Washington, DC – As U.S. secretary of energy Steven Chu continues his tour through the Middle East “to strengthen and expand U.S. relationships across the region” and “discuss a range of energy issues, including energy security and the importance of investing in a broad portfolio of energy technologies as part of the global economic recovery,” the Institute for Energy Research (IER) wonders about the comparative value of this trip weighed against one to Canada.

It has been nearly a year since Secretary Chu was confirmed by the U.S. Senate, but according to his Department of Energy website, it appears he still has yet to visit Canada—our most strategic trading partner and strongest hemispheric ally—from which we import more natural gas, refined gasoline and oil than any other country.

Despite this strong and critical energy trading partnership, some out-of-the-mainstream special-interest organizations who oppose our most affordable energy resources, as well as several governors, members of Congress and top administration officials, are actively working to antagonize Canada with a Low Carbon Fuel Standard (LCFS). Many of these LCFS backers wax poetic about the dire need for the U.S. to use less Middle Eastern oil. Yet, the core objective of a LCFS is to effectively ban the nearly 17 percent of our oil we import from Canada. The result? A deeper reliance on oil derived in the Middle Eastern and in other unfriendly, unstable regions of the world. Oh, and higher prices at the pump, too.

While Secretary Chu pairs his world travels with such important missions as encouraging Americans to paint their roofs white, Canada—obviously not willing to depend on an increasingly anti-energy Washington, D.C.—recently inked a lucrative oil sands trade deal with China. Perhaps our strongest competitor in the global economy, China realizes the importance of securing affordable and stable energy resources to continue to drive economic growth.

According to the U.S. Department of Energy, nearly 2.1 trillion barrels of U.S. oil shale are currently kept off-limits by the federal government. These abundant, homegrown resources—coupled with Canada’s secure oil sands supplies—represent the largest oil reserves in the world. Still, Washington, and other elected officials throughout the country, considers policies such as an LCFS, which would effectively ban secure, job-creating Canadian energy imports to the U.S.

Perhaps, instead of provoking our partners in the world’s largest trade relationship, Secretary Chu’s time could be more wisely used to strengthen economic ties and “discuss a range of energy issues, including energy security” with top Canadian officials. If he waits much longer, we may have plenty of houses with white roofs and no energy to keep them warm. Even worse, we might not have enough oil-derived jet fuel necessary to make the secretary’s world gallivanting possible.

NOTE: According to an Energy Dept. press release, secretary Chu will travel to the energy rich nations of Saudi Arabia, Qatar, and the Emeritus Abu Dhabi. The estimated distance of this trip is roughly 15,363 miles. However, the distance from Washington, D.C. to Ottawa is roughly only 575 miles.

More from the Institute for Energy Research on Secretary Chu, Canada and U.S. energy policy:

• Press Release: 15,000 Miles or 15 City Blocks?
• Blog Posting: Low Carbon Fuel Standards: Recipes for Higher Gasoline Prices and Greater Reliance on Middle Eastern Oil
• Fact Sheet: Embrace Canadian Energy
• Analysis: China Secures Oil and Gas Resources; U.S. Prefers to Wait for Green Energy

For additional information, please contact Patrick Creighton, 202-621-2947, or Laura Henderson, 202-621-2951.

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We ask: Could as much, if not more, have been accomplished by walking 15 blocks to the Interior Dept.?

Washington, DC – Today marks day two of Energy Secretary Steven Chu’s four-day, three-country tour through the Middle East “to strengthen and expand U.S. relationships across the region” and to “discuss a range of energy issues, including energy security and the importance of investing in a broad portfolio of energy technologies as part of the global economic recovery.”

This trip comes nearly one year after Secretary Chu was confirmed by the U.S. Senate and in the wake of countless statements from the Obama Administration on the urgent need to reduce our dependence on foreign energy sources. It should also be noted that while the energy secretary is in the Middle East, the Obama Administration is busy here at home locking up job-creating domestic oil, oil shale and natural gas resources on taxpayer-owned land.

