New Taxes on Oil & Gas

The White House budget request claims that, “Oil and gas subsidies are costly to the American taxpayer and do little to incentivize production or reduce energy prices.” In the first place, it is odd to hear the White House worrying about high energy prices, and also to hear it deny that tax policy gives incentive for production.

Both of these points flatly contradict the whole philosophy behind the White House’s favored cap-and-trade scheme, which is expressly designed to (a) raise the price of fossil-based energy and (b) reduce the incentives to use such energy sources. The White House can’t have it both ways: Do they want higher energy prices (cap-and-trade) or don’t they? And do they think government policies influence energy production, or don’t they? If they claim tax hikes on the oil and gas industries won’t have any incentive effects on production or jobs, then how can they claim that “green investments” will create jobs in the solar and wind industries?

The White House’s statement also euphemistically labels its tax hikes as ending “subsidies” to the oil and gas industries, but that would only be true if the IRS is considered the rightful owner of every dime earned in America. After all, in 2008 alone, the major energy producers incurred $95.6 billion in total income taxes, of which $23.2 billion went to the U.S. government at all levels (the rest being owed to foreign governments). On top of the straight income taxes, oil and natural gas producers paid an addition $12.5 billion in U.S. production taxes.[i] The oil and natural gas industries are hardly being “propped up” by the taxpayer, in contrast to the solar industry and others that can’t pass the market test. The so-called loopholes and tax subsidies are really just methods of allowing private companies to keep more of the money they earned from providing consumers with low-cost energy.

Explaining the Manufacturing Deduction

The biggest “subsidy” on the chopping block is repeal of the Section 199 manufacturing tax deduction for domestic oil and natural gas companies, which the Office of Management and Budget estimates would raise an additional $17.3 billion in revenue over the next ten years.

It is important to realize that the Section 199 manufacturing deduction was not a “loophole” created exclusively for the benefit of energy companies. On the contrary, it was established as part of the American Jobs Creation Act of 2004 [.pdf], and applied to all domestic manufacturers to spur job creation and stem the outsourcing of manufacturing jobs, which was a sensitive political issue at the time. The Obama Administration is not proposing to repeal the “loophole” in its entirety, but merely to deny it to oil and gas companies, while leaving it in place for every other domestic manufacturer. Apparently in the eyes of the Administration, some domestic jobs are more equal than others.

Regardless of the motivations, the simple fact is that levying new taxes on an industry will reduce the incentives for production, leading to fewer jobs and higher prices for consumers. In the fall of 2008, IER published an analysis of a similar call to end the Sec. 199 deduction for oil and gas companies. Although some of the conditions may have changed in the interim, the results are still sobering. The study projected that the tax hike on oil and natural gas would reduce total household earnings by almost $35 billion over ten years, and reduce total U.S. economic output by $186 billion.

A similar analysis applies to the other tax hikes proposed in the new budget. Raising taxes on efficient industries—ones that are net tax contributors, rather than tax recipients—is no way to create jobs or help consumers. To repeat, if the Administration denies that raising the costs of production will reduce output in these industries, then why would its cherished cap-and-trade program have any effect? Their whole argument is that raising the price of fossil fuels will reduce output in those sectors, and we agree: Politically-imposed cost increases reduce output, raise prices, and destroy jobs in the targeted industries. That’s why we oppose them.

To paraphrase President Ronald Reagan’s view of government programs, the Obama Administration’s view of energy can be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

• IER President: “Americans need jobs and America needs fuel to drive economic growth and prosperity. Increasing domestic energy production is a common sense solution embraced by a clear majority of Americans”

Washington, DC – Today, one in 10 Americans are out of work. However, the Obama Administration has the opportunity to help create hundreds of thousands of jobs, increase America’s long-term energy security and reduce our dependence on imported energy by allowing responsible, environmentally-sound offshore energy production.

“The President has directed an enormous amount of hard-earned tax dollars to prop up ‘green jobs’ that would otherwise not exist without heavy and ongoing government support. At the same time, this Administration has discouraged common sense job creation efforts, especially responsible offshore oil and gas development,” said Thomas J. Pyle, president of the market-oriented Institute for Energy Research (IER). “And despite widespread public support for increasing all forms of domestic energy – especially offshore – the President and his Administration continue to add layers of red tape and bureaucratic hurdles on access to homegrown energy.”

Pyle is referring to the job-creating energy resources along the outer continental shelf (OCS), an energy-rich area located between 3 and 200 miles off our coast. Developing oil and gas reserves along the OCS has the potential to create 1.2 million jobs and provide an additional $70 billion in annual wages.

“This Administration continues to embrace Washington-dominated, command-and-control national energy policies focused on mandates, subsidies and political favors – not market forces,” continued Pyle. “Subsidizing one form of energy, while restricting the exploration of another, will lead to several measurable outcomes: increased energy prices across the board, fewer jobs and a weaker footing in the global economy.”

According to the Interior Department, this Administration has leased less taxpayer-owned land than any other year on record during its first year in office, while realizing one-tenth the amount of revenue from leasing taxpayer-owned land than it did in 2008.

Pyle notes that free enterprise continues to create tens of thousands of energy-related jobs right here at home.

“Without a government handout or a Washington mandate, natural gas production created nearly 48,000 jobs last year in Pennsylvania alone,” said Pyle. “Now more than ever, Americans need jobs and America needs fuel to drive economic growth and prosperity. Increasing domestic energy production is a common sense solution embraced by a clear majority of Americans. If the President was serious about redirecting our economy and helping to put struggling Americans back to work, he’d move forward aggressively to expand domestic energy production.”

More from IER:

• OCS Economic Impact Study
• Actions Speak Louder Than Words on Domestic Energy Production
• IER sets the record straight on Obama Admin energy leasing program

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

#####

China’s Economy and Economic Strategy

China became the world’s third largest economy in 2007, overtaking Germany, and it is expected to become the world’s second largest economy, unseating Japan, as early as this year.[iii] Forecasts by the Energy Information Administration, the U.S. Department of Energy’s statistical arm, predict that China will replace the U.S. as the world’s largest economy within the next 15 years.[iv]

As a result, Chinese economic growth rose to 8.9 percent in the third quarter of 2009, and the government is forecasting a full-year expansion of 8.3 percent. China’s trade boom has helped Beijing pile up the world’s biggest accummulation of foreign currency reserves— more than $2 trillion.[vi] Meanwhile, the U.S. and other countries are still struggling with a recession, continued high unemployment, and an energy policy that retards its growth.

