Gazette Op-Ed: Overregulation Cripples Western Energy Production

March 8, 2011
In The News

By Congressman Doug Lamborn


Not since the Great Depression has America faced an unemployment crisis like the one we are living through now. The average job seeker has been out of work for almost 40 weeks. Forty-three-and-a-half -million Americans are on food stamps.

The Obama Administration’s answer has included a massive increase in federal regulations on America’s job creators. Nowhere is this troubling trend more evident than in domestic energy production on our public lands.

In 2008, the federal government raised more than $23 billion from the royalties and bids that companies paid taxpayers for access to energy reserves on public lands. Today, with oil prices at or near the same level, the revenue estimates for this fiscal year are about $7.5 billion, a decline of more than 60 percent. At a time of record national debt and unemployment, Congress must review this decline and consider ways to reinvigorate this vital revenue source.

Besides being the second greatest source of federal revenue after taxes, energy leases on federal lands lead to the creation of thousands of high paying jobs. President Obama’s de facto moratorium on offshore drilling in the Gulf of Mexico, on the other hand, has left thousands of people out of work.

The Administration, in attempting to create new rules for oil and gas permitting, has repeatedly changed the rules and moved the goalposts on companies operating on both federal lands and waters. Instead of thoughtful, reasoned rulemaking that seeks public comments and engagement, the administration created regulatory confusion by directing the change of over 14,000 engineering requirements.

This same regulatory uncertainty is happening with solar energy in the Western United States. While the administration has announced that solar energy is one of its highest priorities, it has once again created tremendous regulatory confusion. The new solar energy zones proposal, while potentially helping some solar development, has left dozens of major energy projects with absolutely no regulatory path forward.

The regulatory confusion on federal lands is even worse for onshore oil and gas production. Rule changes and regulations have cost billions in lost investment in the West. In Colorado, there’s been nearly a 90 percent drop in new leases on federal land.

A recent study by the Denver-based Western Energy Alliance documents $3.9 billion in investment that was diverted from the West in 2010 because of red tape and overregulation by the Department of the Interior. The Western Energy Alliance estimates this lost investment could have helped create upwards of 16,000 jobs in the West.

President Obama’s newly-released budget is yet another indication that this administration is intent on stifling energy production on Western lands. In his 2012 budget, President Obama doubles down on his anti-energy agenda by imposing over $60 billion in tax and fee increases over ten years on American energy production.

Some of the specific energy tax and fee proposals in the president’s budget include a new $1.8 billion tax on the production of hard rock minerals, fees for non-producing leases which would cost the industry about $875 million, and higher taxes for energy producers on their investments in exploration and development. Western producers would be faced with even more administrative fees for operating on public lands, which account for over 50% of western production.

In a global economy, energy producers will have no choice but to go to areas of the world that have a more manageable tax and regulatory environment. This hurts our national energy security by making us more dependent on foreign governments.

As if higher fees and taxes on traditional oil and gas production were not bad enough, the Administration is now examining how to impose federal regulations for the first time on hydraulic fracturing on federal lands. Hydraulic fracturing is an innovative new way to get clean natural gas from formerly unproductive formations. This proposal would duplicate state permitting and create an unnecessary obstacle for American energy development.

America’s oil and natural gas industry supports 9.2 million jobs throughout the economy. These are high-paying jobs that will end up overseas if we do not take a serious look at improving and simplifying the regulatory environment for our energy producers.

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