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  • Morning Bell: Why We Aren't Producing Enough Domestic Energy

    President Barack Obama and Governor Mitt Romney had a heated exchange about energy in the most recent debate. The President repeated his refrain that oil and gas production is the highest it has been in eight years, but Romney was right to point out that this was driven by production on private and state lands.

    The vast majority of America’s new oil and gas production is happening on private lands in states like North Dakota, Alaska and Texas. The environmental review and permitting process on federal lands, however, is burdensome and keeps resources untapped.

    As Heritage’s Michael Sandoval has reported:

    …oil production on federal lands has decreased between fiscal 2010 and fiscal 2011 by 11 percent. Natural gas production has decreased by 6 percent in the same one-year span. It is down nearly 27 percent from fiscal 2009. Meanwhile, oil and gas production have increased by 14 percent and 12 percent, respectively, on private and state-owned land.

    How did North Dakota pass Alaska and California to become the second-largest producer of domestic crude oil? Answer: sensible state regulations, advancements in technology, and the ability to drill on private lands.

    In addition to the much-heralded energy security that domestic energy could bring, these efforts produce jobs. North Dakota’s boom has put people to work. The state has the lowest unemployment rate in the nation, at just 3 percent.

    >>> Watch our video about the North Dakota oil boom

    In contrast, regions where energy production has been restrained have suffered. Heritage energy expert Nicolas Loris explained the effects of halting drilling in the Gulf of Mexico and elsewhere:

    The official moratorium and de facto moratorium as a result of a molasses-like permitting process reduced planned capital and operating investments by $18.3 billion and cost the Gulf more than 162,000 jobs in just the past two years. Federal production in the West has experienced a similar fate: The Administration’s delays on permitting oil and gas projects public lands are preventing economic activity. In Utah and Wyoming, for instance, projects held up by the National Environmental Policy Act process are preventing the creation 64,805 jobs, $4.3 billion in wages, and $14.9 billion in economic impact every year.

    The most recent battle is taking place over uranium mining. The federal government banned uranium mining on more than 1 million acres of federal land in Arizona. Virginia lawmakers are considering doing the same in their own state, but the land in question is privately owned. That means the state legislature, not federal bureaucrats, will decide whether the mining moves forward.

    In a new paper, Heritage’s Jack Spencer and Katie Tubb reveal that “studies show that the net economic benefit of construction and operations will yield almost $5 billion for Virginians over the life of the mine—around 35 years.” The site is “the nation’s largest known deposit of uranium, and the seventh largest in the world. At current uranium prices, the deposit is valued at approximately $6 billion and is enough to fuel each of America’s 104 nuclear reactors for two years.”

    Spencer and Tubb note that it isn’t the state legislature’s responsibility to decide whether mining is a good idea: “The job of the Assembly should not be to ban or promote mining, but rather to set strong regulations that protect public health and safety. Then, given those regulations, private investors can determine whether the mining is worth pursuing.”

    While the federal government makes energy production difficult or impossible on federal lands—as it has done under the Obama Administration—private lands can provide much-needed energy resources and economic revitalization. All government needs to do is get out of the way.

    Quick Hits:

    • The CIA reported to Washington within 24 hours of the Libyan consulate attack that “that there was evidence it was carried out by militants, not a spontaneous mob,” AP reports.
    • Iranian President Mahmoud Ahmadinejad invoked the U.S. debt in questioning America’s continued legitimacy, asking how a country with $16 trillion in debt could “remain a world power.”
    • President Obama and Mitt Romney took turns joking and jabbing at each other at a charity dinner last night.
    • At 10 a.m., new jobs numbers will come out—showing state-by-state unemployment rates.
    • Watch our new quiz show to see the biggest whoppers from opponents of Medicare reform. It’s time to play “Medicare Myths”!
    Posted in Energy [slideshow_deploy]

    14 Responses to Morning Bell: Why We Aren't Producing Enough Domestic Energy

    1. PaulE says:

      North Dakota is an example of how this entire nation's economy could prosper, in all sectors of the economy, if government would just change its focus from slowly strangling the life out of the economy via excessive regulations and taxation to an environment where private industry is actually encouraged to invest and thus grow the economy. That means regulations that only pass the "economics benefits test", not those based on pleasing fringe voting blocks with an ax to grind against either capitalism or America in general.

