DRILLING BAN WILL COST TRILLIONS.WHY ARE WE LEAVING THIS WINDFALL IN THE GROUND?
Drilling Ban To Cost Trillions
Posted 02/16/2010 05:58 PM ET
Energy: A new study shows that our reluctance to develop domestic energy will cost the beleaguered U.S. economy trillions in opportunity costs, reduce our gross domestic product and increase our trade deficit.
From trying to stimulate jobs in nonexistent ZIP codes at great expense to worshiping the false gods of climate change, our biggest deficit these days may be in the area of common sense. A new study shows that many of our wounds are self-inflicted as we forgo the wealth and jobs to be found in our waters and under our feet.
The study by Science Applications International Corp. at the request of the National Association of Regulatory Utility Commissioners, the Gas Technology Institute and others shows the U.S. economy will suffer $2.3 trillion in lost opportunity costs over the next two decades, monies that would go a long way to reining in runaway deficits and creating economic growth.
Critics will say this is another self-serving study paid for by oil industry groups, but unlike the climate change fantasies concocted by the Intergovernmental Panel on Climate Change and Britain’s Climatic Research Unit at the University of East Anglia, the study’s data can survive fact-checking and the conclusions are rooted in reality.
Drilling restrictions in Alaska’s Arctic National Wildlife Refuge and in offshore areas such as the Chukchi Sea and Outer Continental Shelf, the report says, are denying us access to at least nine years’ worth of total U.S. oil and gas consumption.
The U.S. used 22.8 trillion feet of gas and 5.2 billion barrels of oil in 2009. Locked up by federal restrictions are approximately 43 billion barrels of oil and 286 trillion cubic feet of natural gas. Without access to these resources, average natural gas prices will rise 17% by 2030 and electricity prices will “necessarily skyrocket,” as Barack Obama once said, by 5%.
The net effect of our energy inaction will be a reduction in gross domestic product by $2.36 trillion cumulatively through 2029, or by 0.52% annually. We’d also be forgoing hundreds of thousands of high-paying energy and construction sector jobs here in the U.S. as well as missing a golden opportunity to sharply cut our trade deficit.
These are not climate fantasies derived by running faulty assumptions and bad data through inaccurate computer models. This is simple math, common sense and Economics 101. Energy is expensive. We’re leaving vast amounts in the ground while importing it from others. In a word: duh.
Oil accounts for about half our trade deficit. We spend hundreds of billions each year, much of it in borrowed Chinese money, to buy oil from abroad while we let ours sit in the ground. We depend on the world’s petrotyrants, including Russia’s Vladimir Putin, Iran’s Mahmoud Ahmadinejad and Venezuela’s Hugo Chavez, who are all too willing to use their energy wealth as a weapon.
President Obama announced on Tuesday an $8.3 billion loan guarantee to help build two nuclear reactors, a move that hopefully will invigorate the nuclear power industry after nearly three decades in which no new plants have been built. We applaud the move, but suspect it’s being done more to advance the chance for cap-and-trade legislation than to achieve energy independence.
We back an all-of-the-above approach and so, apparently, do the American people. Comments on a Bush-era rule to expand domestic drilling, held up by Interior Secretary Ken Salazar, ran 2-to-1 in favor of drilling here and now.
In addition to conventional sources of oil and natural gas, we have vast stores locked up in domestic shale formations. The Barnett Shale rock formations of Texas and Louisiana, the Bakken Shale formation in Montana and North Dakota, and the Marcellus Shale formation running through New York, Pennsylvania and other states may hold as much as 2,000 trillion cubic feet of this clean-burning, domestically produced fuel.
So just why are we leaving this job-creating economic windfall in the ground?
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