how energy can supercharge the u.s. economy
February 5, 2013 – One of the greatest challenges facing the United States today is continuing to restore our economic strength. Fortunately, this challenge comes amid an energy renaissance that has already reversed more than 20 years of domestic crude oil production declines and positioned the United States as the global leader in natural gas production. Indeed, the energy renaissance already has become a catalyst for economic growth, bringing affordable energy, jobs, revenues and an accompanying resurgence of manufacturing. It is providing the U.S. government with a historic opportunity to dramatically enhance national energy security and affordability when America needs it most.
It is no secret that reliable and affordable energy underpins virtually every element of the economy, providing mobility, power generation, heating and cooling. Indeed, the energy economy keeps our industries competitive, bolsters consumer confidence and pocketbooks, and promotes improved living standards. In economic terms, the U.S. crude oil and natural gas industry contributed more than $1 trillion annually to the U.S. economy, 8 percent of the U.S. gross domestic product, and supported 9.8 million jobs in 2011.
In other words, the energy economy is the foundation of the U.S. economy. It is supported by companies such as Chevron, which has tripled its annual investments in the United States over the past 10 years. In 2013, more than a quarter of the $42 billion Chevron invested in new capital projects, $11 billion, went into the U.S. economy to support the production of affordable and reliable energy for Americans. In 2014, Chevron announced a $39.8 billion capital and exploratory program, with $9.7 billion planned for investment in the United States.
Such investment will be crucial to meeting the United States' growing energy needs in the years ahead. Competition for energy resources will only grow as the world's population expands and incomes rise, increasing global energy demand. The Energy Information Administration forecasts global energy demand will grow by more than 40 percent by 2035. Now that the United States has the potential to become a global energy superpower, we should seize the opportunity.
Conservative estimates put the size of recoverable crude oil and natural gas resources in the waters around the United States at roughly 150 billion barrels. That is the equivalent of nearly 35 years of Saudi Arabia's production. U.S. government estimates suggest federal lands alone hold technically recoverable resources of roughly 116 billion barrels of crude oil and 650 trillion cubic feet of natural gas. That is enough crude oil to power about 225 million consumer vehicles for nearly 17 years and enough natural gas to heat 60 million homes for nearly 160 years.
To grasp this historic opportunity, the U.S. government must ensure America's tax, regulatory and access policies support developing our natural resources safely and responsibly. Only with the proper framework will the energy industry continue to invest in America—creating jobs, stimulating growth, increasing government revenue and enhancing our energy and economic security now and in decades to come.
As of now, nearly all of the eastern U.S. Gulf of Mexico, the entire Atlantic and Pacific coastlines and the majority of offshore Alaska—more than 85 percent of the U.S. Outer Continental Shelf—remain off-limits to crude oil and natural gas exploration and development. Additionally, 60 percent of federal onshore lands are off-limits or subject to significant access restrictions. A recent Wood Mackenzie study estimated that increasing access to U.S. hydrocarbon resources and the approval of more pipelines could support an additional 1.4 million jobs and raise more than $800 billion in cumulative government revenue by 2030.
If the United States encourages responsible development of our abundant energy resources, it could also lead to greater energy security between now and 2030. In the process, we could reduce our dependence on oil imports, giving us greater control over our energy future.
The bottom line is that the energy economy is ready to drive the country forward. But it requires a policy agenda that enables, not compromises, that goal.
Published: February 2013