    2. proud North Dakotan says:

      The data on production of oil and gas on private and state land presented here and coupled with employment data provided by the US Chamber of Commerce, that indicates non-farm employment in the US is down by 3.2% since 2007 and employment in oil and gas extraction is up by 35% over the same time period substantiates that the Obama administration is responsible for an even worse decline in employment than most folks realize. Oil and gas production on private lands, not the federal government, helped keep the depth of the recession and loss of jobs from being even worse. Obama takes credit for results he has no hand in and the economy could be in full recovery if the Obama government had stood aside and quit blocking economic recovery in the US.

    3. Nuclear reactors will become more acceptable when we switch to inherently safe thorium vice uranium. Once people become educated on the new technology then and only then will we have an increase in clean power.

    4. Charley Green says:

      Perhaps one reason production is down on government lands is because of the China connection and their investment in those oil, gas & mineral rights. Who stands to benefit & prosper because of thi?. Follow the money and see how far into our government it flows.

    5. Russ Ramey says:

      Just the facts…this is not hard folks…we need to let this POTUS go…

    6. Jim says:

      US gasoline production is near all time highs and US gasoline consumption is at multiple decade lows. Throughout the 90's and 00's, monthly US gasoline exports were generally in the 2,000,000 – 6,000,000 barrel range. Beginning in late 2010, monthly US gasoline exports shot up to 11,000,000 – 19,000,000. This large jump in exports has come even though US domestic retail prices have been quite high over that period.

      Does Heritage have an explanation for this, other than a weak US dollar relative to certain other countries fueling exports to those countries? I applaud Heritage for for its admirable defense of free trade. But currency manipulation to promote exports is not free trade, and is harming US citizens. So why don't I see much from Heritage about reigning in the Federal Reserve?

    7. alan kalons says:

      Production of gas and oil on goverment lands also generates income from leasing agreements and taxes that are the result business revenvues and employment.

    8. Bassboat says:

      The thing that bothers me most about this is that the Bakken Basin discovery has been known for 10+ years. We know we need energy especially here in the US. Why has the Heritage Foundation not been leading the parade with a 1000 piece brass band? Pressure needs to come from places like HF and other like places. The media will not promote the job creator that we now have. Really disappointed in the HF.

    9. KelliB says:

      I understand the data to be far greater then what this article points out when all 3 years of this administration is taken into account. From what I heard over the last 3 years of the Bush admin. there were 1200 permits for offshore drilling and during the last 3 of obama admin. there were 300. That is a far greater reduction. Additionally, the numbers are similar for land drilling, not as drastic but far greater then what this article is saying.

    10. Dave says:

      Anybody else hearing echos of Atlas Shrugged these days?

    11. David Carter says:

      I'm with you Mr. Gerant, we should utilize the technology we COULD have not just what we DO have. The best we can do is to look as far into the future as possible and welcome innovation.
      Nuclear power is where Einstein left off 90 years ago. Let us embrace solutions and not point fingers, the Tesla Coil, Quantum Mechanics, we have the entire world of information to guide us in designing this. The innovations of green/clean renewable energies like solar, wind, hydro-electric, etc all will aid us equally. Gov't subsidy's should be given to the small businesses (like Solar City) who make these solar kits available to our communities.

    12. s miller says:

      Our environment and energy prod is just one more way O plans to level the playing field internationally.

    13. Guest says:

      Why not develop Solar Energy???

    14. Vic Samuelson says:

      Energy policy needs to be looked at from the broadest possible perspective. We have huge coal resources plus cleaner burning technology and scrubbers for coal-burning plants. Obama administration has vowed to make new coal plants uneconomic. We have improved nuclear technology and adequate safe storage capability in the Yucca Flats. Nuclear energy progress also is blocked by the government and hindered by myths from Three Mile Island, etc. Oil and gas have been addressed in your article. If we were strongly committed to real objectives of first, a substantial increase in energy diversification, and second, energy independence, we could achieve these goals by doing the following: maintaining adequate tax and other incentives for oil and gas, facilitating and expediting permits, providing new tax and other incentives for coal and nuclear, getting burdensome regulations out of the way, while keeping on eye on sensible environmental protection, we could achieve these vital goals faster than most people would imagine.
      Meanwhile, incentives, not subsidies, should be provided to stimulate alternative energy research and these modes should be developed, tested, and introduced as and when they become economic vs. conventional economic sources.

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