Most economists, independent experts and, in particular, our chief economic competitor, China, recognize that energy markets are global in nature. However, reducing our foreign energy dependence has become a rallying cry for some who favor top-down federal mandates to promote expensive and unreliable energy sources. These heavily taxpayer-subsidized forms of energy – such as wind and solar – are not transportation fuels, and simply cannot be used to drive our nation’s manufacturing base.

If the Obama Administration’s goal is to reduce our dependence on foreign oil, it is certainly attainable; however, it will only become a reality if this government implements policies that encourage increased domestic production of homegrown resources. The U.S. has the capability and technological know-how to achieve this goal. But to do so, policymakers must demonstrate a commitment to commonsense, pro-job, pro-American energy policies, which have been noticeably absent in Washington for the past 30 years.

Visiting our allies in the Middle East to discuss energy security is important. But this administration’s efforts to demonize domestic energy production, add layers of bureaucratic red-tape, and impose enormous, burdensome tax hikes on the very resources that serve as the foundation for economic growth and prosperity will only cause our nation’s long-term energy security to weaken.

One has to wonder if the Energy Secretary could accomplish more if he were to “discuss a range of energy issues, including energy security” with his colleague, Interior Secretary Salazar. At a minimum, by walking the 15 blocks to the Department of the Interior, he could have saved energy– the kind derived entirely from oil.

NOTE: According to a Energy Dept. press release, Secretary Chu will travel to the energy rich nations of Saudi Arabia and Qatar, and the Emirate Abu Dhabi. The estimated distance of this trip is roughly 15,363 miles. However, a distance to the Interior Department is at most 15 city blocks.

For additional information, please contact Patrick Creighton, 202-621-2947, or Laura Henderson, 202-621-2951.

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It has recently come to light, through a Freedom of Information Act (FOIA) request by American Solutions, that there may be more here than meets the eye. More on that in a second; first, a bit of history on what led up to what is now called “drill gate.”

In July 2008, when oil prices reached $147 a barrel, the Institute for Energy Research called on President Bush to end the moratorium on additional offshore energy exploration and development. For years and through both Republican and Democratic administrations, the Federal government had not allowed new offshore energy exploration or production. But when oil prices hit new highs, President Bush saw the light and started the process of opening up new areas for energy development.

President Bush saw that the public wanted new offshore energy production. The public favored additional offshore drilling by a 2 to 1 margin and President Bush acted accordingly, implementing the necessary regulation to open up new areas for energy development.

Less than a month after taking office, instead of moving forward with the plan the Bush Administration proposed, President Obama and his Interior Secretary Ken Salazar decided that first, they needed 6 additional months to hear from the American people. They made this decision despite the fact that the Bush Administration had already solicited comments from concerned citizens; the Obama Administration wanted more time for even more comments.

Maybe they hoped that by waiting 6 months, environmental groups and their well-honed letter writing operations would send more comments to the Administration than people who want increased energy security and jobs created by offshore energy development. But if that was the Administration’s plan, it backfired.

The Institute for Energy Research and several other like-minded groups organized our own plans to help Americans let their government know they favored additional offshore energy production. Unfortunately for the Obama Administration, our efforts paid off. The Administration received pro-drilling comments from the public by a 2 to 1 margin.

But here’s the catch… the Obama Administration didn’t publicize this information, despite having the information months ago. We only recently found out because another pro-energy, pro-jobs, pro-economic growth group, American Solutions used the Freedom of Information Act to pry this information from the Administration.

So why does offshore drilling matter? One reason is that it will create a lot of new jobs. In fact, one study estimates that over a million U.S. jobs are locked away in the job-creating energy resources we have offshore. Also, by producing oil and natural gas at home we’ll help stabilize the world market for oil, holding the price lower.

In his State of the Union address, President Obama said that he was open to offshore energy production. Now is the time for him to walk the walk and not just talk the talk on offshore energy and jobs production.

