Domestic Resources For Energy Independence
Over the past year, we have seen gas prices spike to record levels followed by the deepest economic downturn in a generation. These events illustrate how our energy priorities and economic challenges are tightly intertwined. A national strategy to achieve American energy independence is long overdue. As both sides of the aisle come together to create a plan to wean our nation off imported energy, we must consider the economic benefits of expanding our domestic resources, and heed the consequences of stifling production.
Since 1982, a moratorium on offshore exploration and development has prohibited production on 85 percent of the Outer Continental Shelf (OCS), leaving some of our greatest energy reserves untapped. This failure to rely on our own vast resources has placed America in the disadvantaged position of importing over 60 percent of our energy. Too much of it comes from unstable and unfriendly regimes like Venezuela and some in the Middle East. In 2008 alone, we spent close to $475 billion on imported oil. This equation will not solve our long-term energy needs.
Oil and gas development in the OCS holds great potential to reduce our reliance on foreign en- ergy sources. The technology and the infrastructure to safely and efficiently extract oil and natural gas are in place. Experts have estimated that the OCS contains roughly 100 billion barrels of untapped oil. Combined, production occurring off our Atlantic, Pacific, Gulf, and Alaska coasts could replace OPEC imports for approximately 50 years.
Natural gas, in particular, is an extremely valuable domestic asset. It is abundant, cost-effective, and the cleanest-burning fossil-fuel available. The OCS holds undiscovered recoverable reserves of 420 trillion cubic feet of natural gas. And with the United State consuming natural gas at a rate of roughly 23 trillion cubic feet per year, there is essentially a 20 year supply of domestic natural gas off American shores.
Not only will expanded OCS development move us closer to energy independence, it will strengthen our economy and create stable, well-paying jobs. If the United States produced all available reserves in the OCS, the government would take in up to $1.4 trillion in tax revenues. A December 2008 study conducted by economists and the American Petroleum Institute (API) indicates the potentially broad economic impacts from leveraging these available resources. The study projects that in the year 2030 alone, OCS production would result in more than $8 billion in private sector economic output. It would add nearly 40,000 jobs and $2.3 billion in income for American workers.
The benefits of the OCS are clear; now, we must take decisive steps to develop this valuable source of domestic oil and natural gas.
In March, I introduced an amendment to the 2010 Budget to ensure that we expand domestic offshore energy production on the OCS. When setting the budget policies that will guide our energy portfolio, we cannot overlook our most valuable and accessible resources. My amendment, which was adopted in the Senate by unanimous consent, would ensure the OCS plays a role in our national policy. I look forward to working with the House of Representatives to keep this resource in our portfolio when the final budget is negotiated between the House and Senate.
I also led 33 of my Senate colleagues in sending a letter to President Obama, urging him to complete as expeditiously as possible the Administration's five-year plan for offshore oil and gas development. The President can show strong leadership and help reduce dependence on foreign oil by not reinstating the Presidential Moratorium on U.S. offshore oil production and by delivering a new offshore drilling plan. This approach would benefit all Americans.
The wrong approach would be to tax energy production, which is what the Administration's budget proposes. Repealing tax provisions that support exploration, production, and refining would move our country in the opposite direction of energy independence, and it would lead to higher prices for all consumers of energy. When households are already struggling in this economy, a tax increase is the last thing we need.
The United States has two things that uniquely position us for energy independence: an abundance of natural resources and the indomitable spirit of American ingenuity. If we use these assets effectively, we will free the U.S. from dependence on foreign energy, thus strengthening our economy and national security. We must begin with the swift development of offshore oil and gas.
Kay Bailey Hutchison is the senior U.S. Senator from Texas and is the Ranking Member of the Senate Committee on Commerce, Science, and Transportation.