As we look for a long-term solution to our country’s long-running recession, policy makers in Washington would do well to understand that there is no surer path to prosperity, now and for years to come, than by maximizing the development of American energy. This is true for both Georgia and the United States as a whole.
Leave aside the rest of the energy portfolio, and just think about oil and gas for a moment.
Due to recent technological advances in production, the International Energy Agency says the United States is set to become a net exporter of natural gas by 2020 and almost completely self-sufficient by 2035. And when you include our North American neighbors, we’re set to become a net oil exporter by 2035 as well.
Our challenge is clearly not a resource problem; it’s a government problem, and so it depends on what choices we make as a nation.
For example, when the Bakken Formation was discovered in North Dakota, 25 times more oil was found than was originally estimated. But that’s because this was on private land where innovators and entrepreneurs were free to explore and develop.
According to the New American Energy Opportunity Foundation, 91 percent of undiscovered resources on federal lands are inaccessible or restricted, a mere 6 percent of onshore mineral estate is leased and it’s hardly better offshore, where it’s only 20 percent.
Looking at those numbers, it’s not difficult to understand why Citi Investments believes the main obstacles to a North American oil surplus are actually political rather than geographical or technological.
While this problem is obviously hampering our ability to immediately develop American energy, it’s also preventing the creation of sustainable, well-paying American jobs, real economic growth, and enormous amounts of revenue to both the states and the federal government.
On the jobs front, a 2011 IHS Global Insight report makes the case that increased drilling activity in the Gulf of Mexico and the adoption of a “pro-active regulatory pace” could generate 230,000 American jobs, one-third of which would be generated outside the Gulf region in states like Georgia. With such job creation comes economic activity, and by definition, revenue to the government.
If only we increased our federal lease sales back to historic levels, we could generate an estimated $1.7 trillion in government revenue over 30 years as a result of both royalty payments and current tax rates.
And such revenue wouldn’t just be for Washington, D.C. If political leaders in Georgia successfully copied Virginia’s Democratic Senators Jim Webb and Mark Warner in their attempt to open up their offshore resources, Georgia could split the revenue from offshore energy development with Washington 50-50. Of Georgia’s 50 percent in shared revenue, 37.5 percent would go straight to the state government, with the other 12.5 set aside for conservation, public transportation projects and the like.
This isn’t a pipe dream — it’s actually the current deal Georgia’s neighbors in the Gulf already have.
Just imagine if the recent debate over TSPLOST hadn’t been about taxes at all because Georgia had been collecting and saving revenue generated by offshore energy production.
And again, this only deals with oil and gas production. Once you factor in Georgia’s leadership on nuclear power and the much-anticipated opening of Plant Vogtle units 3 and 4, you realize opportunities for economic growth, and all that comes with it, are almost endless for Georgia and the nation.
So the next time you hear politicians debating potential solutions to our fiscal woes, let them know that there is another tried and true answer.
That answer is the aggressive and responsible development of American energy.
Adam Waldeck is executive director of the Southeast Energy Alliance, energy producers and consumer groups advocating for an all-of-the-above energy policy.