Step on the Gas! How to Extend America's Energy Advantage
August 5, 2015
Now may seem an odd time to emphasize the importance of increasing U.S. oil and gas production because of the recent, tumultuous changes in our energy markets.
- Domestic output has reached an all-time high.
- Prices have plummeted.
- Drilling activity is slowing.
- Job cuts in the industry are approaching 100,000.
Headlines announce that the boom has already gone bust. However, America's shale boom took energy markets by surprise. The EIA's current projections for 2015 U.S. oil and gas output are 66 percent and 37 percent higher, respectively, than its 2015 output projections made in 2010. Soaring production helped lift America's economy out of the Great Recession -- boosting annual GDP by hundreds of billions of dollars and creating hundreds of thousands of shale-related jobs.
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.
However there are reforms that could fix this:
- Amplify the boom by enacting regulatory reforms to increase the efficiency and effectiveness of U.S. energy markets.
- Extend the boom by opening federal land and waters to energy development to replicate the extraordinary growth of tight oil.
Improving America's energy regulatory environment will amplify today's boom by encouraging resources to be used more efficiently. Opening federal land and waters to development over the next decade will extend the boom. Together, such reforms will further the country's energy advantage and make it an enduring fixture of U.S. prosperity.
Source: Oren Cass, "Step on the Gas! How to Extend America's Energy Advantage," Manhattan Institute for Policy Research, July 2015.
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