The sudden spike in oil prices set off by political instability half a world away is causing energy costs to surge to record levels in America. With gas hovering around $3.50 on average, Texas families are spending $40, $50, $60 or more to fill up their cars and trucks!
As a possible "solution" to soaring gas prices, the administration is considering tapping into the Strategic Petroleum Reserve (SPR), our nation’s emergency source of oil. This has only been done twice before, once during Operation Desert Storm in 1991 and another time after Hurricane Katrina in 2005. Those were true emergency situations. Consequently, I believe it would be misguided at this time to authorize emergency sales from the SPR when there are ways available to decrease costs to consumers by increasing domestic energy production. Depleting our reserves would make our economy more vulnerable if a natural or man-made disaster occurs.
Instead, we should be expanding and expediting domestic oil production to help increase the supply of fuel and lower prices for consumers. Fully leveraging our vast domestic resources would prevent us from being beholden to foreign regimes for energy when there is instability in oil producing regions of the world. It would protect our interests in the future, and it would raise Americans’ confidence in our energy security today.
The Gulf of Mexico accounts for 30 percent of total U.S. oil production and 13 percent of total U.S. natural gas production. Unfortunately, bureaucratic barriers have prevented oil and gas producers, and thousands of American workers, from getting back to work in the aftermath of the BP oil spill.
In the wake of the BP accident, energy production virtually shut down in the Gulf of Mexico and moratoria were placed on drilling. The shallow water moratorium was "officially" lifted on May 28, 2010, but since then, only 37 new shallow water permits have been issued. Prior to the Gulf Coast oil spill, the shallow water permit approval average was 10-to-15 permits per month.
Energy producers operating in the deepest waters off our nation’s coasts have faced similar challenges. The industry is working to ensure that the most stringent environmental and safety standards are always followed, and the administration lifted the moratorium on deepwater drilling on October 12, 2010. But more bureaucratic delays and confusing regulations have left deepwater rigs sitting idle. In fact, only one new deepwater permit has been approved in a year. This "permitorium" is placing our natural resources out of reach when we need them most. What’s worse, they are sending American jobs overseas as energy producers move their operations elsewhere.
Gas exploration activities have also been impacted. The Department of Interior (DOI) ordered drilling lease holders in the Gulf of Mexico to halt all exploration drilling operations after the BP accident. At the time, 33 leaseholders were conducting exploration drilling, while thousands of leaseholders were in the earlier stages of exploration. Companies working in the Gulf invest millions of dollars and typically spend nearly a decade in the exploration phase before they begin to drill for oil.
While the moratoria were in place all of the leaseholders continued to pay "rent" as time ticked away on the length of each lease. To address this issue, I recently introduced the Lease Extension and Secure Energy (LEASE) Act of 2011 which will grant a one year extension on all exploration leases in the Gulf impacted by the DOI’s drilling moratoria. The LEASE Act provides a fair and reasonable restoration of the time lost. Allowing leaseholders to use the full length of their lease provides them with the certainty needed to plan for the future, including investing in the local workforce and protecting American jobs.
The offshore industry’s domestic energy production is not only vital to our energy independence – it is also vital to our economic security. More than 400,000 jobs along the Gulf of Mexico are tied to the oil and gas industry, which in 2009 accounted for $70 billion in economic value and provided roughly $20 billion in revenue to Federal, State, and local governments.
Keeping energy prices low and stable are critical for economic recovery and growth. We must not allow the instability of foreign governments and the inaction of our own to place our energy and economic security at risk.