Will Obama Get Out of the Way of the Energy Boom?

Energy production is experiencing a huge revitalization period in the United States, surging faster than many seasoned analysts predicted.

A nodding donkey rig pumps crude up from the ground on an oil field

Daniel Simmons is the director of state affairs at the Institute for Energy Research.

President Obama says that he is "proud of the fact" that domestic oil and natural gas production is increasing. The reality, however, as the Congressional Research Service explains in a new report, is 100 percent of the increase in domestic oil and natural gas production since 2007 has occurred on nonfederal lands. In fact, oil and gas production in the United States has fallen on federal land since 2007. Considering that the federal government owns almost two thirds of all lands onshore and offshore in the United States, many of which hold vast energy resources, this is a glaring discrepancy and a blight on the administration's so-called "all of the above" energy strategy.

Energy production is experiencing a huge revitalization period in the United States, surging faster than many seasoned analysts predicted. Oil production in the United States last year experienced the largest amount of growth since the oil industry began here in 1859, with the biggest gains coming from shale oil formations like the Bakken Shale in North Dakota and the Eagle Ford Shale in south Texas. Congressional Research Service's report noted that oil production has increased 1.1 million barrels per day over the 5.08 million barrels produced in 2007—an increase of 22 percent. All of that increase occurred on nonfederal lands. Similarly, natural gas production has increased by 4 trillion cubic feet—or 20 percent—since 2007, and the report states that all of the increase has occurred on nonfederal lands, like the Marcellus Shale in Pennsylvania.  

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In contrast, oil and gas production on federal lands has actually decreased, despite technological increases like hydraulic fracturing and despite the president's stated commitment to reduce our dependence on overseas imports. The Congressional Research Service's report found that the federal share of oil production from 2007 to 2012 actually fell about 7 percentage points; similarly, production of natural gas on federal lands fell by a whopping 50 percent for offshore natural gas and by 33 percent overall.

The charts below underscore this disparity. While operators have been able to capitalize on the favorable leasing and regulatory regimes in place for state and private lands, oil and gas production trends for federal lands show relative stagnation and decline. Since 2010 in particular, there has been a sharp divergence between oil and gas production on federal lands versus nonfederal lands, and this gap will only continue to increase as current leasing policies begin to fully manifest themselves in the coming years. Specifically, offshore leases take years to develop, and the offshore leases now producing were actually granted under the Clinton and George W. Bush administrations years ago. As such, the total effect of the Obama administration's more stringent leasing and permitting processes has yet to be realized.

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To give one a sense of what the impact will be from President Obama's energy policies, take the amount of time it takes to obtain a permit on federal versus nonfederal lands: It currently takes about 307 days to obtain a permit to drill on the federal estate (an amount of time that has been steadily increasing), whereas it takes about 10 days to obtain a permit on nonfederal land in North Dakota. Moreover, the Obama administration has implemented numerous policies that restrict the overall amount of land that is available for exploration. President Obama's five-year offshore leasing plan placed 85 percent of the energy-rich Outer Continental Shelf off-limits to exploration, and other important areas in the National Petroleum Reserve in Alaska and the western Green River oil shale formation have been similarly restricted.

The data the Congressional Research Service presents from the previous six years are very clear: Oil and gas production on private and state land continues to rapidly outpace production on federal lands, even though the federal government owns a majority of the land in this country. Moreover, a sizable portion of our natural resource assets—including a staggering 1.4 trillion barrels of recoverable oil in oil shale—lie under these lands. This is a discouraging trend, yet it can readily be reversed by making the federal permitting regime less complex and restrictive, and by granting greater access to our energy-rich federal lands. Producing more energy here at home will help to lower prices and stimulate our economy; continuing to hamstring production will inevitably resign us to more years of imports from overseas sources, and it will leave us beholden to the whims of those countries. The right choice for the American people seems clear, but whether Washington agrees remains to be seen.

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