“It doesn’t take an advanced legal mind to interpret what Congress meant in the Deep Water Royalty Relief Act – it’s right there in black and white. Unfortunately, now that this case has officially come to a close, it will likely be used by those who oppose responsible energy development as a cudgel to beat Congress into passing bad legislation that would otherwise have no legitimate place in the energy debate.

“Make no mistake. Oil and gas revenues from federal lands and waters contributed more than $23 billion dollars to the Treasury in 2008 – making this the single largest revenue raiser after federal income tax receipts. And with scarcely three percent of the outer continental shelf currently leased for energy exploration, it’s fair to say we haven’t even scratched the surface of what could be a multi-trillion-dollar resource.

“Today’s court ruling represents a clear victory for the rule of law, and an unambiguous rebuke to those in the administration who believe they have the unilateral power to make law, instead of the faithful obligation to enforce it.”

Note: According to an economic analysis commissioned by the American Energy Alliance, robust offshore energy exploration and production would generate $8 trillion in additional economic output (GDP); $2.2 trillion in total tax receipts; 1.2 million new, well-paying jobs annually across the country; and $70 billion in additional wages each year.

For additional information, please contact Patrick Creighton, 202-621-2947, or Laura Henderson, 202-621-2951.

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FOR IMMEDIATE RELEASE
September 16, 2009
Contact:
Patrick Creighton, 202.870.0850
Laura Henderson, 202.621.2951

IER: Rahall Bill a Continuation of Failed Energy Policies From Washington

‘Energy’ hearing to focus on extending de facto offshore energy production ban,

New bill will increase foreign energy dependence

Washington, DC – Prior to part one of a two-day hearing on H.R. 3534, The Consolidated Land, Energy, and Aquatic Resources (CLEAR) Act of 2009, Thomas J. Pyle, president of the Institute for Energy Research (IER), a free market energy think tank, issued this statement:

“It’s been over a year since Washington responded to the will of the American people and finally put to rest restrictions on responsible offshore energy exploration. While this action was long overdue, and was certainly a positive first step toward restoring proper balance in our national energy policy, unfortunately, one year later, it seems as though last year’s actions were merely a gesture.

“In fact, legislation like the CLEAR Act would actually move our nation further away from being able to safely and effectively develop our offshore energy resources, adding even more red tape, costs, and burdensome regulations to the safe practice of producing energy offshore. The creation of new bureaucracies to manage leasing at the Interior Department – which is called for in Mr. Rahall’s bill – is a direct attempt to ensure that a de facto ban on much of America’s energy remains intact. The American people do not want more government – they want more of the energy that is rightfully theirs.

“And while China invests in oil sands projects in Canada, and Russia, Brazil, Venezuela, and Cuba continue to expand energy production offshore, America – the country that discovered oil 150 years ago – remains on the sidelines. The rest of the world gets it, and the American people understand that increasing energy production here at home will create jobs, help stabilize energy prices and drive down imports. And yet, our leaders stand in the way of securing energy and mineral resources at every turn, putting special interests who oppose the energy the fuels our economy in front of the interests of the American people.”

More from IER:

Interactive Dashboard: Where’s our offshore energy production?

Fact Sheet: Offshore Energy Exploration: Myth vs. Fact

Press Release: China, Russia, Cuba, Brazil Advance Robust, Supply-Focused Energy Policy

Blog:Two Energy Futures

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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FOR IMMEDIATE RELEASE
March 18, 2009
CONTACT:
Laura Henderson (202) 621-2951

We Hate to Say We Told You So….

Canadian Energy Industry to Target Asian Trade, Avoid New U.S. Regulations

WASHINGTON, D.C. – In response to a Globe and Mail report that indicated that Canadian energy producers will increasingly look to Asia to sell their energy resources thanks to President Obama’s proposed new and costly regulations and taxes, IER President Thomas J. Pyle released the following statement:

“The Obama administration knows that Canada’s energy resources are among the most significant in the world, and with a population one-tenth the size of the United States, our neighbors to the north have always been ready and willing to share.  In spite of that knowledge, the administration developed and proposed plans that will force Canada’s energy producers to send their products to Asia to avoid America’s regulatory and tax-related mess.

