Will Obama Strangle the American Energy Juggernaut?

America is undergoing an energy revolution. If only the government would get out of the way...

America is in the midst of an energy revolution, undergoing a metamorphosis from a major oil and gas importer to a top producer, but the federal government needs to get out of the way.

This was a major point of agreement at a luncheon held at the Center for the National Interest on April 8. The discussion, entitled “Will America’s Energy Revolution Suffer from Low Energy Prices,” featured Karen Harbert, president and CEO of the U.S. Chamber of Commerce Institute for 21st Century Energy, and J. Robinson West, a senior advisor at the Center for Strategic and International Studies and a member of the Board of Directors of CFTNI and of the Advisory Council of TNI. CFTNI’s executive director, Paul Saunders, moderated.

Kicking off the event, Harbert emphasized that the energy sector has increased employment and that state and local governments want to invest in energy, because it produces good revenue. However, she also drew attention to the fact that there are four hundred fracking bans in the United States, and warned that such restrictive policies made by state and local government could hinder America’s progress in the energy revolution. This would not only squander America’s “competitive advantage” as a superpower in the energy market, but also jeopardize potential jobs and revenue.

West differed over referring to the United States as an energy “superpower,” but agreed that it was the private sector that was primarily responsible for the energy revolution, with little help from the federal government. While admitting that the federal government had invested in some of the research and development that led to the fracking process, West argued that it was mostly the independent, smaller companies that had sparked America’s growing production of natural gas and then oil.

Harbert shared the sentiment that the government has not been particularly helpful in optimizing the utility of America’s resources. To illustrate this, she pointed to the government’s recently proposed five-year leasing plan for oil and gas exploration for the years 2017-2022. Many, including Harbert, have criticized the draft proposal as being too restrictive.

She estimated that some 85 percent of America’s offshore resources are off-limits, and characterized the government’s restriction on energy exploration in various U.S. states as being “an extraordinary policy response to energy abundance,” essentially telling the public that “‘it’s there, we just don’t want you to get at it,’ despite the fact that the people in these states are for it.”

While addressing the oil export ban, both Harbert and West emphasized that the reason the government has been apprehensive about energy reform is because Congress has been accustomed to scarcity for decades, hence the implementation of the ban. Harbert mentioned that even members of Congress who support lifting the ban state that their caucuses are simply not ready for it, making political change in energy policy a very slow process.

In addition to this, West highlighted another political facet of the energy revolution, stating that one hundred percent of the new energy production in the United States occurs on state and private land. In the United States, landowners own the mineral rights to what is beneath the surface of their land. This makes the politics of America’s energy revolution unique. In most other countries, landowners have surface rights, but not subsurface rights, meaning the government is able to stake claim to minerals beneath the surface.

Both speakers did agree that the energy revolution was advantageous to the United States. West, however, argued that we should not overstate these benefits, noting that it is “difficult to project force through energy.” For example, he pointed out that America is unable to supplement Russian energy to Ukraine, reminding the audience of the simple fact that the United States has no plant from which to successfully export gas to Ukraine (and, in any case, that Ukraine would have no terminal to receive LNG.)

It is hard to say whether or not this revolution anoints America an energy superpower. On the one hand, with upwards of thirty U.S. states producing energy, the oil and gas sectors in the United States have developed tremendously. However, there is still room for reform.

So while there is much to be optimistic about with regards to America’s energy revolution, the overall sentiment was clear: The federal government should step aside and stop enacting such restrictive energy policies lest it strangle the American energy juggernaut.

Rebecca M. Miller is assistant editor and illustrator at The National Interest. You can find her on Twitter: @RebecMil.

Image: Flickr/U.S. Government