the President would pick the Bakkens for a pilot project given that most of the production in the Bakken Shale Formation is taking place on private lands where the federal permitting process is not an issue. The fact is that for the last 6 years most all of the new production has taken place on private lands. Most of the shale gas development is on private lands. If we had to rely solely on federal lands for oil and gas development we would still be building import facilities for LNG!

Third, the President’s plan seems to only include federal lands both onshore and offshore that are currently open to federal leases.  So rather than significantly increase the size of the pie, he has decided that he will just cut the pie into smaller pieces so there are more slices but not more pie! Why not open up more of the Outer Continental Shelf (OSC) to oil and gas leasing. Make the pie bigger and thus the revenue bigger.  By keeping the size of the pie virtually the same, then we are not making progress. More pieces does not necessarily translate into more pie!

Finally, we have a deficit problem in this country. The federal government spends more than it takes in. The President is looking for new revenues. He needs look no further than federal lands. By opening up additional OCS leases and federal lands we can significantly increase our revenue, stimulate the economy and increase our energy security. Let’s eliminate unnecessary “bottle necks” not just in the Bakken but everywhere and let’s open up more of our federal lands.

Chip Yost is assistant vice president of energy and resources policy, National Association of Manufacturers.


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