Last week President Obama spoke about his plans for offshore energy exploration and expansion of leasing in the Outer Continental Shelf (OCS). As part of their plan, the President and Secretary of the Interior Ken Salazar will allow for the leasing of waters off the Eastern Coast of New Jersey. Additionally, the President’s plan will expand leasing in the eastern portion of the Gulf of Mexico at least 125 miles off the coast of Florida. Although these gestures seem positive, this plan is simply a political carrot at best.
While the President’s plan appears to support the expansion of oil and gas development in the OCS, in reality, it does more to limit our abilities to explore these vast resources. With praise from political pundits, you would believe that this plan will actually stand to alleviate our nation’s energy crisis. To the contrary, the President has simply created an environment of smoke and mirrors. While he expands small portions of the OCS in one place, he significantly locks up leasing and exploration in another.
Let’s look at the facts.
While seemingly positive on the surface, it’s important to know that the President’s new plan stands to cancel five lease sales off the coast of Alaska. To give you an idea, one of these areas is projected to contain over 77 billion barrels of potential oil production, which is three times US reserves. In addition, this plan delays planned leases off the coast of Virginia and calls for a “study” of southern portions of the Atlantic OCS. This study is nothing more than a delay tactic and will prevent future lease sales for another year.
Coupled with this backward approach, the President failed to remind the American public that his FY2011 budget proposal stands to tax the oil and gas industry at an overwhelming $37 billion. Removal of these vital tax incentives will result in significant reduction in our domestic production and the elimination of thousands of jobs.
Ironically, President Obama unveiled this plan while standing next to the Environmental Protection Agency Administrator Lisa Jackson and his climate change advisor, Carol Browner. This seems ironic simply because these two individuals are key components in the systematic destruction of the oil and gas industry. While making his statement to increase exploration and production of oil and gas, the President stands next to Administrator Jackson, who is keen on regulating CO2 and the process of hydraulic fracturing. Simply put, these two initiatives and the inclusion of the President’s tax policies are a recipe for disaster.
Without doubt, the President’s actions are political in nature. His plan moves the ball backward, not forward. His plan will result in a significant decrease in our domestic production, less job creation, and a perpetuation of our dependence on foreign sources of oil. Instead of playing political games, let’s expand exploration and development of our resources in the OCS and open up ANWR in Alaska. Let’s develop our nation’s natural resources to ensure our economic stability. In the state of Louisiana, more than 20,000 jobs exist as a direct result of oil and gas activities in the Outer Continental Shelf. It is estimated that the actual average salary of these jobs is around $60,000 per employee. At a time of unprecedented unemployment, it would be wise for the President to support job-creating initiatives that our industry can offer.
Don Briggs is the President of the Louisiana Oil & Gas Association.