Letter to President Obama on Energy Policy from U.S. Chamber President and CEO Tom Donohue

The President 
The White House
Washington, DC 20500

Dear Mr. President:

The dramatic rise of gasoline prices has focused the nation’s attention on our energy policies and the steps we need to take to secure America’s energy future. The current turmoil in the Middle East and North Africa underscores the compelling national security imperative that our nation becomes more energy self-sufficient. You have appropriately called for our country to responsibly use more of our own resources but, thus far, the requisite actions from the responsible departments in your administration have not been forthcoming.

The purpose of this letter is to suggest specific actions that you could direct agencies to take in order to implement the policy direction you have recently ouffined.

The stakes for our nation are high. According to the International Monetary Fund, every $10 increase in a barrel of oil will shave .5% from GDP growth. Last year Americans paid $265 billion — nearly half of our trade deficit — to import oil. There are many promising sources of crude oil in the U.S., but the vast majority of them are currently off-limits to exploration and production. The U.S. Department of Energy has estimated that the United States has in excess of one trillion barrels of oil. A Wood McKenzie study released in January estimates that increasing access to federal energy resources would create an additional $150 billion in federal and state revenue and add more than 500,000 jobs—jobs in every region of the country and jobs that pay well above the national average.

Offshore Resources

The U.S. Outer Continental Shelf (OCS) conservatively contains 86 billion barrels of undiscovered, technically recoverable oil resources, yet 97% of the OCS is not currently leased. The Energy Information Administration (ETA) recently projected that domestic crude production will begin to decline in 2011—reversing the recent positive trend—resulting in a reduction of more than 116 million barrels through 2012, almost all of which is directly attributable to a 30 percent loss from the Gulf of Mexico.

After the Macondo accident, the petroleum industry quickly reacted in testing and demonstrating its world-class safety systems as well as investing more than $1 billion to develop state-of-the-art response and containment systems. However, a year later, the Interior Department has not yet issued permits for many of the existing rigs to get back to work nor issued final regulations for new exploration. Significantly, shallow water exploration has also slowed. This has had a crushing impact on the Gulf’s economy and especially on smaller independent oil and gas companies, which hold half of all Gulf deepwater leases.

• We urge your administration to finalize the new regulations and ensure the new permitting process is fair, predictable, timely, and transparent.

One of the most significant missed opportunities is the Department of Interior’s proposed Five-Year OCS Leasing Program for 2012-2017 which greatly restricts access to new leasing areas even beyond the limitations that were in place in the prior plan.

• We urge your administration to revisit the 2012-2017 leasing plan to include areas in the Gulf of Mexico, Alaska, and Atlantic coast that were included in prior versions of the plan.

Arctic Resources

The Arctic region holds enormous promise, containing as much as 90 billion barrels of oil and many countries, including Russia, Norway, Denmark, and Canada are all laying claim. It is imperative that the U.S. not sit idly by while other countries are aggressively pursuing their interests in the Arctic. The current National Security Presidential Directive (NSPD 66) calls for the U.S. to, “assert a more active and influential national presence to protect its Arctic interests and project sea power throughout the region.” In 2008, the U.S. Geological Survey (USGS) estimated that the U.S. stake in the Arctic contains 30 billion barrels of oil. A recent study conducted by the University of Alaska estimates that developing resources off the north coast of Alaska will create 35,000 new jobs. In U.S. waters where Arctic leases have already been paid for and issued, exploration remains idled awaiting air-quality permits that have been caught in a regulatory carousel at the Environmental Protection Agency for years.

• We urge you to ask the Senate to pass the Law of the Sea Treaty to ensure that other nations do not infringe on U.S. resources in the Arctic.
• We urge your administration to expeditiously issue the necessary permits, including clear air permits, and quickly approve the pending exploration plan which far exceeds regulatory safety standards.

Onshore Resources

Access to federal lands onshore has been increasingly restricted over the past two years. One of the first official acts that the Department of Interior took after your inauguration was to retroactively cancel nearly 80 leases in Western states, a decision based on rationale that was later challenged by the Department’s own Inspector General. The U.S. Geological Survey estimates that onshore federal lands contain 30.5 billion barrels of oil, but exploration and production on federal lands continues to decline pushing the industry to private lands which have less restrictive barriers.

The U.S. also has massive unconventional crude oil reserves which could exceed two trillion barrels. Because this figure is substantially larger than the total proven reserves of unconventional crude oil in the rest of the world, the global energy picture could improve dramatically if even a small fraction of these resources can meet the geological, technological, and economic thresholds for classification as proven reserves. Yet, in 2009, the Department of Interior acted to prevent access to unconventional oil resources, even for purposes of research and technology development.

• We urge your administration to reverse the policies put in place since 2009 that have signiflcantly reduced the areas available for oil and natural gas exploration on federal lands and also proceed with the rulemakings that will allow the private sector access to oil shale resources in order to further develop the technology needed to unlock these massive resources.

North American Imports

With increased production of oil sands in Alberta, Canada has become our largest single source of imported oil. As Canada’s production increases, we need new infrastructure to ensure we have access to this vital resource and do not forfeit it to Asian competitors. Construction of the KeystoneXL pipeline will do exactly that, allowing an additional 1.1 miiiion barrels of oil per day to be imported from Canada— 1.1 miflion barrels that will not need to be imported from unstable regions of the world. Construction of this pipeline, and the 250,000 jobs it will create, has been delayed as it awaits a Presidential Permit to be issued by the State Department.

• We urge your administration to quickly approve the Presidential Permit for the KeystoneXL pipeline and reject efforts to prevent importation of Canadian oil.

Your administration has an opportunity to create hundreds of thousands of jobs, foster billions of dollars of domestic investment, and significantly increase federal and state revenues, while leading the country towards a more secure energy future. Taking the steps outlined above would also significantly enhance our national security.

As our economy continues to struggle, I can think of little that is more important for our economic future than getting it right on energy. We stand ready to work with you, your administration, and the Congress to make this happen.

Sincerely,

Thomas J. Donohue

Read the Letter: 

Letter to President Obama on Energy Policy from U.S. Chamber President and CEO Tom Donohue