The world has changed since the passage of the 1975 Energy Policy and Conservation Act, a law that set the tone for energy policy for nearly a half-century. Technology and demographics have eviscerated old ideas of limits and import dependency. Given the new abundance, the United States now has the opportunity to become a major energy exporter.
America is now the world's fastest-growing oil-and-gas-producing region and has the capability to become a net energy exporter.
America is now the world's fastest-growing oil-and-gas-producing region and has the capability to become a net energy—and even a net oil—exporter. Meanwhile, China has become the world's largest importer of oil. Imports are, in fact, rising across the Asia-Pacific region. This new energy reality is fundamentally reversing the trade and economic positions of China and the United States.
Today, oil imports account for about 40 percent of America's $750 billion annual trade deficit, a deficit that drains the GDP and kills jobs. Expanding the domestic production of hydrocarbons to reduce imports as well as increase exports will function as an enormous subsidy-free stimulus to the U.S. economy, directly creating all manner of jobs across the nation and indirectly creating millions more jobs as the nation's current account deficit shrinks.
Increased production and exports of oil and gas and of energy-intensive products from chemicals to fertilizers can put the nation on track to wipe out the entire trade deficit within the decade, returning the nation to a trade balance—even a surplus—that has not been enjoyed for decades. This process has already begun: increasing exports of U.S. refined petroleum products are already pushing the trade deficit down.
Oil and natural gas businesses are willing and able to produce more in order to reduce imports as well as to sell to foreign buyers. This cannot be accomplished, however, unless the government avoids policies that prohibit or inhibit oil and natural gas production or that constrain the freedom to sell into markets, foreign and domestic, that make economic sense.
Today, oil imports account for about 40 percent of America's $750 billion annual trade deficit, a deficit that drains the GDP and kills jobs.
Over the coming decade, private investment in the American energy renaissance is projected to grow to a cumulative $5 trillion—without subsidy or taxpayer assistance. In the past four years alone, $150 billion of foreign direct investment has been made in America's hydrocarbon domains. No government stimulus program or infrastructure investment could hope to compare with this level of private activity.
To ensure and accelerate all the economic, employment, and geopolitical benefits from America's hydrocarbon capabilities, the U.S. government should immediately:
- Approve any and all qualified entities seeking to export natural gas;
- Approve the Keystone XL pipeline, allowing Canadian crude to replace Venezuelan imports; and
- Direct the Department of Commerce to approve any application to export crude oil, which is illegal under current law.
Then the Obama administration and Congress should work together to do everything possible to:
- Encourage private domestic and foreign investment in hydrocarbons; and
- Open up greater access to hydrocarbon resources on federal lands, where 85 percent of offshore - and half of onshore territory - remains off-limits.
Finally, Congress should:
- Pursue twenty-first-century omnibus energy legislation, starting with a clean slate;
- Repeal the authority of the Departments of Energy and Commerce over hydrocarbon exports to open up a free market consistent with historical trade principles; and
- Restructure federal energy priorities away from funding commercial projects, focusing instead on basic R&D.