With gasoline prices in many areas above $4 a gallon, energy concerns are once again making headlines. Prices have more than doubled since the start of 2009 and are projected to remain at excruciating levels for the foreseeable future.
We know from experience that high energy prices harm American families and businesses. Aside from pain at the pump, it’s harder to balance budgets or even buy groceries when transportation costs soar. Many experts have concluded that if prices remain high, economic growth will languish. At stake is our fragile recovery from the recent recession.
High energy prices therefore demand a strong policy response. For years, however, federal lawmakers have routinely ignored the supply side of the equation and the fact that — if we chose to — we could absolutely produce more oil here in America.
For that reason, I welcomed President Obama’s recent pledge to increase domestic production. It was a big step, and I hope his administration heeds the message. But I’m also deeply concerned by some of the information presented about America’s energy potential. Left unchallenged, it will contribute to a mistaken belief that increased domestic production is not truly possible.
The president said this month that “even if we doubled the amount of oil that we produced, we’d still be short by a factor of five.” That’s simply incorrect. Doubling our production would trim imports nearly in half. Boosting production by a factor of five is not currently feasible, but if it were, it would make the United States the world’s largest producer.
Perhaps most misleading is his claim — also made by others — that the United States has “about 2, maybe 3 percent of the world’s proven oil reserves; we use 25 percent of the world’s oil.” That line is crafted to make the audience think that America is both running out of oil and using oil at an unsustainable rate.
In truth, “reserves” is just one of several categories used to quantify oil and, on its own, misrepresents America’s potential. To classify a barrel as a reserve, you have to drill, prove the oil is there, and meet strict criteria established by the Securities and Exchange Commission. It’s not an easy process.
Right now, America has an estimated 22.3 billion barrels of oil reserves. But that’s hardly the whole story. A recent Congressional Research Service report that I commissioned with Sen. Jim Inhofe of Oklahoma found that the United States’ recoverable oil resources are estimated at 157 billion barrels. That is seven times as much as our reserves and doesn’t even include the roughly 900 billion barrels of unconventional oil resources nearing commercialization.
Consider this: While our nation’s oil “reserves” have never reached 40 billion barrels, we’ve managed to produce nearly 200 billion barrels since 1900. Between 2008 and 2009, America’s oil reserves rose more than 8 percent, even as roughly 2 billion barrels were produced. That was made possible by our substantial resource base. Reserves alone have never provided the full picture.
Those who repeat the 2 percent argument are falling into an old trap. Government officials have claimed since 1919 that America is “running out of oil.” Nearly a century later, we are still the world’s third-largest oil producer, behind Saudi Arabia and Russia. Our consumption levels may seem high, but in fact they’re directly proportionate to America’s share of the global, petroleum-based economy.
Relying on reserves to depict America’s oil excludes all of the lands that have never been explored. My home state of Alaska, for example, holds an estimated 40 billion barrels of oil — the equivalent of more than 60 years’ worth of imports from the Persian Gulf — that are excluded from reserve figures. Ignoring that supply underestimates America’s oil and leads us away from one of the best solutions to our various energy challenges.
If our country endeavored to produce more oil, we could slash imports and stanch the flow of dollars sent to foreign suppliers. At the same time, we could create thousands of jobs in this country and generate hundreds of billions of dollars in government revenue.
In this era of fiscal restraint, our most effective energy strategy may be to have oil work itself out of a job by using revenue from production to facilitate the deployment of alternatives. A firm commitment to greater production and lower consumption would also send a message to OPEC that the United States will no longer tolerate high oil prices.
It’s time to acknowledge how much oil America really has — and expeditiously bring more of it to market.
The writer, a senator from Alaska, is the ranking Republican on the Senate Energy and Natural Resources Committee.