The average price of a gallon of regular gas is now $3.66, and has been decreasing for eight straight weeks. This is causing some of the President Obama’s advisors to declare energy prices an irrelevant issue. Political advisor David Axelrod recently tweeted: “Gas prices have been going down for the past six weeks. You think the GOP will blame the President?”
In those six weeks, the only significant energy policy change at the White House was to make new coal production nearly impossible and thus vastly increase the cost of electricity. So, it is hard to assign this slight dip to the president after a record 75 straight weeks of prices exceeding $3.00. However, it is true that the president is not entirely responsible for gas prices.
Market and economic conditions play a large role. With unemployment creeping back up, new global turmoil and summer travel on the wane due to a sagging economy, demand is surely dropping. But that does not mean, and has never meant, that the president’s policies or Congressional action does not play any role in gas prices.
After three years of adding regulatory hurdles and blocking exploratory access and development, President Obama’s policies are helping keep prices higher than necessary. Having only three percent of federal land available for oil exploration is not a “market condition.”
But we are in luck. There are several steps Congress can immediately take, and President Obama can immediately support, that will help alleviate the pain felt at the pump by American families and would create economic growth, and importantly, jobs.
In a new paper, Heritage’s Herbert and Joyce Morgan Fellow, Nick Loris lists ten actions Congress could immediately take that would help improve gas prices in the short term and the long term:
1. Lift offshore and onshore exploration and drilling bans: We remain the only nation in the world that has placed the majority of its territorial waters off limits to exploration. Congress should lift the ban on exploration in the eastern Gulf of Mexico and the Atlantic and Pacific coasts, and conduct more lease sales off Alaska’s coasts.
2. Approve Keystone XL: The Keystone pipeline has bipartisan support and continues to be consistently popular, polling at 60 percent in November 2011 and 57 percent in late March. 69 Democrats joined House Republicans on a vote of support in April with Rep. Dennis Cardoza (D-CA) saying: “I think the president has made a very serious mistake here.”
Yet, President Obama continues to block it and the jobs that come with it. Had Obama not delayed approval, up to 830,000 barrels of oil per day would have come from Canada to Gulf Coast refineries by as early as 2013. That’s more than we bring in from Venezuela, our fourth largest importer.
3. Require timely environmental review: Environmental review requirements for oil and gas projects to commence on federal lands under the National Environmental Policy Act (NEPA) take too long. Congress should place a reasonable 270-day time limit on NEPA reviews.
4. Permitting process: The processing time for an Application for Permit to Drill (APD) extends well past the 30-day time limit. Loris recommends: “Congress should require the Department of the Interior to honor the law’s deadline unless the Interior finds fault with the application…[and] should ultimately transition the permitting process to state regulators, who are best able to balance economic growth and environmental well-being.”
5. Issue leases on time: Rather than implementing an efficient leasing process, the Department of the Interior keeps adding administrative regulations to make the process more burdensome and bureaucratic. Congress should remove unnecessary red tape and if Interior fails to issue a lease within 60 days, it should be considered issued by default.
6. Allow development of oil shale: Oil shale production in the U.S. could be a global game changer since we hold the largest known reserves in the world. However, 70 percent of those reserves lie beneath federal lands. The Obama Administration has introduced new regulations, time frames, and significantly reduced the land available for leases. Congress should make permanent the 2008 guidelines for oil shale development in order to provide regulatory certainty.
7. Stop the land grab: Through Secretarial Order No. 3310, the Department of Interior is unilaterally and arbitrarily classifying federal land areas as “Wilderness” or “Wild Lands” restricting access to new drilling areas, preventing production on existing leases and halting economic growth. Congress should permanently block Secretarial Order No. 3310 and any similar designation should require congressional approval.
8. Implement 50/50 revenue sharing: States receive 50 percent of the revenues generated by onshore oil and natural gas production on federal lands and Congress should apply this allocation offshore as well. This would encourage more state involvement in drilling decisions and help state economies, whether by closing a deficit or aiding coastal restoration and conservation.
9. Prohibit greenhouse gas and Tier 3 gas regulations: In 2010, Interior suspended 61 leases in Montana alone because environmental groups charged that the energy production would contribute to climate change, demonstrating the need to permanently prohibit any federal agency from unilaterally regulating greenhouse gas emissions. Additionally, the proposed Tier 3 gas regulations to lower the amount of sulfur in gasoline are costly with no measurable benefits. Congress should prohibit the implementation of these regulations. Unelected bureaucrats should not hold such power over the economy.
10. Repeal the Renewable Fuel Standard (RFS): Soon, refiners will be fined when the amount of ethanol mandated exceeds the amount that can be refined for use but the mandate requires production of cellulosic ethanol, which no companies have been able to viably produce commercially. As a result, refiners paid more than $6 million in waiver credits or surcharges in 2011. It is an economic and environmental disaster and must be repealed.
President Obama is keen to accept credit for the windfall of oil production in North Dakota and in other private areas outside federal control, where jobs are plentiful and unemployment has plummeted. Meanwhile, production on federal land is decreasing and regulatory conditions are worsening. It would be to the president’s benefit to embrace some or all of these reforms that could immediately help American families filling up the minivan. Another 75 weeks with gas prices over $3.00, and household goods and food costing more as a result, will not help an already anemic recovery.