Sensible Policies on Production, Regulations, Permits will Ease Prices at the Pump

By July 16, 2013Energy

This morning, the Senate Energy and Natural Resources Committee will hold a hearing to “explore the effects of ongoing changes in domestic oil production, refining and distribution on U.S. gasoline and fuel prices.” The boom in unconventional oil and gas production has changed the way we look at fossil fuels. No longer are we in a position of scarcity; on the contrary, we are energy rich. Virtually every credible energy analyst predicts that domestic oil supply will exceed our demand at some point relatively soon.

This spring, the U.S. produced 7.3 million barrels of crude oil per day—our highest level of production since 1992. While many factors affect gasoline prices—the American Petroleum Institute has a good summary of those factors here—increased supply is clearly one of them. Energy Information Administration (EIA) chief Adam Sieminski, who will testify at today’s hearing, recently issued a statement that “[i]ncreased oil refinery fuel production, particularly as facilities are back on line in the Midwest, and lower crude oil costs will help to ease pump prices.”

We’re glad the Senate is having a real discussion of how to keep gasoline prices down. We can offer several good ideas. First, obviously, is to keep supply up. We can do that by making more areas available for leasing onshore and offshore. More than 85 percent of all offshore areas remain off-limits to oil and gas exploration. Onshore oil and gas production is up, but that is due to development on private and state lands—oil production on federal lands is flat.

Second, we need reliable permitting. That means approving the Keystone XL pipeline, which would bring hundreds of thousands of barrels of crude oil from Canada to refineries in the Gulf coast. There is no legitimate reason why, after five years of red tape, this project still hasn’t gotten its permit from the government. Keystone isn’t alone: Shell paid the U.S. government for drilling rights in Alaska back in 2005 and 2008 and didn’t get its permits until last year. Back in April, the House Natural Resources Committee found that it takes the federal government 307 days to approve a permit for onshore drilling on federal land—during which the average person could watch the movie “Die Hard” 3,349 times, according to the Committee. There are dozens of bills in the Congress that would speed up the permitting process for energy projects, and we believe these should make it to the President’s desk.

Finally, we need to make sure our regulations do not make it more expensive to get crude oil out of the ground and refine it into gasoline. Oil refining operates on razor-thin margins, and that’s before incorporating several of the billion-dollar regulations planned for the industry to deal with ozone, greenhouse gases, sulfur and vapor pressure. We hadn’t built a new refinery in the U.S. for 30 years until one broke ground this year in North Dakota; unless we keep the regulations in check, we won’t be adding many more.

For manufacturers, a balance between supply and demand is important to assure competitive, stable prices. The NAM supports policies that promote the leasing, exploration and development of the nation’s oil and natural gas resources in an environmentally sound manner.

Ross Eisenberg

Ross Eisenberg

Ross Eisenberg is vice president of energy and resources policy at the National Association of Manufacturers (NAM). Mr. Eisenberg oversees the NAM’s energy and environmental policy work and has expertise on issues ranging from energy production and use to air and water quality, climate change, energy efficiency and environmental regulation. He is a key voice for manufacturing on Capitol Hill, at federal agencies and across all forms of media.
Ross Eisenberg

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