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It would be easy to look at the dramatic 35% increase in America’s oil and natural gas production since President Obama took office and think the administration deserves much of the credit. But the energy boom has happened in spite of him.
Production could have been even greater if the administration embraced America’s new energy superpower status instead of being so hostile to the development of our fossil fuel resources.
Since Obama took office, oil and gas production has soared on private and state land, for which he deserves little or no credit. Meanwhile, production on federal lands has dropped sharply due to a cutback in leasing of deepwater areas for energy development.
The U.S. government leases less than 2.2% of the energy-rich Outer Continental Shelf, and less than 6% of federal onshore lands. Offshore leasing is at half the level recorded during the Clinton administration, and its decline is indicative of Obama’s hostility toward the oil and gas industry.
Nevertheless, thanks to drilling on private and state land, U.S. oil production is on pace to break a 42-year-old record next year.
When Obama was elected in 2008, U.S. oil production averaged 5 million barrels a day. In 2013, daily output averaged 7.4 million barrels, and is expected to climb to 8.5 million this year and 9.3 million in 2015, according to the Energy Information Administration.
Most of the recent growth has come from tight oil deposits in Texas and North Dakota. Those two states combined now produce more than 4 million barrels every day and supply almost half of America’s total oil output.
US oil output up 70 percent
Since 2010, oil production in Texas has risen almost three-fold to more than 3 million barrels a day in April. Texas, by itself, could soon be the sixth-largest oil producer in the world.
U.S. dependence on imported petroleum products has fallen from more than 60% in 2005 to less than 33% in 2013. It’s expected to drop to 22% in 2015, which would bring reliance on imported oil to its lowest level since 1970.
To grasp the significance of the shale oil boom, the ramp-up in production from 5 million barrels a day in 2008 to 8.5 million barrels this year amounts to a whopping 70% increase.
That 3.5 million-barrel-per-day increase alone is larger than the output of all 12 OPEC countries except Saudi Arabia. It has energized the U.S. economy, created hundreds of thousands of jobs, produced savings for consumers and strengthened America geopolitically.
The surge in U.S. tight-oil production is holding down the global price of crude, much to Russia’s detriment, since it relies heavily on oil exports to support its economy.
US No. 1 gas producer
U.S. natural gas production has been an equally remarkable success story. The shale-gas revolution has transformed the U.S. into the world’s No. 1 gas producer. Between 2007 and 2013, U.S. gas output grew 29% as companies started tapping previously inaccessible oceans of shale formations with revolutionary drilling technologies.
An important environmental impact of the shale gas revolution has been the significant drop in U.S. carbon dioxide emissions, as gas replaces coal for elec tricity generation. Except for 2012, greenhouse gas emissions last year were the lowest since 1995.
Clearly, with U.S. natural gas resources projected to last more than 100 years, Europe and Asia are eager to buy our liquefied natural gas.
Exports would serve a double purpose — incentivize countries with fast-growing economies like China and India to switch from burning coal to lower-carbon natural gas, while also reducing Europe’s costly reliance on Russia’s natural gas.
But instead of seizing the opportunity, the Obama administration continues to slow-walk export licenses for liquefied natural gas.
That sort of foot-dragging on LNG exports is nonsensical. So is Obama’s refusal to approve the Keystone XL oil pipeline and his administration’s restrictive policies toward oil and gas production on federal lands.
Given Obama’s weak leadership in so many areas, we should not expect anything different in energy policy. But he is squandering millions of jobs that could be created from expanded energy production and the revitalization of U.S. manufacturing.
By neglecting America’s new abundance of hydrocarbon resources and limiting development on federal lands, he is preventing the country from reaching its full economic potential.
• Perry is a scholar at the American Enterprise Institute, professor of economics and finance at the University of Michigan’s Flint campus, and creator of the economics blog Carpe Diem.
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