The People’s Daily, a Chinese newspaper, indicated that the large level of economic growth achieved in 2009 was due to its leaders’ ability to make quick decisions and to ensure that underlings carry them out, something that leaders of the free-market countries cannot do.[vii]

The Auto Race

In the area of automobile sales, the China Passenger Car Association reported that China’s total vehicle sales soared 45 percent in 2009, to an estimated 13.6 million, partly as a result of the Chinese government’s stimulus programs. By contrast, U.S. sales of cars and light trucks dropped 21 percent last year to 10.4 million,[viii] because of the recession, credit crisis, uncertainty regarding government stimulus programs, and worries concerning the financially troubled U.S. automobile industry. That made last year the worst U.S. auto sales year since 1982.

Except for August, when U.S. auto sales were boosted by the cash-for-clunkers incentive program, China sold more vehicles than the U.S. in every month since January of last year. Increasingly, global auto makers are also looking to China for sales.[ix]

Kevin Wale, president of General Motors’ China Group, expects Chinese auto sales to grow to 14.5 million to 15.5 million in 2010, far above the level predicted for the United States (11.5 million to 12 million), creating a gap that may be too large to close. [x] There is uncertainty, however, among analysts regarding how much China’s auto sales will grow this year. Some think growth may be as low as 5 percent, whereas others think it may be as much as 15 percent, increasing Wale’s range slightly.[xi]

One reason why analysts do not believe the strong sales growth experienced in 2009 can be repeated is the scaling back of the Chinese government stimulus for autos. China’s central government last January halved the sales tax from 10 percent to 5 percent on smaller-engine vehicles, which resulted in the sales boom. But for 2010, the sales tax is set at 7.5 percent on small cars.  And while that is still lower than the normal 10 percent rate, the effect that the economic stimulus policies had in 2009 could subside in 2010.[xii]

The Auto Industry in China

General Motors has been making headway into China’s auto sales, with 14 factories there and more than 1.8 million cars sold in 2009, just shy of its U.S. sales of slightly more than 2 million vehicles. While Buicks in the U.S. are deemed cars for the 60-and-over crowd, many young and middle-aged Chinese like what GM delivers in its Buick series. However, China has its own automobile manufacturers, who are ready to make headway into the booming Chinese auto market as well as into overseas markets.[xiii]

The Great Wall Motor Company Limited, for example, is a large multinational automaker, with product sales in more than 120 countries and regions. The company, which has more than 30 subsidiaries and over 22,000 staff members, manufactures sedans, sport utility vehicles, and pickups. It has an annual capacity of 400,000 vehicles and the capability to independently produce key parts such as engines and front and rear axles.[xiv]

Another Chinese auto company, BYD or Build Your Dreams Auto, has grown to be one of the largest automakers in China in just seven years. In 2009, BYD sold 450,000 vehicles, and the company expects sales to increase to 800,000 this year. The company’s goal is to be China’s top automaker by 2015 and number one in the world by 2025. Bolstered in part by Warren Buffett’s 10 percent investment in the company, BYD has plans to begin selling vehicles in the U.S. by the end of 2010. It also plans to market a fully electric crossover called the e6 that uses a proprietary ferrous battery technology. BYD claims that the five-passenger e6 can go 205 miles between charges, double the expected mileage of electric vehicles in the works by Nissan and Ford. The company also purports that the e6 can be fully recharged in less than one hour when plugged into a high-voltage outlet and that a 10-minute charge will replenish the battery to 50 percent.[xv]

China’s Oil Imports Reach Record Share

To fuel both its growing economy and its transportation vehicles, China in 2009 imported 52 percent of its total oil consumption (204 million tons versus 190 million tons produced domestically). According to the China Daily, importing more than 50 percent constitutes a “globally recognized energy security alert level.”[xvi]

According to the chief geologist with the Chinese Ministry of Land and Resources, Zhang Hongtao, “This year we will control the amount of imported oil and accelerate the exploration of domestic oil and natural gas.”  He added that, owing to the country’s fast economic development, increased oil imports would continue for a long time and that China urgently needed to step up the exploration and development of natural gas as a substitute energy source.[xvii]

However, China has already agreed to purchase 1.04 million barrels per day from Saudi Arabia, up 12 percent from its 2009 import levels. This is a larger percentage increase than in 2009, when its imports from Saudi Arabia increased almost 10 percent over 2008 levels. China is now the world’s second largest oil consumer, behind the U.S.[xviii]

Believing in diversity of supply, China has made a bid for Canadian oil sands, reaping benefits from threatened U.S. energy policies that would limit such imports. The Canadian government recently approved PetroChina’s $1.8 billion bid for Alberta oil sands, making this PetroChina’s largest North American investment and providing a foray into the Canadian natural resource sector. Under the agreement, PetroChina will assume a non-operating majority interest in two oil sands projects in northeastern Alberta, which is believed to hold 5 billion barrels of recoverable reserves. In addition, PetroChina has agreed to invest $250 million to fund its equity share of the project’s development through 2013.[xix]

The prediction for China’s total crude oil imports in 2010 is a 15 percent increase over 2009 levels. While crude oil prices are still low, China is expected to launch the second phase of its state petroleum reserve, according to China Oil, Gas & Petrochemicals, a report published by the state-run Xinhua news agency.[xx] Phase one consisted of a 101.9 million barrel reserve, which was mostly completed by the end of 2008. The second phase of an additional 170 million barrels is expected to be completed by 2011. Recently, Zhang Guoboa, the head of the National Energy Administration in China, indicated that there will be a third phase that will expand reserves by 204 million barrels, with the goal of increasing China’s petroleum reserves to 90 days of supply by 2020.[xxi]

Conclusion

China is savoring in its world domination of export markets and auto sales, while quietly ensuring that it has the energy to sustain its economic development. Its economic stimulus policies have actually put the country on a path of huge economic growth, while the U.S. is still seeing high unemployment and slow economic growth. Our energy policy of going “green” (empasizing wind and solar power) while stalling the development of fossil energy, has resulted in more expensive and highly-subsidized energy and an increase in jobs that are temporary at best. Our government may need to learn by example from other countries, a policy that it hasn’t had to adopt in a very long time.