“If President Obama won’t let us import oil and natural gas from Canada, he will force us to buy higher-priced energy from highly unstable and largely unfriendly nations in the Middle East.  The Obama administration may understand this reality and it may be concerned, but it is not fighting to keep Americans’ access to Canada’s affordable, reliable, and abundant energy resources intact.  We hope the administration will take notice and see that their proposals have serious and detrimental consequences.”

Note: The Globe and Mail quoted the Canadian Association of Petroleum Producers president David Collyer as saying, “We see potential constraints to access to the U.S. market…the only realistic option, as an alternative to the U.S. in the near term, would be exports off the West Coast to the Far East.”

More from IER on domestic energy policy:

• IER Study: Low Carbon Fuel Standards: Recipes for Higher Gasoline Prices and More Middle East Oil
• Primer on Oil Shale: What is it? How much do we have? How do we produce it?
• Press Release: Embrace Canadian Energy
• IER Study: Green Jobs: Fact or Fiction?

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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www.InstituteforEnergyResearch.org

FOR IMMEDIATE RELEASE:
March 13, 2009
CONTACT:
Laura Henderson (202) 621-2951

Cap and Trade: All Pain, No Gain for Consumers, Economy, Environment

WASHINGTON, D.C. – On the heels of two hearings in the House today on how an economy-wide cap and trade program might affect working-class American families, Institute for Energy Research (IER) released an analysis that demonstrates that lawmakers’ concerns about the financial burden cap and trade would impose on their constituents are well founded.

“Cap and trade has two goals: increase energy costs and reduce carbon dioxide emissions,” said IER President Thomas J. Pyle. “IER’s analysis clearly shows that cap and trade goes one for two—it is as historically ineffective at reducing carbon dioxide emissions as it is historically adept at raising gas prices and electricity bills. With our economy in free fall and millions of Americans out of work, the idea that lawmakers would enact an unnecessary policy to harm families’ budgets is as irresponsible as it is illogical.”

The analysis shows that cap and trade:

· Is designed to increase the price of 85 percent of the energy we use;

· Didn’t reduce emissions in Europe, home of the world’s only full-scale carbon dioxide cap and trade policy;

· Targets low-income earners;

· Unfairly targets rural economies; and,

· Penalizes domestic and friendly trade partners’ energy resources in favor of Middle East oil.

More from IER on carbon regulation:

· IER Study: Carbon Taxes Reduce Economic Growth & Achieve No Environmental Improvement

· Blog Posting: The Dangers of a “Carbon Fed”

· Press Release: Obama Attempts to Sneak Biggest Tax Increase in History into Budget

· IER Study: Green Jobs: Fact or Fiction?

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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www.InstituteforEnergyResearch.org

FOR IMMEDIATE RELEASE
February 25, 2009
CONTACT:
Laura Henderson (202) 621-2951

IER: Interior Decision on Oil Shale Locks Away American Energy Resource Larger than Total Reserves of Middle East

WASHINGTON, D.C. – Institute for Energy Research (IER) president Thomas J. Pyle issued the following statement today after the Interior Department announced its plans to withdraw from consideration acreage in Colorado, Utah and Wyoming where research and development of a small portion of our nation’s homegrown oil shale reserves had previously been scheduled to take place:

“Earlier this week, Secretary Salazar suggested America’s massive and homegrown reserves of oil shale held ‘great potential.’ Unfortunately, the Interior Department’s decision today may help ensure that potential never becomes reality – in the process, locking-away an American energy resource larger than the total reserves of the entire Middle East.

“At a time of great economic uncertainty, with millions of Americans out of work and state budgets stretched beyond their breaking point, responsible development of America’s abundant shale resources could be a way out of our current condition, and a way back to a better one. The Interior Department’s announcement today effectively forecloses that opportunity.”

NOTE: In a story posted Sunday by the Salt Lake (City, Utah) Tribune, reporter Thomas Burr quoted Secretary Salazar as saying to a group of western governors gathered in Washington that oil shale had “great potential.”

