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Op Ed: Time to Get Serious About American Oil

Why is Washington blocking oil exploration

in states like Alaska and Louisiana when the Middle East is such a powder keg?

By Sean Parnell
March 3, 2011

Wall Street Journal

** Link to WSJ (subscription required)

The revolution that began in Tunisia, spread to Egypt, and is now dramatically unfolding in Libya is far from over. The events in North Africa and the Middle East threaten to push the price of oil well above $100 a barrel—and make the importance of oil to America’s security clearer than ever.

Over the past several decades, we have allowed ourselves to become dependent on oil from unstable regions that are hostile to our nation. The United States relies on an open Suez Canal, the security of which has been funded by our tax dollars for decades. With gasoline prices surging, and manufacturing and transportation costs rising, the rising cost of goods will soon impact every American, putting our economic recovery at risk.

The U.S. imports more than 63% of its oil. The time is now for our federal government to re-examine its current policy—which severely hampers domestic oil exploration and development—and to learn from our recent history.

In the 1970s, the OPEC embargo led to long lines at gas stations, with families waiting for hours to buy gas for their cars. Rationing was enacted, and Americans fought each other for a gallon of gas. The power of OPEC was indisputable.

One of the most significant outcomes of that embargo was the Trans Alaska Pipeline System. Americans knew we needed to develop domestic energy to balance the power of cartel oil. For 40 years, oil from Alaska has allowed our nation to stand with some degree of energy independence. Building that pipeline on American soil was prescient.

Millions of American jobs are directly tied to our energy sector. Even as the energy sector necessarily diversifies, oil will continue to be a key piece of our national energy profile for many decades.

And yet Alaska and the Gulf states have been blocked from developing America’s oil by politically driven federal policy, much of it aided by misinformation. If Americans wonder what our economic Achilles’ heel is, they need look no further than the federal regulatory system that delays permits for domestic exploration and production.

In Alaska, an oil company can buy federal leases, spend over $3 billion in permitting and capital costs, apply for an air permit from the Environmental Protection Agency (EPA), and then wait for five years and still have no permit. In one case, the EPA’s refusal to grant a permit for Royal Dutch Shell to drill in the Beaufort Sea delayed the creation of 54,700 jobs annually and $145 billion in payroll.

Alaskans have significant limits placed on us by the federal government, but we are hardly alone. In Wyoming, it takes years to get permits for oil-related development. Republican Gov. Matt Mead has asked the Interior Department to rescind its “Wild Lands” policy, which removes a state’s discretion for land use. Last year Gov. Bobby Jindal (R., La.) pleaded with the Obama administration to end the moratorium on deep-water drilling in the Gulf of Mexico, which affects 33 permitted exploratory wells. To date, only one new well has been approved.

Meanwhile, the EPA received a $3 billion increase in its budget last year. It produced 42 significant regulation packages in the first 18 months of the current administration, each costing our economy tens of millions of dollars.

Lost American jobs are one consequence of not developing our domestic oil, but there are others. By shutting down domestic production, the Department of Interior and the EPA are now essentially driving U.S. foreign policy in the Middle East. The State Department is relegated to a reactive role because we remain dependent on foreign oil.

By delaying leasing and permitting for exploration and development, and by locking up lands without congressional approval or authority, these agencies have locked down domestic oil with no responsibility for the consequences. The rest of us feel them: increased reliance on Middle East oil and lost economic opportunity.

As we watch fuel prices rise, inflation take hold, and government debt reach record levels, Alaskans and those in other oil-producing states are frustrated. We wonder why the Obama administration is openly hostile to a sector of our economy that has created hundreds of thousands of jobs, kept the country on an even keel even during the recession, and produces a global commodity we depend on every day.

As residents of our individual states, we desire responsible resource development. We don’t want to live and work in a spoiled nest. We also want to create jobs that contribute to our economic recovery. Why should we spend billions overseas for foreign oil when we could spend those dollars here at home?

Mr. Parnell, a Republican, is the governor of Alaska.

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