[ii] The Economist, “China’s Economy: Not Just Another Fake,” January 14, 2010, http://www.economist.com/displayStory.cfm?story_id=15270708 , and China Daily, The fastest in the world, December 28, 2009,  http://www.chinadaily.com.cn/bizchina/2009-12/28/content_9235505.htm

[iii] “China becomes biggest exporter, edging out Germany,” Associated Press, January 10, 2009, http://hosted.ap.org/dynamic/stories/A/AS_CHINA_TRADE?SITE=MSJAD&SECTION=HOME&TEMPLATE=DEFAULT

[iv] Energy Information Administration, International Energy Outlook 2009, http://www.eia.doe.gov/oiaf/ieo/index.html

[vi] “China becomes biggest exporter, edging out Germany,” Associated Press, January 10, 2009, http://hosted.ap.org/dynamic/stories/A/AS_CHINA_TRADE?SITE=MSJAD&SECTION=HOME&TEMPLATE=DEFAULT

[vii] “As China Rises, Fears Grow on Whether Boom Can Endure,” New York Times, January 11, 2010, http://www.nytimes.com/2010/01/12/world/asia/12china.html

[viii] “GM Exec: China Likely to Keep Auto Sales Lead,” New York Times, January 13, 2010, http://www.nytimes.com/aponline/2010/01/13/business/AP-US-GM-China.html?_r=1

[ix] “China Overtakes U.S. to Become Largest Auto Market,” The Wall Street Journal, January 12, 2010, http://online.wsj.com/article/SB10001424052748703652104574651833126548364.html?mod=googlenews_wsj

[x] “GM Exec: China Likely to Keep Auto Sales Lead,” New York Times, January 13, 2010, http://www.nytimes.com/aponline/2010/01/13/business/AP-US-GM-China.html?_r=1

[xi] “China Overtakes U.S. to Become Largest Auto Market,” The Wall Street Journal, January 12, 2010, http://online.wsj.com/article/SB10001424052748703652104574651833126548364.html?mod=googlenews_wsj

[xii] Ibid.

[xiii] “GM Exec: China Likely to Keep Auto Sales Lead,” New York Times, January 13, 2010, http://www.nytimes.com/aponline/2010/01/13/business/AP-US-GM-China.html?_r=1

[xiv] http://www.gwm.com.cn/eng/html/about/profile.asp

[xv] “Chinese Company Wants to Build Your Dream Car,” FOXNEWS.com, January 15, 2010, http://www.foxnews.com/story/0,2933,583042,00.html

[xvi] “Oil Imports Hit an Alarming Level in China: Study,” China Daily, January 14, 2010, http://www.chinadaily.com.cn/bizchina/2010-01/14/content_9317926.htm

[xvii] Ibid.

[xviii] “China oil imports from Saudi to rise by 12% in 2010,” November 22, 2009, http://www.gulfbase.com/site/interface/NewsArchiveDetails.aspx?n=117033

[xix] “China Buys Into Canadian Oil Sands,” Oil Voice, January 3, 1020, http://www.oilvoice.com/n/China_Buys_Into_Canadian_Oil_Sands/7d689186d.aspx

[xx] Reuters, January 19, 2010, http://www.reuters.com/article/idUSTRE5B30OK20100119

[xxi] http://en.wikipedia.org/wiki/Global_strategic_petroleum_reserves#China

WASHINGTON – America’s shale gas resources can play a critical role in securing America’s energy future, members of a key Energy and Commerce subcommittee heard today — but only if the technology needed to produce those resources remains intact and under the regulatory oversight of the states. Subsequent to this morning’s hearing, Thomas J. Pyle, president of the Institute for Energy Research (IER), issued the following statement:

“Considered within the context of an administration almost singularly focused on denying Americans access to energy resources offshore, America’s onshore shale resources was an inevitable development – but one that could not be possible without advances in horizontal drilling and a key technology known as hydraulic fracturing.

“Unfortunately, national activists understand the potential of this technology as well and are currently engaged in an aggressive campaign to block the responsible development of homegrown energy – this time, not by attacking the carpenter, but by taking away his tools.

“The irony here is that hydraulic fracturing has for decades been considered an environmentally sensitive technology – not only because 99.5 percent of the solution it uses is water and sand, but because it allows operators to produce ten times the amount of energy by drilling one-tenth the number of wells. And there, my friends, is exactly the reason why the technology is coming under fire: It’s safe, it’s effective, and it’s used to produce fossil fuels.

“At a time when Washington begins to focus on job creation and the economy, the domestic coal, oil and natural gas industry can no longer be ignored by the Obama Administration and Congress. Our domestic energy industry, and the environmentally sound technologies used to extract these energy resources – like hydraulic fracturing – have the potential to put thousands of Americans back to work. Any ‘jobs bill’ that fails to recognize this fact, will shortchange the American people.”

More on hydraulic fracturing

• IER: America: Awash in Natural Gas—as Long as Hydraulic Fracturing is Allowed

• Energy In Depth Fact Sheet: Frac vs. Fiction

• Energy In Depth Library: Studies, Fact Sheets, Memos and more

• Penn State University: An Emerging Giant: Prospects and Economic Impacts of Developing the Marcellus Shale Natural Gas Play

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

#####

Largely owing to shale gas discoveries, estimated reserves of natural gas in the United States in 2008 were 35 percent higher than in 2006.[iii] Further, because of shale gas production, net imports of natural gas are more than 30 percent lower and domestic production of natural gas is 12 percent higher for the first 9 months of 2009 than they were during the same period of 2007.^[iv] Shale gas has made up for declining pipeline imports of natural gas from Canada and slower than expected increases of liquefied natural gas,[v] some of which is being diverted from U.S. markets to China.[vi] Expectations are that production of shale gas will make the U.S. the world’s largest producer of natural gas, overtaking Russia, whose demand plunged as a result of its economic decline.[vii]

U.S. Natural Gas Shale Deposits

There are several natural gas shale deposits in the United States: two of the largest being the Marcellus Shale and the Barnett Shale deposits.  The Marcellus Shale is a sedimentary rock formation located in the Eastern United States that contains significant quantities of natural gas. The area extends from southern New York, across Pennsylvania, and into western Maryland, West Virginia, and eastern Ohio. The first Marcellus well began production in Washington County, Pennsylvania, in 2005. Between then and 2007, more than 375 gas wells were permitted in Pennsylvania. With proven reserves currently at 50 trillion cubic feet, recent estimates are that Marcellus might contain more than 500 trillion cubic feet of natural gas.^[viii]

