America has plenty of oil, but Obama managed to turn an energy boom into an energy crisis
In the mountainous Green River Basin of the American West, running through Utah, Colorado, and Wyoming, the American people own lands containing an estimated one trillion barrels of oil, more than triple the amount of Saudi Arabia’s proven oil reserves and far exceeding anything we could have dreamed a few decades ago.
This incredible supply—made of up most of the world’s oil shale—should be a cause for national celebration, since it has the potential both to lower gasoline prices and to increase government revenues without raising taxes.
In 2008, this exciting energy story was just beginning to bear fruit, as the Bush administration issued 77 leases (after a seven-year environmental review process) for energy companies looking to develop the oil shale.
Then came President Barack Obama. Within weeks of his inauguration, the Obama Interior Department withdrew the leases.
And although Interior Secretary Ken Salazar said the administration would “reconsider” the leases, his department ensured that any progress would be minimal. According to a statement from the House Committee on Natural Resources, “In October 2009, the Interior Department announced a new round of RD&D leases that included significant changes to the program. The new program decreased lease acreage by 87 percent, demanded unrealistic timelines for investment into cutting-edge research, included unattainable production requirements, and implanted variable royalty rates. As a result, only three companies applied for this latest round of RD&D leases.”
Out of the original 77 leases, the Obama administration has reissued just 17.
This case of oil shale in the American West—of President Obama managing to turn energy boom into energy crisis—is not an isolated event.
As I explain in $2.50 A Gallon: Why Obama Is Wrong and Cheap Gas Is Possible, out this week as an ebook and in paperback, the last four years have given us two remarkably divergent stories about American energy.
One is that President Obama’s anti-American-energy policies have been incredibly destructive. In addition to revoking the leases for oil shale development in the American west, in just four years he has:
- Obstructed new drilling offshore, where only 2.2 percent of federal land is currently being leased for production.
- Killed the Keystone XL pipeline to transport Canadian oil to the United States, where it could be refined in our refineries and sold in our gas stations.
- Proposed tens of billions of dollars in new taxes on oil producers every single year in his budget.
- Demonized energy producers and lambasted “tax breaks for oil companies” which in reality apply to all U.S. manufacturers.
- Harassed oil and gas companies in North Dakota with trumped-up charges under the 1918 Migratory Bird Act.
- Attempted to institute massive new carbon taxes by dictate, allowing the EPA to classify carbon dioxide as a pollutant—even after Congress directly rejected his cap-and-tax scheme.
Of course, this is just the tip of the iceberg of President Obama’s anti-American-energy animus. The full account of his record leaves no room for doubt: President Obama and his allies on the Left are deeply opposed to a form of energy most Americans rely on every day—oil.
The source of this hostility? As I write in $2.50 Gas, they share the views of their radical environmentalist base:
The President and his allies are doing nearly everything in their power to keep Americans from consuming more gasoline and more fossil fuels in general—just as they did in Congress in 2008. They are extremists, beholden to an extreme environmentalist base, as demonstrated by the outcome of the Keystone XL project.
Ideology explains why President Obama adopts policies that drive up the price of gasoline and other forms of fuel when he could easily do the opposite. High gas prices are not a problem but a solution for someone whose true goal is to force Americans away from oil and gas into other forms of energy. President Obama’s Secretary of Energy recently admitted to this aim in testimony before Congress. When asked if his goal was to lower gas prices, he replied, “No, the overall goal is to decrease our dependency on oil, to build and strengthen our economy.” Notice, Secretary Steven Chu did not say he wanted to decrease our dependence on “foreign oil,” a popular bipartisan goal. He simply said “oil.”
Clearly, Americans are struggling under the policies of a president who consciously aims for the elimination of one of our economy’s major sources of fuel.
Thankfully, the second energy story—the one the President doesn’t want Americans to know—is that the last four years have also been a time of tremendous progress and discovery in American energy. So much progress, in fact, that if we had leaders who were committed to unleashing the full potential of our energy resources, we could ensure American energy independence and decisively reverse the rising cost of fuel.
When in 2008 I first wrote Drill Here, Drill Now, Pay Less, on which $2.50 Gas is based, peak-oil theorists were winning the public debate—they claimed the rising gas prices were the beginning of the end of world oil supply. At the same time, many experts believed the United States only had about seven years’ supply of recoverable natural gas, and prices had more than doubled since 2002.
But as I relate in $2.50 Gas, both of these theories have been dramatically disproven over the past four years, at the same time as President Obama has been busy trying to force Americans away from fossil fuels to his preferred, expensive alternatives.
Offshore in Brazil, we’ve made some of the largest oil finds in decades; in all, the Santos Basin is estimated to hold 50 billion to 100 billion barrels of oil, and the country is set to become one of the world’s top oil producers, whereas not long ago it was thought to have few remaining reserves.
In Canada, developments are even more impressive. It turns out that the Canadian oil sands may be equal to the entire world proven reserves.
But nothing that has happened in the last four years is more devastating to President Obama’s environmental extremism than the new discoveries right here in the United States. With technological and engineering advances in our ability to recover oil and gas trapped in shale, we’ve seen a revolution in American energy.
In the Bakken formation in North Dakota, the Eagle Ford shale in Texas, the Marcellus formation in the east, and others, estimates of oil and natural gas are rising all the time. And not just by a little bit. As recently as 2008, there were an estimated four billion barrels of oil in the Bakken formation. By 2010, that estimate doubled to eight billion barrels. In June 2011, Bakken developer Continental Resources updated its estimate to 24 billion barrels of oil.
In many of these same places, we’ve discovered so much natural gas that the price has collapsed from more than $8/MMBTU in 2008 to about $2.50 today—a 70 percent drop.
These are just the developments on private land, where the government can’t stop the drilling so easily. But enormous swaths of federal land onshore and offshore are still held off-limits by the Obama administration and Congress.
In $2.50 A Gallon: Why Obama Is Wrong and Cheap Gas Is Possible, these are the two energy stories I relate—the amazing promise of American energy and the incredible peril of electing leaders who are radically opposed to it.
It’s within our reach to become a true energy superpower. But first Americans must force their leaders to stop obstructing that future.