Free Markets, Free People


The energy policy choices

Yesterday was a rather interesting day for me.  Besides being a mild and pleasant day in Washington DC, a new Congress was being sworn in and an vital industry group was making the “state of American energy” known via a presentation and news conference at the Newseum – a museum about the history of gathering of news (and a place you should definitely put on your “must visit” list the next time you’re there).

The American Petroleum Institute’s Jack Gerard made a very sound and clear argument for the development of an energy policy which will best benefit this country and economy.  Backed by a Wood Mackenzie study, the choices seem stark and the best one seems obvious.  As he laid them out, choice one is to continue the policy of limited or no access to domestic drilling areas both on and off-shore and taxation of the industry at an increased percentage in order to generate revenue for government use.   That will certainly generate revenue – no doubt.  But at what real cost to the economy?  That is the question.

Choice two is to open up access and focus on safe and environmentally sound drilling to boost production here in the US.  That, of course, would have the critical side benefit of creating hundreds of thousands of jobs and, by the way, producing more revenue for government than choice one.

The numbers for the two options come from the Wood Mackenzie study as cited in an API press release.

The study calculates that increased access to America’s oil and natural gas reserves could, by 2025, create 530,000 jobs, generate $150 billion in taxes, royalties, and other revenue for the government, and “boost domestic production by four million barrels of oil a day.

The other choice?   Not so good: “Raising taxes on the industry with no increase in access could reduce domestic production by 700,000 barrels of oil equivalent a day (in 2020), sacrifice as many as 170,000 jobs (in 2014), and reduce revenue to the government by billions of dollars annually”

That latter policy choice would reduce our domestic oil production, cost jobs, raise the cost of doing business for the oil and gas industry of which most will be passed along to those who can least afford it.  Plus:

An additional 1.7 million barrels of oil equivalent a day in potential production that is currently of marginal economic feasibility would be at greater risk of not being developed under the modeled tax increase.

So again we see some pretty stark examples of how government enabling an industry would be vastly more beneficial to the economy and its own revenue coffers than would government using regulatory restrictions, denial of access and a straight up scheme of taxation. 

Yet right now we have an administration which is choosing the latter course and is seemingly at war with that industry- an industry that “supports more 9.2 million U.S. jobs and 7.5 percent of the U.S. economy, and, since 2000, has invested nearly $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.”

Does that make sense to you? 

The energy policy choice that enables Americans to increasingly address their own domestic energy needs with good paying jobs and will actually provide more in revenue for the government than taxation alone seems the obvious choice.

So why aren’t we seeing it being made?

~McQ

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7 Responses to The energy policy choices

  • If I believed in conspiracy theories and such, “choice one” has all the markings of either a environmental fanaticism or a plan to save all petroleum in the US till we have exhausted other world supplies.  Both allow for much market manipulation that has gone hand-in-hand with the whole AGW push.

    • Another possibility: deny the US cheap energy to make up for our past trangressions (excessive energy use, causing global warming, whaling, exploiting brown people, . . . pick your favorite).

  • Oil isn’t the other form of energy. When was the last time we put up a new nuke power plant? And why are we not using breader reactors? The left always pushes energy that doesn’t work. Solar? How do you store the f*cking energy? Maybe it will work if we invent some new capacitor or battery technology. Wind? Currently it requires a oil/coal plant to match output, which means said carbon producing plant operating ineffciently. Maybe a super capacitor plant could make wind work.

    If we do develope some super new capacitor (or battery), what are the odds the environmentals will like it? That aside, how much would they like the footprint of huge arrays of solar panels or wind machines?

    And what is the climate impact of removing massive amounts of wind energy from the environment?