Source: Marcellus Shale – Appalachian Basin Natural Gas Play

Barnett Shale is located in north Texas and its reservoir underlies the cities of Dallas and Fort Worth, plus at least 17 counties totaling 5,000 square miles.  The field, with 2.5 trillion cubic feet of proven reserves, may contain as much as 30 trillion cubic feet of natural gas resources.^[ix]

Two other notable shale plays are in north central Arkansas, the so-called Fayetteville Shale, and in northwestern Louisiana, the so-called Haynesville Shale.^[x] The Fayetteville Shale play stretches across Arkansas from approximately Fort Smith east to beyond Little Rock. It is approximately 50 miles wide from north to south.^[xi] Original gas in place in the Fayetteville Shale is estimated at 52 trillion cubic feet with recoverable reserves of 41.6 trillion cubic feet.[xii]

The Haynesville Shale came into prominence in 2008 as a potentially major shale gas resource and has recently been estimated to contain 250 trillion cubic feet of recoverable gas. Production has boomed since late March 2008.^[xiii] Because of the size and location of the Haynesville Shale play, there has been speculation of exporting some of that gas, in the form of liquefied natural gas, from Louisiana ports.

Horizontal Drilling and Hydraulic Fracturing Technology

There are two key technologies that allow the recovery of natural gas from shale rock—horizontal drilling and hydraulic fracturing.  Shale rock contains pore spaces where most of the recoverable gas is located. The gas has difficulty escaping through the pore spaces because they are tiny and poorly connected. Shale rock also contains fractures that break through the rock allowing gas to flow. These fractures intersect other fractures, producing a network of fractures. Given the fracture network and a proper drilling technology, such as horizontal drilling, natural gas can be obtained from a very large volume of shale with just a few wells. A single well can recover gas from many acres of surrounding land.

For example,  the fractures in the Marcellus Shale are vertical. A horizontal well is drilled perpendicular to the fractures, intersecting a large number of the fractures.  Some horizontal wells in the Marcellus Shale have initial flows that suggest that they are capable of yielding millions of cubic feet of gas per day, making them some of the most productive gas wells in the eastern United States.[xiv]

A second method—a technique known as “hydraulic fracturing”—is used to increase the number of fractures  This method uses high-pressure water or gel to induce fractures in the rock surrounding the well bore.  Hydraulic fracturing is done by sealing off a portion of the well and injecting water under very high pressure into the isolated portion of the hole. The high pressure fractures the rock and pushes the fractures open.  To prevent the fractures from closing, several tons of sand is pumped into the pressurized portion of the hole and into the fractures, keeping them open and improving the permeability of the shale.[xv]

While these technologies have been around for years, recent advances have allowed their use in producing natural gas from shale formations.[xvi]

Jobs and Tax Revenues

In 2006, the natural gas development of the Barnett Shale was responsible for creating 55,385 permanent jobs and is estimated to have contributed $490.9 million in revenues to the state of Texas, as well as $227.7 million to local governments.^[xvii] The economic benefits, however, are growing even faster than expected.  At the end of 2007, permanent jobs in natural gas development had increased to 83,823 (8.9 percent of total jobs in the Forth Worth area), and annual output had increased to $8.2 billion, up from $5.2 billion, an increase of over 50 percent in just one year. Texas also increased its revenues in 2007 from Barnett Shale activities to an estimated $715.5 million, and revenue to local governments increased to an estimated $378.7.[xviii] Economic projections indicate that by 2015 the Barnett Shale may be responsible for more than 108,000 jobs.[xix]

In 2007, Fayetteville Shale yielded $1.8  billion  of  direct  expenditures, total  economic  output  of  $2.6  billion, and employment  of  9,533  people.  Tax  revenues  from  operations  in  the  Fayetteville  Shale, though not as  significant as those for Barnett, were more  than  $54.6  million  in  revenues and more than $7.0 million in sales tax generated for cities and counties.[xx]

An economic impact analysis on Haynesville Shale indicates that state revenues may reach $1.8 million in 2009, $229.5 million by 2015, and $615.5 million by 2023.[xxi]

Since exploration and drilling in most of these shale plays is new, the extent of the economic benefit is not known and is dependent on the amount of activity at the play. Some studies (e.g., Potential Economic Impacts of Marcellus Shale in Pennsylvania) have compared the economic benefits to those of Barnett Shale, where more data are available for economic assessments.[xxii]

And it seems that the benefits of U.S. innovation in shale gas technology and experience have impacted global politics. The Chinese would like to use the experience gained by the U.S. to determine the potential of shale gas in China and to conduct joint technical studies with the U.S., in order to accelerate the development of China’s own shale gas resources. This is the new “U.S.-China Shale Gas Resource Initiative,” recently launched by the presidents of the two countries.[xxiii]

Criticism of Hydraulic Fracturing

Critics of hydraulic fracturing want it to be regulated by the Environmental Protection Agency (EPA), because they contend that toxic fluids pumped into the ground during fracturing may seep into nearby ground water supplies. However, no actual case of water contamination has been connected to hydraulic fracturing, and U.S. states, which currently regulate hydraulic fracturing, believe that it should remain under their jurisdiction, where regional and local conditions are best understood and where local governments have 60 years of experience. [xxiv] Further, the great majority of hydraulic fracturing activities take place at depths far below any existing groundwater sources that could reasonably be considered underground sources of drinking water.[xxv]

Because of such claims, the EPA conducted a study, released in 2004, in which they concluded that hydraulic fracturing did not threaten water supplies.[xxvi] In February 2009, former U.S. Energy Secretary and current Democratic Governor Bill Richardson of New Mexico introduced a plan to ease unnecessary compliance burdens, recognizing that thousands of jobs and millions in potential revenue were tied to safe, responsible, state-regulated natural gas and oil production.[xxvii]

However, some environmental groups and members of Congress are still pressing the EPA to regulate hydraulic fracturing. Current law exempts hydraulic fracturing from EPA review under the Safe Drinking Water Act. A bill to repeal that exemption has been proposed but not enacted.   Supporters of the bill, however, were able to include funding for an additional study of hydraulic fracturing and its impact on drinking water in EPA’s 2010 funding bill, which was signed into law on October 30, 2009.[xxviii]

