As the New Year moves forward, Americans are pursuing resolutions that will help them improve their lives. However, the single most important action that can benefit the nation’s businesses, industry and consumers is the advancement of sensible policies that enable the full development of the United States robust energy resources. For this reason, the Obama Administration and state governments throughout the country should implement policies that will enable the economy to grow and allow the nation to continue as a global leader for the 21st Century.
Until this occurs, we will continue to see dreary headlines in the news, like the one that consumers may soon have to pay $5 per gallon or more for gasoline in the near future. With the global oil market becoming increasingly constrained, and the United States importing 11.8 million barrels per day of crude oil to keep our economy running, every time a disruption occurs -- like the threat to close the Strait of Hormuz -- American businesses and consumers will find themselves on the hook.
Due to our continued reliance on unstable energy supplies, Americans are quite literally being held hostage at the pump. This doesn’t have to be the case, and in fact we have all the tools necessary to reverse this trend. It only requires rejecting misguided policies that present us with false choices pitting the environment against energy development and a commitment to fully developing our nation’s vast energy resources.
One such misguided policy is the implementation of a low carbon fuel standard (LCFS). LCFS, at its heart, mandates the use of certain transportation fuels that are not yet commercially viable while penalizing affordable fuels, all based upon their "carbon intensity." Such a policy, supposedly designed to protect the environment, in practice only grossly distorts market dynamics. Ironically, many studies have found that the policy would have a net negative impact for the environment due to "crude-shuffling," or rising greenhouse gas emissions due to extraneous exporting and importing.
Predictably, the state of California -- no stranger to energy crises fueled by flawed ideological commitments -- has led the charge on LCFS implementation. That is, until its law was recently struck down by a federal judge for violating the Commerce Clause of the U.S. Constitution. Maine also recently announced it would abandon its support for an LCFS due to the economic hardship it would cause in the Pine Tree State.
As for more forward-thinking policy choices, first and foremost should be increasing access to our nation’s vast supply of affordable energy resources. According to the Institute for Energy Research’s North American Energy Inventory, the United States is host to more than 1.4 trillion barrels of technically recoverable oil and 2.7 quadrillion cubic feet of recoverable natural gas. Exploration for and development of these energy supplies could create hundreds of thousands of jobs and spur enormous economic growth. Consider:
Granting the permits necessary to explore and produce offshore resources in the Chukchi and Beaufort Seas in Alaska would help maintain capacity in the critical TransAlaska Pipeline, as well as deliver an additional 1.4 million barrels of oil per day to U.S. markets. Further, approving the Keystone XL pipeline, which a majority of Americans already support, would bring more than 700,000 barrels per day, along with more than 20,000 immediate jobs and $5.2 billion in revenues for the corridor states alone.
Also critical to establishing sanity in our energy policy is restoring the Gulf of Mexico to its pre-Macondo production levels, which would add 130,000 barrels per day to the nation’s energy supplies. The sum total of these three steps -- all of which can be done easily by this Administration or one that follows -- would increase domestic oil supplies by 2.2 million barrels of oil per day and create 114,700 high-paying American jobs.
This does not mean, of course, that we should abandon the development of renewable energy sources such as solar and wind. In fact, we should develop these sources more aggressively to further diversify our national energy portfolio and, in turn, increase energy security.
However, during this election year we must demand specific answers in regards to our nation’s energy portfolio from the President and candidates alike. Indeed, a well defined plan to unleash the nation's full range of energy resources is the one New Year’s resolution that will provide the most benefit to American consumers, as well as the economy.