Energy production: the key to prosperity

Oil and natural gas production from shale formations is providing a clear path forward for American energy security and economic growth. At a time when our economic recovery still hangs in the balance, we need an energy policy that recognizes oil and natural gas production from shale holds the key to ushering in a new era of prosperity.

Shale energy production was all but a blip on the nation’s radar just a half decade ago. It’s now a jobs engine that has turned the U.S. into the world’s largest producer of natural gas. For decades America’s oil and natural gas companies have worked to provide an affordable and secure supply of fuel to the nation. This relentless drive to innovate has unlocked the nation’s vast shale energy resources. We have entered a new age of energy abundance that is only beginning to show its full promise.

One hundred years ago, Ohio was America’s leading oil producing state. Today, they’re on the verge of once again being one of the nation’s great energy producers. While drilling has just started, investment has been pouring into the state. Producers are purchasing local mineral leases, building infrastructure to support development efforts, and ramping up hiring to staff expanding operations.

A study released earlier this year projects that development of Ohio’s shale resources will generate 65,000 jobs and add $4.9 billion to the state’s gross domestic product in 2014. This is precisely the kind of economic boon shale oil and tight gas development has provided in other states.

In Pennsylvania, drilling created 72,000 jobs in 18 months between late 2009 and early 2011. Development of the Bakken formation has turned North Dakota into the nation’s third largest oil producer, trailing only Texas and Alaska. In 2005, North Dakota produced 3,000 barrels of oil a day. Today, the state is producing more than 550,000 barrels per day and is home to the nation’s lowest unemployment rate.

This surge in oil and natural gas production is also ushering in a renaissance in American manufacturing. New steel and chemical plants are rising across the country to take full advantage of the nation’s growing supply of oil and gas. For example, U.S. Steel’s tubular plant in Lorain, Ohio, has invested $100 million to manufacture the seamless steel pipe used in shale energy development. And a new multibillion dollar petrochemical plant is planned for Beaver County in western Pennsylvania. The facility is expected to provide 10,000 permanent jobs.

President Obama has acknowledged the importance of shale energy development to the nation’s economy. During his State of the Union speech, earlier this year, he said growth in shale gas production will create 600,000 new manufacturing jobs by the end of the decade. He was not speaking out of optimism. He was reciting a fact.

The administration also needs to ensure we have policies that encourage the development of the nation’s shale resources. We need increased access to the nation’s oil and natural gas reserves that lie under federal land.

But we also need an approach to regulation that recognizes the safeguards already in place and the effective role states are playing to ensure responsible energy development, as well as avoids layering on unnecessary or counterproductive federal regulations. And the president must end his calls to punish the oil and natural gas industry with billions in higher taxes.

The oil and natural gas industry already generates $86 million a day for the federal treasury. Increased access to the nation’s vast oil and gas resources and streamlined federal permitting would do far more to create jobs and revenue for the government than increased taxes. Every additional dollar taken from the industry is a dollar that cannot be reinvested into domestic energy production and American job creation.

Thanks to the shale energy revolution, consumers will realize $11 billion in cumulative cost savings by 2025, according to a study by PricewaterhouseCoopers. And in part due to increased production on state and private lands, imports of oil are down from 57 percent in 2008 to 45 percent today. Even with oil production basically flat on federal land and falling offshore, total domestic production rose by 120,000 barrels per day last year – driven by that surge in private and state land development. This was the first growth in domestic production in eight years.

Shale energy development in Pennsylvania, North Dakota and now Ohio is providing a model for job creation and increased domestic energy production. Recreating this model in other parts of the nation should be the centerpiece of our energy strategy – and a critical opportunity to help lead our nation back to prosperity.