The following by Bernard Weinstein, associate director of SMU's Maguire Energy Institute, appeared in the Jan. 9, 2018, edition of The Houston Chronicle.
January 19, 2018
By Bernard Weinstein
As 2018 begins, America's families and businesses have good reasons to be optimistic about the economy. The jobless rate is at a 17-year low, employment is at an all-time high, real wages are rising, corporate profits are strong, business investment is increasing, and the "Great Recession" has become a distant memory. What's more, whereas a decade ago energy was scarce and expensive, today - thanks to the shale revolution - oil and natural gas are abundant and comparatively cheap. Indeed, an argument can be made that the decline in energy costs has played a major role in the economic rebound from the debacle of 2008-2009.
Another dramatic change on the energy front is America's emergence as a growing player in the global market place. Currently, we're exporting more than one million barrels per day of crude oil while we've also become a small but fast-growing supplier in the international liquefied gas market. The U.S. Energy Information Administration projects our oil exports will double, and our gas exports will triple, by the end of next year.
In short, America has once again become an energy superpower, and the old mantra of "energy independence" is being replaced by the new mantra of "energy dominance." But achieving energy dominance for the long-term requires taking actions today, in particular removing restrictions on the industry's ability to explore for resources in promising areas such as the outer continental shelf where 94 percent is currently off limits.
The Trump administration has already taken several actions in that regard. Last fall, the Department of the Interior proposed that nearly 77 million acres in the Gulf of Mexico be offered for drilling leases starting in March 2018. Then on Jan. 4, the White House announced it would allow new offshore oil and gas drilling in nearly all United States coastal waters, giving energy companies access to the California coast for the first time in decades, while opening more than a billion acres in the Arctic and along the Atlantic Seaboard.
Industry groups have praised the plan while Interior Secretary Ryan Zinke has stated the leasing program will promote responsible energy development while helping pay for coastal conservation efforts. Not surprisingly, a coalition of more than 60 environmental groups has lambasted the proposal, arguing it will do irreparable harm to America's oceans, coastal economies, public health and marine life. And governors of several coastal states have also expressed strong opposition.
Given the growing industry focus on land-based shale plays, and the higher drilling costs associated with offshore prospects, there's not likely to be a rush to buy offshore leases in the current price environment. An extended period for public comment and the likelihood of lawsuits will also delay any significant leasing activity, for at least several years. Still, to maintain long-term energy competitiveness as we become a larger player in global oil and gas markets, it's important to open these areas for future exploration and production so they can be included in America's portfolio of energy reserves.
We should also keep in mind that our economic prosperity is highly dependent on a thriving energy industry that accounts for more than nine million American jobs. What's more, all households and businesses benefit from reliable and abundant energy that keeps down heating, power and transportation costs while giving a leg-up to America's manufacturing sector.
America's growing energy dominance is not just a matter of jobs and revenue. In many ways, our ability to produce energy also affects our position in the global arena, especially as tensions increase with Russia, currently the world's No. 1 oil producer and No. 2 exporter.
By eliminating restrictions on America's ability to develop energy resources, we will be better able to leverage the advantages of the American economy and engage our neighbors in the Western Hemisphere in a shared interest in economic prosperity.
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