Another issue that has been raised is the amount of water used to obtain shale gas. A recent study, however, found that shale gas used the least amount of water when compared to producing and transporting other energy sources. Shale natural gas requires only 0.60 to 5.80 gallons per million Btu. In comparison, nuclear generation requires 8 to 14 gallons to produce the same amount of energy, and conventional oil requires 8 to 20 gallons.  The energy source that requires the most amount of water is plant-based biodiesel from soy, requiring 14,000 to 75,000 gallons of water per million Btu of energy produced.[xxix]

Conclusion

U.S. shale gas resources have significantly increased U.S. reserves of natural gas and increased U.S. production of natural gas, the cleanest of the fossil fuels from a greenhouse gas perspective. Its future, however, may be threatened by unnecessary regulation by the EPA of hydraulic fracturing, a technology needed to increase the permeability of the shale rock. Though hydraulic fracturing has been used for years in coal bed methane mines, it is now being attacked by environmentalists as contaminating ground water, although there has been no documented case of such contamination. With fossil fuels providing 84 percent of our current energy, and a projected 78 percent of our energy in 2035,[xxx] natural gas production is important for meeting heating needs as well as industrial and electric utility demand. The Chinese recognize its importance and have signed the U.S.-China Shale Gas Resource Initiative to help promote the industry in China using U.S. expertise.

[ii] Ibid.

[iii] http://en.wikipedia.org/wiki/Shale_gas_in_the_United_States

[iv] Energy information Administration, Monthly Energy Review, Table 4.1, www.eia.doe.gov/emeu/mer/pdf/pages/sec4_3.pdf

[v] Energy Information Administration, Short-term Energy Outlook, December 2009, http://www.eia.doe.gov/pub/forecasting/steo/oldsteos/dec09.pdf

[vi] Reuters, “Qatar diverts LNG to higher-paying China from U.S.”, October 27, 2009, www.reuters.com/article/companyNews AndPR/idUSLR15622520091027

[vii] U.S. Overtakes Russia as the Biggest natural Gas Producer, January 12, 2009,  Bloomberg.com, http://ow.ly/WfEs

[viii] Marcellus Shale-Appalachian Basin Natural Gas Play, http://geology.com/articles/marcellus-shale.shtml

[ix] Barnett Shale, http://en.wikipedia.org/wiki/Barnett_Shale

[x] Ibid.

[xi] About the Fayetteville Shale, http://lingo.cast.uark.edu/LINGOPUBLIC/about/index.htm

[xii] The Fayetteville Shale, http://shale.typepad.com/fayettevilleshale/reserves/

[xiii] Haynesville Shale, http://en.wikipedia.org/wiki/Haynesville_Shale

[xiv] Marcellus Shale-Appalachian Basin Natural Gas Play, http://geology.com/articles/marcellus-shale.shtml

[xv] Ibid.

[xvi] http://en.wikipedia.org/wiki/Hydraulic_fracturing and http://en.wikipedia.org/wiki/Horizontal_drilling .

[xvii] The Barnett Shale Formation of North Texas and Oklahoma, http://www.expertsreviewof.com

[xviii] Drilling for Dollars: An Assessment of the Ongoing and Expanding Economic Impact of Activity in the Barnett Shale on Forth Worth and the Surrounding Area, http://www.bseec.org/images/summaryreport.pdf

[xix]Barnett Shale, http://en.wikipedia.org/wiki/Barnett_Shale

[xx] University of Arkansas, Projecting the Economic Impact of Fayetteville Shale Play for 2008-2012, http://cber.uark.edu/FayettevilleShaleEconomicImpactStudyEXECSUMMARY2008.pdf

[xxi] An Economic Impact Analysis of the Haynesville Shale Natural Gas Exploration, Drilling and Production, August 28, 2008, http://dnr.louisiana.gov/haynesvilleshale/manfred-dix-impact-analysis.pdf

[xxii] Potential Economic Impacts of Marcellus Shale in Pennsylvania: Reflections on the Perryman Group Analysis from Texas, Penn State, http://www.energyindepth.org/PDF/PSU.pdf

[xxiii] Statement on U.S.-China Shale Gas Resource Initiative, November 17, 2009,  http://www.america.gov/st/texttrans-english/2009/November/20091117145333xjsnommis0.4233515.html&distid=ucs

[xxiv] http://en.wikipedia.org/wiki/Hydraulic_fracturing

[xxv] American Petroleum Institute, Hydraulic Fracturing, http://www.api.org/policy/exploration/hydraulicfracturing/index.cfm

[xxvi] http://www.epa.gov/ogwdw000/uic/wells_coalbedmethanestudy.html

[xxvii] http://www.istockanalyst.com/article/viewiStockNews/articleid/3056805

[xxviii] The Dallas Morning News, EPA to study impact on hydraulic fracturing on drinking water, December 16, 2009, http://energyandenvironmentblog.dallasnews.com/archives/2009/12/epa-to-study-impact-of-hydraul.html

[xxix] Deep shale gas uses the least amount of water, January 12, 2010, http://www.greeningofoil.com/post/Deep-shale-gas-drilling-uses-least-amount-of-water.aspx

[xxx] Energy Information Administration, Early Release of Annual Energy Outlook 2010, http://www.eia.doe.gov/oiaf/aeo/index.html

WASHINGTON – Earlier today, Interior secretary Ken Salazar outlined a series of changes to federal leasing rules aimed at making it more difficult, expensive, and time-consuming to explore for and produce abundant reserves of American energy on federal, taxpayer-owned land. Subsequent to the announcement of the new rules, Institute for Energy Research (IER) president Thomas J. Pyle released the following statement:

“When it comes to paving the way for the responsible development of homegrown, job-creating energy resources, no administration in history has done more to ensure producers do less.

“It’s a superlative not achieved by accident. Over the course of a single year, we’ve seen the Interior secretary block commonsense exploration through a number of creative means – from executing a pocket veto on a sensible plan to produce offshore, to outright rescinding existing lease contracts in Utah.

“But while the means and methods have changed, the loser continues to be the American taxpayer. In 2008, the Interior Department collected 10-times the amount of revenue from lease sales than it did in 2009. Thanks to today’s announcement, that number has nowhere to go but down in 2010.”

NOTE: Back in November, IER published a detailed exposition of Secretary Salazar’s record of leasing this year as head of the Interior Department. Among the highlights from that report:

• Under the first year of the Obama administration’s 2009 oil and gas leasing program, fewer onshore and offshore acres have been leased than in any previous year on record.

