Step on the Gas! How to Extend America's Energy Advantage

Failing to press America’s current energy advantage would be an enormous mistake. Demand forecasts indicate that any oil and gas glut is temporary. Further, U.S. energy policy, still based on an assumption of resource scarcity, is ill equipped to manage the new abundance.

• America’s failure to develop federally owned lands and waters and to update its energy-policy framework represents today’s low-hanging policy fruit.
• Improving America’s energy regulatory environment will amplify today’s boom by encouraging resources to be used more efficiently. 

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Oren Cass is a senior fellow at the Manhattan Institute. Follow him on Twitter here.

Now may seem an odd time to emphasize the importance of increasing U.S. oil and gas production. Domestic output has reached an all-time high, prices have plummeted, and drilling activity is slowing in response. Job cuts in the industry are approaching 100,000. Headlines announce that the boom has already gone bust. Observers concerned about output typically worry that it is too high: that drilling will damage local environments; that cheap, abundant fossil fuels will frustrate progress on limiting carbon emissions; and that prospects for electric cars and wind turbines, which had enough difficulty becoming economically viable before fuel costs fell by half, will further dim.

Yet failing to press America's current energy advantage would be an enormous mistake. Demand forecasts indicate that any oil and gas glut is temporary. Further, U.S. energy policy, still based on an assumption of resource scarcity, is ill equipped to manage the new abundance. Indeed, America's private sector has driven an oil and gas revolution in the face of, at best, ambivalent federal policy. This paper suggests 11 reforms to help craft a smarter U.S. energy policy, one that will amplify the current boom and extend it far into the future:

1. Amplify the Boom (Reforms 1-5). Enact regulatory reforms to increase the efficiency and effectiveness of U.S. energy markets.
2. Extend the Boom (Reforms 6-11). Open federal land and waters to energy development to replicate the extraordinary growth of tight oil.