Jun
9

Government Is Impeding America’s Energy Explosion

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oilWhat if the United States could quickly take steps that would eliminate the entire trade deficit, boost the economy, and create millions of jobs?

It can, according to a leading energy expert — but not if it retains some current government policies.

American exports now total $1.6 trillion a year, second only to China’s $2.1 trillion, but the United States imports more than it exports and runs the world’s largest annual trade deficit, about $750 billion.

And 40 percent of the deficit comes from oil imports, says Mark P. Mills, a senior fellow at the Manhattan Institute and founder and CEO of the Digital Power Group, a capital advisory group focusing on technology.

But America is now the world’s fastest-growing oil and gas producing region, and could become a net oil exporter.

Much of the credit goes to improvements in drilling technology. As the Insider Report disclosed earlier, that technology has improved the productivity of the typical oil or gas rig on U.S. shale fields by 200 to 300 percent over the past five years.

“Increasing 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,” Mills writes.

It would also serve as a huge stimulus to the U.S. economy, directly creating jobs across the nation and indirectly creating millions more jobs, he asserts.

However, government policies now in place hinder the production and export of hydrocarbons, says Mills, who served in the White House Science Office under President Ronald Reagan and writes the “Energy Intelligence” column for Forbes.

He urges the government to take a number of immediate steps to accelerate the nation’s hydrocarbon capabilities.

For one, the Commerce Department should be directed to approve any application to export crude oil as domestic production increases 70 percent within the decade. A 1975 law makes it illegal to export crude oil, with rare exceptions, although refined petroleum products can be sold overseas.

Under legislation last modified in 1978, the Department of Energy has the authority to approve or disapprove applications for licenses to export natural gas. The government should approve all qualified entities seeking to export natural gas, Mills insists.

The Obama administration should approve the construction of the Keystone XL pipeline, allowing Canadian crude to replace Venezuelan imports.

The federal government should also offer wider access to hydrocarbon resources on federal lands, where 80 percent of offshore and half of onshore territory remains off limits to hydrocarbon exploration.

Mills concludes: “There are manifold benefits to be had from ensuring or accelerating energy exports. Congress and the administration should take action to unleash the economic, employment, and strategic benefits that will derive from furthering U.S. hydrocarbon production and exports.”

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