• The Interior Department collected less than one-tenth the revenue from oil and gas lease sales in 2009 than it did in 2008

• For the year 2008, lease sale revenues produced a return for the taxpayer of $942 per acre leased.  In 2009, taxpayers received about $254 in return for each acre leased under the Obama administration – indicative of the quality of leasable land made available under Sec. Salazar

• More than 97 percent of the 2.46 billion acres of taxpayer-owned lands in the public domain are presently not leased for oil and gas exploration

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Washington, DC – Today, Rasmussen Reports released a poll finding that nearly 70 percent of Americans support responsible offshore energy exploration and production. Thomas J. Pyle, president of the non-partisan Institute for Energy Research (IER), issued this statement:

“The American public understand full-well that energy stability and security and economic strength and prosperity are underpinned by access to reliable supplies of oil and gas. Today’s report not only reinforces what most of the American people already believe, but should also serve at a wake-up call to the Administration, which should move forward aggressively with a commonsense 5-year offshore energy plan.

“America’s oil and gas industry represents nearly 7 percent of the U.S. economy and accounts for more than 9 million permanent, good-paying jobs. Unlocking our nation’s offshore energy reserves could create over one million family-supporting jobs at a time when they’re desperately needed. At the same time, increasing American energy production will help drive down and stabilize prices for struggling families, senior and small businesses, helping to strengthen America’s ability to compete in the global economy.”

READ MORE

• Click HERE to view the full Rasmussen poll on-line.
• Click HERE to view a comprehensive offshore energy economic analysis.

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

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China’s Investment in Oil and Gas

China has seized on the global recession to gain access to oil and gas resources and supplies. The atmosphere is ripe for Chinese firms to invest in these resources because:[i]

• Acquisitions are now more favorable than they were in early 2008, due to lower oil prices and, hence, lower asset prices.
• China is less constrained than many of its international counterparts in terms of where they can invest (e.g. Iran).
• Financing is not a problem, because Chinese banks are willing and able to provide needed funds.
• Competition for these assets in some areas has lessened.

Not only is China investing in places like Iran, Iraq, Kazakhstan, Nigeria, Venezuela, and Argentina, but it is in the U.S.’s backyard, looking towards usurping the U.S. supply of Canadian oil sands.  China is a good customer for Canada, as Canada fears that the U.S. may introduce a low carbon fuel standard[ii] or other legislation that would restrict our purchases of oil sands from Canada[iii].  China is also looking at a possible purchase of leases in the Gulf of Mexico where Devon Energy is looking to sell its U.S. leases.[iv] The sale of these offshore leases requires the approval of the Mineral Management Service in the U.S. Department of Interior. China is willing and able to be at the forefront of any misstep other countries make to gain a foothold and secure oil and gas supplies, and the U.S. seems to be giving it elbow room.

China is also investing in oil and natural gas pipelines to ensure access to its investments and to divert some of its oil imports from the Middle East away from the Straits of Malacca. Oil pipelines are being built from Russia, Kazakhstan, and the coast of Myanmar. [v] A natural gas pipeline from Turkmenistan should be operating in the near future, and several liquefied natural gas terminals are either operating or are expected to be operating shortly.[vi]

While the total amount of “investment” loans made by China to oil and gas producing countries for guaranteed future supplies of oil and gas are unknown, China has clearly invested billions of dollars in their ‘loans for energy’ program. [vii] The main provider of the loans is the China Development Bank, and thus they are essentially Government loans. Just on Tuesday, December 8^th, for example, Nigeria’s presidential advisor for energy announced that Chinese companies have proposed investing $50 billion to buy 6 billion barrels of oil reserves in Nigeria.[viii]

China’s Oil and Gas Reserves

China is not endowed with many reserves of oil and natural gas.[ix] According to the Oil and Gas Journal, as of January 1, 2009, China had 16 billion barrels of oil reserves, 1.2 percent of the world total,[x] and its natural gas reserves totaled 80 trillion cubic feet, 1.3 percent of the world total.[xi] China gets 70 percent of its energy from coal, the hydrocarbon with the highest level of greenhouse gas emissions, and 20 percent from oil, the hydrocarbon with the second highest level of greenhouse gas emissions.[xii] China is third in rank to the U.S. and Russia in recoverable reserves of coal, with 13.6 percent of the world total.[xiii] Because of its massive use of hydrocarbons and its growing economy, China surpassed the U.S. in carbon dioxide emissions, the largest component of greenhouse gas emissions, in 2006.[xiv]

The U.S. Oil and Gas Strategy

While the Bush Administration initiated steps to bring on new leases of oil and gas, both offshore in the Gulf of Mexico and on public lands that are endowed with billions of barrels of shale oil, the Obama Administration has slowed the progress by extending the comment periods and providing other obstacles.  Examples include:

• On February 4^th, shortly after his Senate confirmation, Interior Secretary Salazar rescinded 77 oil and gas leases in Utah that could cost American taxpayers millions in lost lease bids, production royalties, new jobs, and the energy needed to offset rising imports of oil and gas.[xv]
• On February 10th, Secretary Salazar delayed for 6 months the development of the new 5-year leasing program for offshore drilling that would have set the framework for accessing newly available areas.[xvi]
• On February 25^th, Secretary Salazar canceled a new round of commercial-scale oil shale research, demonstration, and development leases in Colorado, Wyoming and Utah.[xvii]
• On February 26^th, President Obama introduced a budget that contains page after page of taxes on oil and gas totaling more than $31 billion that will reduce our domestic energy production.[xviii]
• On March 30^th, President Obama signed the Omnibus Public Lands Management Act into law, prohibiting energy production on over 3 million acres of federal land.[xix]
• On October 8^th, after rescinding 77 Utah oil and gas leases in February, Salazar announces he will lease 17 of them.[xx]
• On October 20^th, after canceling a new round of commercial-scale oil shale research, demonstration, and development leases last February, Salazar issued a new oil shale leasing program that decreases lease acreage by 87 percent, demands unrealistic timelines for investment into cutting edge research, and leaves royalty rates at the whim of the Secretary or in new regulations. [xxi]

Issues with the U.S. Renewable Strategy

The Obama Administration prefers that priority be given to offshore wind farms and wind and solar installations onshore.[xxii] They tout that these sources of “green energy” will provide needed jobs in the U.S. However, studies[xxiii] have shown that highly-subsidized renewable energy cost consumers and taxpayers more than the alternative fossil technologies[xxiv], that their component parts are largely made in foreign countries, that the jobs are mainly for the actual site construction and thus are temporary, and that the economy would be spurred more by investments made elsewhere.

