Higher gasoline prices are grabbing headlines all across the country.
The higher prices can be attributed directly to higher prices for crude oil. Geopolitical tensions in the Middle East, other supply disruptions and rising demand for oil worldwide explain why crude prices are up.
The U.S. cannot control the unrest in the Middle East, international supply disruptions or rising worldwide demand, but it can increase world supply of crude oil by developing more of our own ample oil resources. President Obama could announce his intent to change oil and gas tax and regulatory policies to encourage more domestic oil and natural gas production today, sending positive signals to the market and putting downward pressure on prices.
Increasing domestic oil and natural gas production helps secure our own energy future, create American jobs and provide billions more in revenue to the government.
If you recall, when President George W. Bush lifted the moratorium on the East and West Outer Continental Shelf in July 2008 – a time when the price of gasoline was nearly $4 a gallon – the 45-day price average for crude oil dropped $16 dollars per barrel, a 12 percent decline. While multiple factors affect crude price, this action and the resulting crude price decline demonstrated the clear link between anticipated supply and downward pressure on prices.
The Congressional Research Service released a study this month that says raising taxes on the oil and natural gas industry “will also raise the cost of exploration and production, with the possible result of higher consumer prices and more slowly increasing domestic production.”
Let’s take a look at the record: The Obama administration has eight federal departments and agencies contemplating new regulations or seeking to delay hydraulic fracturing, the technology critical for increasing oil and natural gas production. In addition, President Obama has proposed for the fourth year in a row the elimination of critical oil and natural gas tax provisions relied upon by small independent producers – the small businesses that account for 94 percent of the wells drilled in America.
Unfortunately, despite President Obama’s pledge that he wants an all-of-the-above energy strategy, his administration’s actions are out of step and appear to be about slowing oil and natural gas production, which sends the wrong signal to the energy markets: that supplies of domestic oil and natural gas could decline in the future.
U.S. oil production is the highest it has been in eight years largely because of private investments. President Obama’s policies have nothing to do with the rising American production.
I encourage President Obama to send a powerful signal today to the world crude oil markets that the U.S. is ready to lead in developing the domestic energy resources of oil and natural gas, the energy that is used to meet more than half of our energy demand and will continue to do so for decades despite advances in alternative fuels.
The question is not whether we will continue to use oil but whether we will use our own resources or import that oil. By responsibly developing our vast domestic resources, we can create American jobs, contribute to economic growth and send more money to federal and state governments.
President Obama has the power to encourage more domestic oil and natural gas. He can open new areas for responsible development. He has the power to propose tax policy that encourages more American oil and natural gas development. He can direct regulatory and oversight agencies to guard against any benchmark that tends to equate “good” or “better” regulation with “more” regulation.
I urge President Obama to do all of the above to immediately create downward pressure on crude prices to the benefit of consumers.