More from IER on the potential and promise of America’s massive reserves of oil shale:

• Fact Sheet: Canadian Shale Resources a Critical Part of America’s Regional Energy Security

• IER Oil Shale Primer: What Is It? How Much Do We Have? What Can Be Done to Develop It?

• Nov. ’08: IER Applauds BLM on Final Rule for Shale Development

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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www.InstituteforEnergyResearch.org

Fact: The Minerals Management Service (MMS) estimates that the OCS contains 86 billion barrels of oil and 420 trillion cubic feet of natural gas. These estimates are likely very conservative, as bans on offshore leasing have made it illegal to explore and determine how much more energy is available. In other words, this is just the tip of the iceberg­—history has proven that when people are allowed to look for energy, they generally find it.  The best way to stop them from finding it is to stop them from looking for it.

Myth: Offshore energy development would do nothing to lower prices because it would take too long for the energy resources to make it into the market.

Fact: Economists have long disputed the notion that offshore energy development would not affect consumer prices. Both economic theory and now empirical evidence demonstrate that government policies promising future oil production lead to immediate price relief. IER economist Robert Murphy made this point on a TV interview on June 26, 2008,[1] while Martin Feldstein made the point in a Wall Street Journal op-ed on July 1, 2008.

Further, while there may be areas along the Atlantic coast without the significant build-out of infrastructure needed to facilitate quick energy production, other currently unexplored areas do have that infrastructure in place, such as the eastern Gulf of Mexico. No serious observer has ever suggested that it would take anywhere close to ten years to access those energy resources and deliver them to American consumers.  Furthermore, in places like California, where an infrastructure is already in place and the local community supports offshore exploration, those resources could be available in a significantly shorter period of time.

Myth: Offshore energy production is dangerous and harmful to the environment.

Fact: Offshore energy production is safe and environmentally sound.  In the last 50 years, the oil and gas industry has developed innovative technologies and exploration methods that are efficient, pose little threat to the environment, and keep workers safe.  The industry has taken additional precautions to prepare for any type of unwanted incident.

Some of those technologies include:

• Advanced 3-D seismic and 4-D time imaging technologies: enable offshore operators to locate oil and gas resources far more accurately to necessitate less drilling and allow greater resource recovery.[2]

• Storm chokes: placed on all offshore wells to detect damage to surface valves and shut down production during an emergency.[3]

• Blowout preventers: continuously monitor the subsurface and subsea-bed conditions to prepare for unexpected changes in well pressure.[4]

• Waste product reuse technology: transforms drill cuttings, a waste product of rock pieces and drilling fluids produced when drilling a well, into raw material for bricks, roads, and even rebuilding Louisiana’s wetlands.[5]

These technologies and practices are yielding results:

• According to the U.S. Department of Interior data, offshore operators produced 7 billion barrels of oil from 1985 to 2001 with a spill rate of only .001 percent.[6]

• In 2005, Hurricanes Katrina and Rita destroyed 115 Gulf of Mexico oil and gas platforms and damaged 535 pipeline segments, but there were no major oil spills attributed to either storm.[7]

Myth: Offshore oil and gas production is the number one contributor to oil in our oceans.

Fact: Less than 1 percent of all oil found in the North American marine environment comes from offshore oil and gas development.[8] According to the National Academy of Sciences, the majority—60 percent—is the result of natural seeps through the ocean floor.[9] In many places it is higher. For example, all of the tar on the beaches of Santa Barbara is from natural seeps.[10] Moreover, these seeps are reduced when the oil is produced and transported to shore, where it can be put to use as energy for America.[11]

Oil seeps—underwater cracks in the Earth’s crust—release more than 60 percent of the petroleum entering North American waters and over 45 percent of the petroleum in waters around the globe.[12] Natural seepage of crude oil from geologic formations below the seafloor is estimated to exceed 47,000,000 gallons in North American waters and 180,000,000 gallons globally every year.[13]

Myth: Oil companies are sitting on 68 million acres of untapped leases and don’t need access to new areas.

