Daniel Kish is the senior vice president for policy at the Institute for Energy Research.
In his State of the Union speech two short weeks ago, President Obama assured the American people that he was on the side of domestic energy production—but already those promises are coming unraveled in a big way.
Last week, the Obama administration's Department of Interior announced that it would be drastically curtailing access to Western oil shale resources on public lands, which the department estimates contain almost five times the amount of Saudi Arabia's 260 billion barrels of proven oil reserves. Oil shale is a sedimentary rock that contains kerogen, which is a fossilized organic material that can be heated and converted into multiple petroleum products such as gasoline, diesel, high quality jet fuel, and kerosene. The United States is blessed with the world's largest supply.
Although oil shale can be recovered with today's technology, much of richest, most concentrated deposits are found on federal lands that have yet to be leased. According to Interior's Bureau of Land Management, over 70 percent of the United States' oil shale resources are on federally-owned lands.
Under the administration's proposal, the few federal lands that are currently available for oil shale development would be reduced from over 2 million acres to 461,964 acres—a decrease of over 75 percent—and no further oil shale research would be permitted on the remaining lease areas until industry demonstrates that commercial development of oil shale is viable. This is akin to an employer posting a sign saying, "The beatings will stop when morale improves."
The rationale behind prohibiting oil shale development on public lands because the resource hasn't yet been proven economically or technically viable is entirely flawed. No one is asking for subsidies and mandates that citizens buy oil shale, as lobbyists are demanding for so-called green energy sources. If one applied this same logic to expensive, highly subsidized wind power, the secretary of Interior's decision to hold an offshore wind lease sale to produce energy that is two and a half times the cost of other generation sources would not have been announced. In reality, the lack of access provided by government—the largest resource holder—is the principal reason oil shale has yet to be developed by industry. This latest decision does little to remedy that problem; rather, it exacerbates it.
The much more plausible scenario is that the administration found a convenient excuse to limit access to oil shale resources in the form of environmental litigation. In a classic case of a "sweetheart deal," environmental groups challenged a 2008 plan to open up federal oil shale resources to development that was ordered by a 2005 law, which Interior Secretary Ken Salazar then settled in a way that allowed them to skirt the law. Salazar, as a matter of record, was the leading opponent to the 2005 oil shale law while in the Senate, but lost his fight when the law was adopted. The settlement gave him a chance to revisit his loss, and he accepted the 75 percent reduction in available leases and adopted the "catch-22" approach to oil shale leasing.
Closing off access to our vast oil shale resources will come at a huge cost to future U.S. energy security. Signing sweetheart deal legal settlements to skirt the law potentially costs the nation the rule of law. In the absence of a good reason to skirt the law and leave more than 1.2 trillion barrels of oil in the ground while gas prices are projected to hit $4 by May, the American people should question the sincerity of the president's stated commitment to an "all of the above" energy approach. They should also wonder whether their government any longer follows the law, and what that portends for the future.