In the debate over rising gas prices, Washington is creating a massive distraction: whether Congress should eliminate tax “subsidies” for oil and gas companies. Of course oil and gas companies don’t receive checks, grants, or direct payments from the federal Treasury, so the debate is a red herring. What’s really needed is price relief for consumers at the pump. The best way to do that is to produce more affordable energy here at home.
We certainly have plenty of it: according to the non-partisan Congressional Research Service (CRS), America’s combined supply of oil, coal, and natural gas is the largest on Earth. Put another way, America’s recoverable resources are far larger than those of Saudi Arabia (3rd), China (4th), and Canada (6th) combined. And that’s without including America’s immense oil shale and methane hydrates deposits.
The CRS report was requested by me and my colleague, Sen. Lisa Murkowski (R-Alaska). It grew out of frustration with the Democrats’ refrain that America only has 3 percent of global oil reserves, and therefore, under this view, more drilling and production at home is futile. As President Obama put it, “With 3 percent of the world’s oil reserves, the U.S. cannot drill its way to energy security.”
But the CRS shows the full, accurate picture of America’s reserves — and shows that we can produce our way to energy security. CRS shows more than just our proven oil reserves, which are a modest 28 billion barrels. The only way to estimate proven reserves is to drill. But that’s not possible because federal policies, supported by President Obama and many Democrats, put 83 percent of America’s federal lands off limits to drilling. Of course that’s just fine for this administration, as a senior official at the Obama Treasury Department said, “The administration believes that it is no longer sufficient to address our nation’s energy needs by finding more fossil fuels…”
In fact, according to CRS, which relied on estimates from the Department of Energy, the U.S. Geological Survey, and the Interior Department, we have 163 billion barrels of recoverable oil — nearly six times higher than what President Obama and the Democrats like to claim. That amount of oil would replace our current oil imports from the Persian Gulf for more than 50 years.
But this administration is saying no. By restricting supply — through its de facto moratorium on deepwater permitting in the Gulf of Mexico, and its restrictions on production on federal lands — prices have gone up. This is exactly what this administration wants. Energy Secretary Steven Chu, for instance, told the Wall Street Journal that “[s]omehow we have to figure out how to boost the prices of gasoline to the levels in Europe.” Consider just Great Britain: consumers there pay over $7.00 a gallon for gasoline.
Remember that when President Obama took office, the national average price for regular gasoline was $1.84 per gallon. Today, the average price is $3.98 per gallon. Prices are well over $4.00 in many parts of the country.
This mindset — which seeks to make the energy we use more expensive, in hopes of spawning a “green energy” revolution — is encapsulated in the cap-and-trade agenda being implemented by the Obama Environmental Protection Agency (EPA). That agenda is now squarely aimed at gasoline, as EPA is preparing onerous new global warming regulations on petroleum refineries, which will inevitably raise prices at the pump.
EPA’s cap-and-trade agenda has already killed refinery expansions. Lion Oil, based in El Dorado, Arkansas, recently testified before the House Energy and Commerce Committee that it commenced a $2 million expansion of its El Dorado refinery in 2007, with 2,000 construction jobs, but its completion has since been stalled. As Lion Oil Vice President Steve Cousins explained, “The uncertainty and potentially prohibitive costs associated with possible cap-and-trade legislation and EPA’s greenhouse gas regulations were a critical factor leading us to delay the completion of the expansion.”
Cousins also testified in 2009 that cap-and-trade legislation would have forced his company out of business. He sees the same threat looming at EPA: “It is our fear that, left unchecked, EPA will use the Clean Air Act to drive to exactly the same goals as the defeated cap-and-trade legislation that Congress so wisely chose not to pass. And in that pursuit, EPA will inflict the same damage on our company and our nation’s economy.”
This gets to the heart of the debate about gas prices. We have plenty of energy here at home, and we can produce it responsibly, yet the Obama administration, and some in Congress, would rather propagate myths about oil and gas “subsidies.” At the same time, they are obstructing our ability to create jobs and affordable energy.
It’s time for the president to stop picking on America’s energy producers. Instead, for the benefit of consumers, our economy, and our energy security, he should exercise real leadership by getting serious about producing American energy.
Senator James Inhofe (R-OK) is the ranking member of the Senate Environment and Public Works Committee.