Further, most green technologies are dependent on the wind blowing or the sun shining, and thus provide a lower amount of usable energy than their fossil or nuclear counterparts. Hence, many more wind farms or solar installations will be needed to provide the same amount of energy as their fossil and nuclear counterparts. And, they will also require more land area.[xxv]

What China Knows and the U.S. Doesn’t Know

All sources are needed to ensure energy will be available for future economic growth and to reduce dependence on foreign imports. Trading foreign imports of oil for component parts of wind and solar technologies does not reach any goals to which the U.S. is aspiring. To reach reductions of greenhouse gas emissions required by H.R. 2454, or other similar legislation, either nuclear power or biomass generating technologies will be needed[xxvi], which provide greater amounts of energy than wind or solar power.  That’s precisely the reason that China is investing in oil and gas resources abroad and in building power plants from hydrocarbon, nuclear, and renewable sources of energy without legal and government delays.[xxvii]

[ii] A Low Carbon Fuel Standard reduces the carbon intensity of transportation fuels by requiring that the mix of fuels sold reaches pre-specified targets of carbon reduction. Since oil sands yield heavier crude, more energy is required for producing and refining it, thus giving that crude a  higher carbon intensity than conventional crude.

[iii] China National Petroleum Corp. received a $30 billion low-interest loan from a state-run bank to finance overseas acquisitions, Beijing’s latest bid to secure mineral resources to fuel the country’s burgeoning economy. http://www.eenews.net/Greenwire/2009/09/09/

[iv] David Pierson, “China’s push for oil in the Gulf of Mexico puts U.S. in awkward spot,” Los Angeles Times, http://www.latimes.com/business/la-fi-china-oil22-2009oct22,0,2776603.story?track=rss.

[v] Centre for Global Energy Studies, China’s Search for Energy Security, December 3, 2009, www.cges.co.uk

[vi] Energy Information Administration, International Energy Outlook 2009, www.eia.doe/oiaf/ieo/index.html

[vii] China National Petroleum Corp. received a $30 billion low-interest loan from a state-run bank to finance overseas acquisitions, Beijing’s latest bid to secure mineral resources to fuel the country’s burgeoning economy. http://www.eenews.net/Greenwire/2009/09/09/

[viii] The Wall Street Journal, Chinese Firms Propose $50 Billion Oil Buy in Nigeria, http://online.wsj.com/article/SB10001424052748703558004574583901047538032.html

[ix] Proved reserves of crude oil are the estimated quantities that geological and engineering data indicate can be recovered from known reservoirs with existing technology and current economic and operating conditions.

[x] “Worldwide Look at Reserves and Production,” Oil and Gas Journal, Vol. 106, No. 48 (December 22, 2008), pp. 23-24.

[xi] “Worldwide Look at Reserves and Production,” Oil and Gas Journal, Vol. 106, No. 48 (December 22, 2008), pp. 22-23.

[xii]Energy Information Administration, Country Analysis Brief on China, www.eia.doe.gov/emeu/cabs/China/Background.html

[xiii] Energy Information Administration, International Energy Outlook 2009, Table 9, page 59, www.eia.doe/oiaf/ieo/index.html

[xiv] Energy Information Administration, Annual Energy Review 2008, Table 11.19, http://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_39.pdf

[xv] E&E News, Oil and Gas: Salazar scraps contested Utah leases, February 4, 2009, http://www.eenews.net/eenewspm/2009/02/04/archive/1?terms=Salazar

[xvi] The Washington Times, Obama Blocks Offshore Drilling, February 11, 2009, http://www.washingtontimes.com/news/2009/feb/11/drilling-ban-revisited/

[xvii] Climate Wire, Interior: Research needed before “headlong” oil shale rush, February 26, 2009, http://www.eenews.net/climatewire/2009/02/26/archive/6?terms=Salazar

[xviii] The Hill, Oil, Gas Industry Aims to Nip Tax Hikes In the Bud, March 23, 2009, http://thehill.com/business-a-lobbying/3976-oil-gas-industry-aims-to-nip-tax-hikes-in-the-bud and Obama’s Budget: Almost $1 Trillion in New Taxes Over Next 10 yrs, Starting 2011, http://blogs.abcnews.com/politicalpunch/2009/02/obamas-budget-a.html

[xix] E&E News, Public Lands: Obama signs natural resources omnibus into law, March 30, 2009, http://www.eenews.net/eenewspm/2009/03/30/archive/2?terms=Salazar

[xx] The Wall Street Journal, 2^nd UPDATE: US Govt Proposes Delay On Controversial Utah Leases, October 8, 2009, http://online.wsj.com/article/BT-CO-20091008-715463.html

[xxi] U.S. Department of Interior News Release, Salazar Reforms U.S. Oil Shale Program, October 20, 2009, http://www.doi.gov/news/09_News_Releases/102009.html

[xxii] http://www.instituteforenergyresearch.org/2009/08/06/interior-secretary-limits-domestic-energy-production-but-fast-tracks-solar-development/

[xxiii] Wind Energy: The Case of Denmark, http://www.cepos.dk/fileadmin/user_upload/Arkiv/PDF/Wind_energy_-_the_case_of_Denmark.pdf ,and Study of the effects on employment of public aid to renewable energy sources, Universidad Rey Juan Carlos, March 2009, http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf, and Economic impacts from the promotion of renewable energies: The German experience, www.instituteforenergyresearch.org/germany/Germany_Study_-_FINAL.pdf

[xxiv] Germans miss out on cheaper electricity, www.reuters.com/article/idUSTRE5B02YS20091201/

[xxv] www.instituteforenergyresearch.org/2009/06/11/facts-on-energy-solar/ and www.instituteforenergyresearch.org/2008/09/26/facts-on-energy-wind/

[xxvi] Energy information Administration, Energy Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009, www.eia.doe.gov/oiaf/servicerpt/hr2454/index.html

[xxvii] www.instituteforenergyresearch.org/2009/11/20/what-president-obama-should-have-learned-about-energy-policy-during-his-visit-to-china/

Washington, DC – Tomorrow, President Obama, business and labor leaders, academics and other elected officials will gather at the White House for a jobs summit. Thomas J. Pyle, president of the Institute for Energy Research (IER), issued the following statement on the positive economic impacts that safe, responsible offshore energy exploration could have on our nation’s ailing economy and our long-term energy security:

“Affordable energy is the linchpin to a strong and prosperous nation and workforce. And there isn’t an industry that can produce more good-paying jobs more quickly, especially through responsibly expanding homegrown offshore energy production. For more than 25 years, presidents and leaders in Congress — of both political stripes — have kept enormous amounts of America’s job-creating energy resources off-limits.

