Editorial: Rahall, Salazar Find New Ways to Reinstate Moratorium

It's been nearly a year since the federal government responded to the will of the American people and retired its decades-old bans on responsible offshore energy exploration. Unfortunately, one year later, it seems as though that long overdue response was merely a gesture. In fact, not only are we no closer to tapping those "newly available" offshore areas, but the areas with the greatest potential off Alaska's coast, which were available last year, are now off the table until such time as Interior Secretary Ken Salazar sees fit to complete a court-ordered "sensitivity" analysis of information his department already has. Meanwhile, as Secretary Salazar continues to slow walk a plan to finally allow Americans to access the vast offshore energy supplies the government's held hostage for nearly 30 years, House Natural Resources Committee Chairman Nick Rahall is holding hearings this week on sweeping legislation designed to add a few more hefty layers of bureaucratic red tape to the federal leasing process, and ultimately make it even more difficult and more expensive to put Americans to work producing American energy on what little land the government offers for lease both on and off our shores.

But what's most troubling about this misguided proposal -- besides the fact that it will make American energy more expensive and less available at a time when Americans are demanding more, affordable energy -- is that it's based on flawed intelligence. The basis for the "use it or lose it" portion of the bill, for instance, is that energy companies have been "sitting on 68 million acres" (while paying millions of dollars in rent for those acres) in order to keep prices high. And that 68 million acres, according to a widely cited report produced by Chairman Rahall's staff last year in response to Americans' calls to end the government's self-imposed offshore energy embargo, "could produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day." The Institute for Energy Research thoroughly debunked that manufactured canard, as did the Interior Department and the American Association of Petroleum Geologists, so this time it's being sold under the guise of "efficiency" and "accountability."

Specifically, Chairman Rahall's bill would create a new, duplicative and unnecessary government leasing agency and add more red tape to already lengthy federal leasing process, while cutting in half the length of time a company has to wade through the process -- and the protests and litigation anti-energy groups file each step of the way -- to get to a point where they can "diligently develop" the lease. The trouble here is two-fold. For starters, the Chairman seems to be contradicting himself as he voted for legislation in 1992 that increased the lease period from 5 years to the current 10 years. And it certainly hasn't gotten any easier to develop energy on federal lands in a timely manner. In fact, according to data from the Bureau of Land Managemen (BLM), protests filed by anti-energy groups at various stages of the leasing process have increased from an average of 167 per year from 1997-2000 to 1,180 per year from 2001-2007 -- a 706% increase.

And in July 2008, when the BLM held a quarterly lease sale involving 78 parcels, 100% of the tracts that were bid on received protests. Every one of them. Unfortunately, the Chairman's legislation does nothing to hold these groups "accountable" for their "efficiency" in delaying any progress toward the diligent development of federal leases.

But perhaps the most striking premise behind this legislation -- and the multiple actions the Administration has already taken to restrict and reduce energy development on taxpayer-owned lands -- is that the Bush Administration was too "cozy" with "big oil" and offered up an inordinate amount of federal lands for energy exploration. The rarely reported truth, however, is that the Bush administration offered far fewer acres for lease than did the Clinton Administration. President Bush also made offshore energy development drastically more expensive and less likely by increasing the royalty rate on offshore energy leases by 50%, an increase Chairman Rahall's legislation would apply to onshore oil and gas leases. So if Chairman Rahall and Secretary Salazar truly want to correct President Bush's energy failures, they ought to reconsider their efforts to double down on the actions he took to make domestic energy scarce and more expensive.

But if the goal is to ratchet down the amount of energy we produce here at home and further increase our dependence on imported energy, this big-government, no energy legislation will do wonders to further that agenda.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
S. Fred Singer | Sep. 19, 2009
I contrast the Rigzone editorial with the NY Times editorial of September 18, 2009 "Trust and the Interior Department," which recommends what I consider cosmetic changes to the Interior Dept's Mineral Management Service. Likewise, your editorial doesn't go nearly far enough.

What is needed IMHO is a drastic change: Abolish the royalty system, go to a pure bonus-bidding lease-auction system, and get rid of the MMS altogether. No more diligence requirements, no more collection problems -- whether in-kind or in cash -- and no more performance monitoring, except for environmental contamination.

