The United States needs more oil and natural gas production on federal land and in coastal waters.
Consider the enormous demand for energy. The Energy Information Administration expects demand will increase 6.3% through 2050. Wind and solar energy are projected to meet an increasing share of energy demand, but hydrocarbons are still expected to provide 79% of America’s energy needs in 2050.
The argument for oil and gas production, however, is not just about meeting the increasing need for energy. It has been an engine for job creation and economic growth, and it has improved the lives of millions of people.
But the politics of energy production are driven, to this day, by the proposition that fossil fuels pollute the environment and depress the use of renewables competing with oil and gas. It is a myopic view, reflected in the keep-it-in-the-ground movement that wants to shut down oil and gas production.
It underpins presidential aspirant Elizabeth Warren’s threat to ban all fossil fuel extraction on federal lands and in coastal waters. She pledged recently that if elected she would sign an executive order on her first day in office for a “total moratorium on all new fossil fuel leases.”
Warren, D-Mass., is misguided. Her proposition is an absurd idea that misses many things, including the fact that oil and gas production on federal lands and in offshore areas is essential to America’s economy and energy security. Those areas provide about one quarter of total U.S. oil production and make up 13% of natural gas production.
Closing off oil and gas production has ominous implications that could touch our pocketbooks and change our daily lives. The cost in dollars and forfeited jobs from a leasing moratorium would be high. Less oil and gas production would mean less revenue for state and local governments whose economies are tied to energy production on public lands. It would jack up energy costs nationally, an ominous development, especially in New England since the region desperately needs more natural gas to make up for the power lost from the shutdown of nuclear and coal plants.
Some would say that solar and wind energy are already making a difference in the energy picture. But that argument doesn’t hold up. Together they make up only 8.5% of electric generation. There’s a fundamental mismatch between the economic importance of fossil fuels (and the growing recognition of what it means for the economy) and the world of renewables.
Technology has made the difference. In 2000, shale gas amounted to only 2% of United States production. Today it is 60% and rising. Natural gas is in such abundance that its price has fallen dramatically, benefiting households, businesses, and industries. The shale revolution has driven the switch from coal to natural gas in electricity production, resulting in a decline in carbon emissions from power generation to mid-1980s levels. Natural gas has underpinned the production of solar and wind energy, providing back-up power on days when the weather isn’t cooperating.
But one of the greatest changes in America’s energy landscape has been the steep decline in petroleum imports, which have fallen from 60% of total consumption in 2005 to just 11% today. The major reason for that change is the amazing turnaround in U.S. oil production, which has more than doubled since 2008, with offshore drilling in the Gulf of Mexico still a key contributor at nearly 2 million barrels per day and accounting for 16% of the nation’s oil production. What is striking about the revival of oil and gas production in the U.S. is its significant affects on energy security, jobs, economic development, and the competitiveness of U.S. industries.
Warren should pay greater attention to those economic benefits instead of advocating an ill-advised keep-it-in-the-ground approach to fossil fuel development on federal lands.
Mark J. Perry (@Mark_J_Perry) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.
