The oil and gas industry is headed for an energy policy “train wreck” unless it can successfully communicate with and engage the public in a way that will influence governmental actions favorable to the realistic provision of energy, said Consumer Energy Alliance Vice-Pres. Michael Whatley at the Offshore Technology Conference in Houston May 8.
“Since 1980 US demand has increased by 30%, but supply has grown by only 15%. Yet over 80% of the Outer Continental Shelf remains off-limits to oil and gas exploration and production. Even worse, only 3% of onshore federal land is available for oil and gas leasing, and more than 51% is totally off-limits for conventional leasing,” he said.
America currently imports 60% of all its oil and gasoline—more than 10 million b/d of total imported petroleum and products, according to the US Energy Information Administration, with half of those imports coming from Organization of Petroleum Exporting Countries member countries.
Whatley said over the last 20 years, US imports from the Persian Gulf area alone have increased 550%. But many areas of domestic potential remain off-limits to exploration and production.
Rising costs
At the same time, “rising energy costs are the top concern among US entrepreneurs,” Whatley said. The national average price of gasoline is $3.68/gal and is projected to rise to $4/gal or more this summer.
US energy demand is projected to increase over 30% in the next 20 years, he said—47% for oil and 54% for gas.
To offset the projected energy shortfall, he said, the US must develop every possible form of alternative energy, but even that won’t be enough under proposed legislation.
“Even if we displace oil and gas with all the alternative forms being proposed, it would only meet 5% of all US energy demand,” he said.
That means fossil fuels must continue to meet the majority of US energy needs, a fact that both the public and Congress need to better understand. The industry needs to do a better job of educating them, Whatley said.
When groups ask why prices are so high, he replies that the fault lies with “Congress, India, and China,” with an emphasis on “Congress.”
In the last 18 months, he said, Congress has enacted laws in a number of arenas that can and likely will adversely affect the energy industry and create obstacles to more domestic oil and gas production. There are more laws planned that can do even more harm to the industry.
Saying these actions “didn’t just start” but are the product of an “extremely effective campaign by environmental groups over many years,” Whatley insisted that the oil and gas industry must follow the same game plan being implemented by these groups if it is to avoid legislative policy that will damage the industry and inadvertently endanger the energy security of the US and its people.
The game plan
Tactics environmentalists employ to protect clean water, air, and endangered species, Whatley said, include “developing consistent policy objectives and playing offense.” He added, “They know what they want and they ask for it.” That is important, he said. “Highly organized, they also recruit strong allies, reward ‘good’ behavior and punish ‘bad’ behavior; they lobby Congress and push the president. They give campaign donations.” They don’t care about blasting Democrats and Republicans alike, he said, and they also “play outside the Beltway.”
Whatley said the industry must form consumer-energy alliances with powerful and influential groups such as labor unions, manufacturers, farmers, and trucker coalitions to pressure Congress for policies that will ensure the energy the country needs. This includes legislation that will help the industry provide more energy, not hinder it from finding and producing oil and gas.
Working with these groups, industry principals should strive to make sure farmers and truckers have enough energy and at reasonable cost. Having such groups say, “Our gasoline prices are too high and are affecting our livelihood and the whole economy, so you must give us access to domestic supplies” can be effective in influencing Congress, he said.
At stake is access to onshore and offshore domestic oil and gas resources, and a national energy policy that encourages use of domestic resources and decreases imports of oil and gas over the long term.