Fact: Lease agreements already contain federal requirements that require oil companies to use leased land in a timely manner. The 1992 Comprehensive Energy Policy Act requires energy companies to comply with lease provisions and explore expeditiously or risk forfeiture of the lease.  Energy companies cannot “stockpile” leases (even those found to contain no oil or gas) to drive prices up.  What’s more, historical data show only one discovery results from every 60 leases granted to energy companies.

Companies are not “sitting” on the leases they now have.  Technology has allowed companies to increase their production on leased acreage.

The Hard Facts:

• 97 percent of Federal offshore areas are not leased.

• 94 percent of Federal onshore areas are not leased.

[2] U.S. Department of Energy, Office of Fossil Energy, Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology, October 1999, p. 28. http://www.fossil.energy.gov/programs/oilgas/publications/environ_benefits/env_benefits.pdf

[3] Id. at 41.

[4] Id.

[5] See id. at 54.

[6] SAFE Commends Movement Toward Lifting Ban on Offshore Oil and Natural Gas Production, http://www.reuters.com/article/pressRelease/idUS223711+18-Jun-2008+PRN20080618, June 18, 2008.

[7] Id.

[8] See National Research Council, Oil in the Sea III: Inputs, Fates, and Effects: Report in Brief, http://dels.nas.edu/dels/rpt_briefs/oil_in_the_sea_final.pdf.

[9] National Research Council, Oil in the Sea III: Inputs, Fates, and Effects, p. 2 (2003).

[10] See Kolpack 77 and Harman 198  R. L. Kolpack, Relationship of migratin of natural seep material to oceanography of Santa Barbara Channel, California Offshore Gas, Oil, and Tar Seeps, Staff Report, California State Lands Commission p. 226-55 (1977); B. Hartman & D. Hammond, The use of carbon and sulfurisotopes as correlation parameters tor the source identilication of beach tar in the southern California borderland, 45 Geochimica et Cosmochimica Acta 309 (1981).

[11] Stop Oil Seeps California, http://www.soscalifornia.org/presentation-bbsw/ze.html.

[12] Id. at 2.

[13] Id.

The study results are similar to past US experience. Congress enacted a windfall profits tax on domestic oil producers in 1980 expecting to generate tax revenues. The Congressional Research Service[ii] found that, instead, domestic crude oil production was reduced by 1.2 to 8.0 percent and foreign oil imports were increased by 3 to 13 percent.

While there is no specific windfall profits tax proposal currently being considered by Congress, such a tax was part of President Obama’s campaign platform. When crude oil prices dropped last fall, President Obama’s aides changed course and indicated that with oil prices below $80 a barrel would not be considered for a windfall profits tax. However, whether a windfall profits tax or some other similar tax or combination of taxes is instituted on the oil and gas industry, the impact on US jobs, the economy, and foreign imports of oil and natural gas would be similar.

Other study results are:

• A decline in natural gas production of 9 to 13 percent, 1.6 to 2.4 trillion cubic feet, between 2020 and 2030. More natural gas imports would result, increasing 14-55 percent, or 0.5 to 1.2 trillion cubic feet, during this period.
• A reduction in refinery output of 2 to 4 percent, or 410 to 660 thousand barrels per day, during the 2010 to 2030 period. The reduction in domestic refinery output could partially be offset by increasing foreign imports of petroleum products by 15 to 21 percent, or 230 to 430 million barrels per day, during the 2010 to 2030 period.
• A reduction in household consumption between $20 to 42 billion by 2030.
• A decline in domestic investment by the oil and gas industry between 20 and 25 percent by 2030.

[i]“Energy and Economic Impacts of a Proposed Windfall Profits Tax on Producers of Oil and Refined Products in the United States “, CRA International, February 2009, http://www.api.org/Newsroom/upload/CRA_WPT_Study_1_30_2009.pdf

[ii] Lazzari, Salvatore, “The Crude Oil Windfall Profit Tax of the 1980s: Implications for Current Energy Policy”, Congressional Research Service, CRS Report for Congress, March 9, 2006