“Inaction and the status quo cannot be accepted any longer — especially with today’s 26-year high unemployment rate. If the president and Congress are serious about crafting solutions to help put Americans back to work, they will move forward quickly with a commonsense plan to access more homegrown energy resources on and offshore.

“With more than 115 billion barrels of recoverable oil and over 565 trillion cubic feet of natural gas located off our shores, energy exploration along the outer continental shelf (OCS) could add more than $270 billion to our economy each year. To families, seniors and small businesses struggling to make ends meet, that’s good news. Our leaders in Washington should recognize that these resources are an asset, not a liability.”

According to an economic analysis of the proven resources located on the OCS — over the life of the production — access to America’s offshore oil and gas reserves could 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.

To read a more complete economic analysis of our offshore energy reserves, click here.

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

*This press release has been updated to reflect the proper location of the jobs summit.

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IER sets the record straight on Obama Admin energy leasing program

Washington, DC – Yesterday afternoon Secretary of the Interior Ken Salazar held a press conference to defend the Administration’s energy leasing program and to announce the 2010 onshore leasing schedule. The Institute for Energy Research released the following fact check of the Secretary’s comments:

Sec. Salazar: “We believe that our oil and gas leasing program is robust, but it is also a program that we have brought back into balance.”

FACT: For the leasing program to be brought into balance, the Obama Administration should be leasing more land, not less. Under the first year of the Obama Administration’s “robust” oil and gas leasing program, fewer onshore and offshore acres have been leased than in any previous year on record. As a consequence, the Interior Department collected less than one-tenth the revenue from oil and gas lease sales this year than it did in 2008. At a time of staggering deficits and record unemployment, the “balance” into which this program has apparently been brought is hardly the type our economy needs as it attempts to make its way back.

Sec. Salazar: “The 9,893 parcels offered offshore covered more than 52 million acres.”

FACT: Lease Sale 208, an event mandated by Congress in 2006 and finalized one week before the current administration took office, accounted for 65 percent of the total offshore acreage offered, 70 percent of total offshore acreage leased, and nearly 75 percent of the $931 million in lease sale revenue generated in 2009.  In other words, the vast majority of acreage and revenue about which the secretary appears to be boasting was generated not through the work or discretion of his department, but by mandate of the previous Congress.

Sec. Salazar: “These [onshore and offshore] combined lease sales offered more than 55 million acres for oil and natural gas development on U.S. public lands, and have generated more than $931 million in revenues.”

FACT: While these numbers may sound impressive, a closer look at the data and U.S. Treasury receipts reveals a different story. Last year, oil and gas lease sales (bonus bids) generated more than $10 billion in revenues – which is more than ten times the amount of revenue generated from lease sales under the Obama Administration in 2009.

Sec. Salazar: “We are fast-tracking large-scale solar projects in the Southwest, and we’re clearing out red tape for transmission projects as we build a national electric superhighway. These clean-energy initiatives will create thousands of new jobs here at home.”

FACT: The number of new jobs created by any “clean-energy” initiatives will be small. The DeSoto Solar Center in Arcadia, Fla, considered the largest solar power plant in the United States, employs two full-time staff and six groundskeepers for one week a month during the rainy season. This past August, the Institute for Energy Research (IER) published a detailed policy analysis examining the key differences between the secretary’s rhetoric on “fast tracking” solar development out west compared to what has actually been accomplished in this space.

Sec. Salazar: “Trade groups for the oil and gas industry need to understand that they do not own the nation’s public lands. Taxpayers do.”

FACT: Sec. Salazar is correct. However, contrary to Sec. Salazar’s actions, the taxpayers have spoken, and the majority of Americans believe we should readily produce more of the untapped oil and gas resources we have right here at home. These resources do not belong to any one individual, company, or administration. IER posted THIS shortly after President Obama was elected.

Sec. Salazar: “They [oil and gas companies] have a responsibility to diligently develop the 26 million acres of public lands and 28 million acres of ocean that have been leased, but which today stand idle.”

FACT: The federal leasing process is a lengthy, cumbersome process, requiring many levels of environmental assessment before exploration can begin. A similar claim was made last summer, and it was widely debunked and roundly dismissed.  As the nation’s keeper of resources, we hope the Secretary understands that such claims are grossly misleading, wholly inaccurate, and thoroughly discredited by expert geologists and others familiar with the leasing process. The fact is, not every acre of taxpayer owned land contains economically recoverable energy resources.

Sec. Salazar: “… And so the fact of the matter is that large parts of the public domain have been made available to oil and gas companies for leasing, and those places are not being developed.”

FACT:  97 percent of the 2.46 billion acres of taxpayer-owned lands in the public domain are not leased for oil and gas exploration.  The small amount of acreage that is currently leased is in various stages of the leasing, exploration and development process, and the percentage of acres that are currently “producing” is in line with than the historical average.

Sec. Salazar: “We are undertaking a review effort here…  And the reform process has several goals.  The first of those goals is to make sure that the American taxpayer is getting a fair return back to the Treasury for the leasing of these lands, which belong to the American citizen.”

FACT: Last year lease sale revenues amounted to roughly $942 per acre leased.  This year, the taxpayer received about $254 in return for each acre leased under the Obama Administration.  Which is greater: $942 per acre of return for the U.S. taxpayer or $254/acre? Environmentally sound oil and gas development is synonymous with economic development. Affordable energy benefits all Americans and increased energy production creates good paying jobs. With unemployment above 10%, it’s a travesty is Administration is working to limit Americans access to job-creating American energy.

Sec. Salazar: “The second goal [of the reform process] is to make sure that we are leasing the public domain in the right places and avoiding the kind of litigation and protests that accompanied many of these leases in the past.”

FACT: In 2008 almost 42 percent of the parcels offered for lease were protested. This year, almost 50 percent of all the parcels that we offered for lease were protested.  Fundamentally, no real reform of the process can take place without addressing the systemic problem of dilatory litigation. Peter Morton of the Wilderness Society perhaps most candidly described this problem when he suggested, “if you bid on lease for federal land, you can expect [environmental] litigation.”

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