DCW | Sep. 18, 2009
Comparing the use of oil to a drug addiction is as absurd as comparing breathing oxygen to a drug addiction. You need oxygen; you can't live without it. All societies need energy, they can't operate without it. Let's postulate what would have happened had oil not been discovered and used as an energy source.

Early oil was used primarily as a lamp oil. It replaced whale oil as the dominant fuel for lamps. Discovery and use of oil saved whales from extinction. Next, what did most individuals use to heat with prior to oil and natural gas? The answer is wood and coal. So, we would have either cut down all the forests to burn to stay warm in the winter or strip mined them off to get to the coal. Oil was used because it was the cheaper, better energy source not because oil pushers grabbed and made you take some until you were addicted to it.

Next point about the how the US uses 25% of the world's oil, this is true but normalize for the size of the economy and we don't use more than anyone else. The US economy is 23% of the world's total economy, while we use 24.3% of the world's oil. Pretty close to a 1 to 1 ratio, implying we have a neutral balance for the size of our economy. Canada uses 2.8% of the world's oil and is only 1.3% of the worlds GDP, a 2 to 1 ratio. When comparing oil consumption to size of economy the US ranks 11th in the world out of the top 20 oil consumers, middle of the pack not -- the best and definitely not the worst. Look at consumption based on size of economy and not population. 1 Billion people living in the stone ages will obviously consume less oil than a 1 million living in a post-industrial society.

Art Vandeley | Sep. 18, 2009
This US administration does not want to jump start the US oil & gas industry. Quite the opposite. Looking at their rush to jump in and run / control other US industries, they're merely looking for more ways to CONTROL the US oil and gas and its companies. Either by taxing them to death, not allowing drilling domestically, increased regulations, any way this administration can by hook or crook to get their agenda into the US O&G industry they will. These people are clearly no friends to our industry.

C Black | Sep. 17, 2009
This is a very good article and kudos to the author. David, So do you ride a bike to work everyday? What about when you travel? Do you ride a bike or walk across the country? Swim across the ocean or river or lake? No one has addicted anyone to oil, let alone the oil companies themselves. They have margins lower than most companies and must drill and produce in order to make a profit to stay in business and pay their shareholders. The oil and gas industry has some of the smartest talent on the planet and also increases the standard of living for the individuals employeed within.

ded2 | Sep. 17, 2009
I am a OIL A HOLIC. I use my car to go to work, go to the store for food and clothes, go check in on family members and any movement that requires travel of over 1/2 a mile. Maybe we do not realize how good our lives have become because of cheap oil. If a substitute for oil is not found we will all be back to 3rd world living.

steve from virginia | Sep. 17, 2009
I think the oil economy is stuck in the past and needs a jumpstart.

The current paradigm is to exploit efficiently -- that is produce and market at rock bottom prices, the benefits being drizzled downstream. The consequence has been depletion and staggering increases in production costs as the easy oil has been produced previously.

Better to analyze those downstream benefits of extremely cheap fuel. At bottom line pricing, there is no incentive to anything other than waste. Until any more domestic oil is produced it would make more sense to determine what real returns can be gained by that production and manage a balance.

With different priorities there would be much less need for speculative fields at this time.

David | Sep. 17, 2009
The oil industry has held the United States government & citizens hostage for decades by addicting us to oil and encouraging the addicts to consume oil at the fastest and most irresponsible rates possible, thereby leading to the United States consuming 25% of the world's daily oil production.

The oil industry wants to continue this reckless, irresponsible behavior by desperation drilling in the Gulf of Mexico and along the Atlantic and Pacific coastlines. Like the drug addict that destroys one vein with too many holes the oil industry looks for another and another until every last one is used up.

The ecological and climate change consequences of all this doesn't matter to the oil industry. At the beginning and end of the day the oil industry is all about money and it is willing to trash the planet and destroy for future for the sake of profits today.

The oil industry is on the path to extinction because Peak Oil has occurred. Please do go gently into that good night. Humankind will be much better off after the oil industry is gone.

Joe Black | Sep. 17, 2009
The goal is to keep some reserves in the ground. It does not make sense to exploit the resource while it is readily available on the market for green colored paper.

It is likely a long term strategic decision.

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