API's president raises some important points during a busy energy week

In a week that began with President Bush's rescinding the presidential OCS withdrawal and ended with the House defeating the latest "use it or lose it" bill, Red Cavaney raised some important points.

Jul 25th, 2008

In a week that began with US President George W. Bush's rescinding the presidential Outer Continental Shelf oil and gas leasing withdrawal and ended with the US House defeating the latest bill incorporating "use it or lose it" provisions, American Petroleum Institute President Red Cavaney raised some important points.

"In the ongoing energy debate, far too much time is being wasted in discussing what form of energy should be favored and which disadvantaged in meeting our country's needs," he said in a July 16 keynote address to the US Energy Association's Energy Supply Forum.

"Every respected energy study on future demand comes to a similar conclusion about the next several decades: We need all the energy that is economically viable to produce in an environmentally sensitive manner, as well as energy efficiency at levels heretofore unrealized," Cavaney observed.

Increasingly, what happens globally affects energy in general, and oil in particular, domestically. Current concerns about crude oil and gasoline prices underscore energy's link with the general economy, he said.

Demand requirements

He cited recent US Energy Information Administration estimates that sustaining 3% annual global economic growth will require a crude oil production increase equal to the United States and China's current combined consumption. Worldwide natural gas demand growth could be even larger, rising 53% by 2030, he added.

"Despite significant growth of alternatives and improvements in energy efficiency, more than half of the world's energy demand will be met by oil and natural gas in 2030, as is the case today," Cavaney said.

He cited often quoted US Minerals Management Service estimates of 18 billion bbl of oil and 76 trillion cubic feet of gas believed to be waiting beneath the 85% of the Outer Continental Shelf that is still off-limits in the Lower 48 states.

But he also mentioned that only 17% of non-park, non-wilderness lands which the federal government administers is open to energy development under standard lease terms. The US Bureau of Land Management has said that the remaining land holds an estimated 19 billion bbl of oil and 94 Tcf of gas, Cavaney said.

'Growing recognition'

"Several recent polls show that many Americans have a growing recognition that our nation must do more to find and develop the domestic oil and gas resources we need, both onshore and offshore," he continued.

A survey which Cable News Network and Opinion Research Corp. conducted in June found that 73% of those sampled favored increase drilling offshore in US waters, he noted. "And a Fox News-Opinion Dynamics poll, also in June, found 76% favored 'increased drilling for oil in the United States immediately,'" he said.

"We cannot afford to repeat the mistakes of the 1970s. We face far tougher energy competition today as a result. Price controls, allocation schemes, limitations on natural gas, picking winners and losers among fuels, and punitive taxes have all been tried by government  and none have worked to benefit the consumer," Cavaney maintained.

Contact Nick Snow at nicks@pennwell.com

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