Energy legislation in the U.S. has turned from foolish to dangerous.
First the Senate wouldn't consider an energy bill that approved leasing of the Arctic National Wildlife Refuge Coastal Plain. Now the House would enshrine in energy legislation the piecemeal moratoriums now blocking leasing of most of the Outer Continental Shelf. Two House committees want to amend the energy bill to make the Department of Interior buy back contested OCS leases. And another committee wants to make refiners and oil importers buy and pay storage fees for oil needed to complete fill of the Strategic Petroleum Reserve.
Thus would Congress annul the country's best hopes for discoveries large enough to slow the decline in domestic oil production. Thus would it seal the U.S. government's reputation as a chiseler and spoil prospects for whatever leasing it might hope to conduct in the future. And thus would it heap new costs on a refining industry facing huge investments required by motor fuel mandates no one yet understands.
GENERAL TERMS
Is it any wonder producers are racing away from the U.S.? Is it any wonder many refiners soon will follow? By taxing drilling and production investments, by resisting frontier leasing, and by nationalizing gasoline chemistry, Congress is evacuating the upstream oil and gas industry and strangling its downstream counterpart.
No reasonable energy policy would systematically dismember the domestic component of an industry that fills 65% of energy demand. Alas, energy policy arguments fall on deaf ears, so the oil industry must focus on broader dimensions of the problem. In those terms, it appears no less urgent:
- A Congress that has spent its nation into fiscal despair now wants to buy back oil and gas leases with borrowed public funds, forgoing rents, royalties, income tax revenues, and future lease bonuses.
- A Congress dedicated to environmental protection at any cost won't even consider the spill threats that will grow along with tanker traffic as a result of its actions.
- Worst of all, a Congress forever seeking extensions in federal unemployment benefits exhibits no apparent concern for the jobs lost to federal hostility toward petroleum production and processing.
Policy hypocrisies like these don't hurt just roughnecks and refining engineers, Texans and Oklahomans. They hurt anyone with a stake in the national economy and a need for oil and gas. They hurt everyone.
DEEPER IN DEBT
Lawmakers will put the nation deeper into debt when they buy back OCS leases. They'll sacrifice economic activity that otherwise would generate royalty and tax revenues and help balance the federal budget. They'll aggravate joblessness in a struggling economy, adding to unemployment benefit costs instead of to payrolls.
Lawmakers need a reminder that the oil business and its support industries represent valuable parts of the U.S. economy. Roughnecks and refining engineers are Americans. When they lose their jobs the economic losses are the same as when auto workers or computer programmers lose theirs.
Americans may never comprehend the dire energy policy consequences of unleased federal land and closed refineries. But they can be made to understand the folly of misspent public funds, squandered revenue opportunities, and camouflaged fuel taxes. If the petroleum industry delivers the message, Americans might just send the energy policy wrecking crew now in Congress back to those quaint realms where people earn pay raises with constructive performance and think twice before writing bad checks.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
