Government Limits Potential for Oil Production

May 15, 2014

Although U.S. oil production has nearly doubled in less than six years, production has continued to fall in federally-owned territory, writes Nicolas Loris, fellow at the Heritage Foundation.

As a result of excessive government regulations, companies may spend anywhere from five to 10 years to move from permit approval to production, without a guarantee that they will be able to produce crude oil successfully. Additionally, the oil industry has access to only 15 percent of available offshore areas.

These regulations are stunting potential for economic growth. A study published by the American Petroleum Institute and the National Ocean Industries Association found that opening more offshore areas in the Atlantic Outer Continental Shelf for drilling would create 280,000 jobs just in that area.

Loris identifies some startling statistics highlighting the disparity between state and federal oil production:

  • Non-federal areas produce 5.5 million barrels of crude oil per day, while federal lands account for only 1.5 million barrels per day.
  • Non-federal areas accounted for 77 percent of total U.S. oil production in 2013, while federal lands only accounted for 23 percent.
  • The average wait time for the federal government to approve a request is 194 days, compared to 27 days in North Dakota, 11 days in Texas, and 45 days in Pennsylvania.

What steps could the federal government take to improve oil production?

  • Opening up the rest of the Outer Continental Shelf to exploration and oil production would be the first step.
  • By streamlining the regulatory process and making it more efficient, the U.S. could reduce the number and impact of expensive and time-consuming regulations.
  • States have proven themselves successful managers of oil-rich lands, as they have the most to gain from proper management and the most to lose from mismanagement. By privatizing some federally-owned land or transferring management of federal land to state regulators, the government could further encourage resource development.

Because of this lack of access to oil-rich lands and excessive federal regulation, the full effects of America's energy boom have yet to be felt, says Loris.

Source: Nicolas Loris, "Federal Regulations and Federal Ownership Limit Oil Production Potential," Heritage Foundation, May 7, 2014.

 

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