Monthly Archives: October 2012

Energy: Made In The USA

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In last night’s debate, both candidates spent a considerable amount of time discussing their respective energy policies. Although I am by no means a grizzled roughneck, I have been employed for two years in the oil and gas industry, specifically the upstream sector of the business. Therefore, it’s always of great interest to me what politicians and their appointees to regulatory bodies have to say regarding energy.

To say that the current administration has been antagonistic toward the fossil fuel industry is to be guilty of gross understatement. It’s been downright adversarial. From the President’s comment as candidate in 2008, when he stated his desire to “bankrupt” coal-powered plants, to the words of the now resigned EPA regional administrator, Al Armendariz, who likened his “philosophy of enforcement,” against EPA rule breakers to that of Romans handling Turkish villages (See: Crucifixion), the traditional energy sector has found few friends at 1600 Pennsylvania Ave.

Not only do we find such hostility toward the industry in their words, but also in their actions. Earlier this year, the President denied TransCanada’s permit request for its Keystone XL Pipeline route from Alberta to Nebraska. The State Department shockingly claimed that at the time they made their decision, they determined the pipeline “did not to serve the national interest.” That was written before pump prices hit nearly $5 in places like California. Seems a tad short sighted now. The Administration likes to champion construction of the pipeline’s southern route from Cushing, OK, to Port Arthur, TX, but that route didn’t require Presidential approval. He never shares that fact with his audience. After the BP debacle in the Gulf of Mexico, the Administration slammed the industry with a drilling moratorium which lasted 6 months and resulted in the exodus of companies and their rigs from the region. The Interior Department estimated “well closures temporarily cost 8,000-12,000 jobs and $1.2 billion in economic activity.” Yes, that dollar amount is a billion. There’s also the constant and seemingly inexhaustible stream of “loans” to failed “green energy” companies like Solyndra Corp. while simultaneously there are calls for the elimination of “subsidies” to the oil and gas industry. And last night, as President Obama defended his energy record in front of the town hall audience and millions more at home, we find that his Interior Department in August quietly closed off from drilling nearly 11.5 million acres in Alaska. Alaska used to be the second highest oil-producing state in the nation. Now, North Dakota occupies that spot. Draw your own conclusion as to why that’s the case.

The shame of it all is that this antagonism need not exist. The energy sector has been the one bright spot in an otherwise anemic economy. The Shale Boom, brought about by new advances in technology such as horizontal drilling and hydraulic fracturing, has created millions of jobs throughout the country. Texas has seen robust job growth within its borders with “288,222 new jobs already attributable to unconventional gas production as of 2010,” with numbers set to “grow to 385,318 in 2015 and 682,740 by 2035.” North Dakota, blessed to sit atop the hugely productive Bakken field, has kept its unemployment rate low with the help of nearly “35,000 of its state’s workforce [being] directly employed in the oil industry.” Ohio, Pennsylvania and Illinois are also reaping the benefits of the shale boom. But it’s not only those directly involved with the industry who are benefiting. Hotels, restaurants and county courthouses are all taking advantage of the influx of workers into their towns. From courthouses in Karnes City, Texas to Carmi, Illinois, county clerks use the revenue from copies and filing of oil and gas leases to uploading the dusty and battered pages of their record books into online databases. I may not like paying $0.50 per copy, but the clerks sure do love it. This new found revenue is also loved by States as it cushions a bit their battered budgets. Through severance taxes and permit fees, states are able to benefit from exploration within their borders. Colorado, Ohio and New Mexico are in the envious position of deciding which programs they’d like to spend their oil revenue on. A position, no doubt, cash starved sister states would love to be in.

There’s more to this story, and I certainly am going to hit the keyboard to continue telling it, but underlying it all is the simple frustration that despite our country’s potential to be an energy powerhouse, we have folks in positions of authority who insist on keeping a choke collar on the neck of the American bull dog. Just when it seems we’re getting ahead, the Administration and its increasingly politically motivated regulatory agencies yank us back. Instead of demonizing this sector of the economy, they should be encouraging it. Millions of folks owe their livelihood to this industry. I know. I’m one of them. I think it’s amazing the advances which have been made. This should be praised. You don’t see this type of activity going on in Europe or China. Not to the extent that it’s happening here. In fact, foreign companies are sending their folks to American shores to learn our techniques and train their workers. After what seems like years where our number one status has slipped in many categories, we have an area where we are decidedly top dog. Why pull back on that now? I have a theory for that question, but that’s a post for another day.

For those in the industry, I say, keep chugging along and hold your heads high. From the geologists to the oil field workers, you all are finding, extracting and refining the fuel this big nation runs on and that’s nothing to be ashamed of. Remember, the guy or gal who berates you for what you do for a living most likely uses what you pulled out of the Earth. And if they deny it, well, it must be a special blend of rainbows and unicorn urine they’re putting in their vehicles that us mere mortals are unable to use.

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