In recent days, the markets have signaled concern about the economy. Amid disappointing employment figures and lagging economic indicators, consumers, investors and businesses are searching for some bright spot in the market. The oil and gas industry, which has consistently shown strength during this lengthy economic downturn, has the potential to help lift our economy if the right energy policies are in place.
One way to help restart our economic engine is to encourage new investment and growth in the energy sector, which currently supports more than 9.2 million American jobs.
We stand ready to create thousands of new jobs and generate billions of additional dollars for the economy by safely developing new energy sources right here at home.
According to a recent analysis by the American Petroleum Institute, oil and natural gas companies contributed more than $470 billion to the U.S. economy in spending, wages and dividends in 2010. This is more than half the size of the 2009 federal stimulus package – yet this stimulus did not require a Congressional vote or taxpayer dollars. Additionally, our industry is a tremendous revenue source for cash-strapped federal, state and local governments – paying about $86 million a day in taxes, fees and royalties.
The U.S. is an energy powerhouse. Estimates of our resource potential are considerable. For example, many experts believe the U.S. could have enough oil offshore to power more than 130 million cars for 25 years and enough natural gas for 70 million homes for 90 years.
With the advent of new technologies, we are constantly improving our abilities to access more supply safely. For instance, the Gulf of Mexico continues to present new opportunities.
Early in my career, drilling in 600 feet of water was just about the limit of our capabilities. Now, we are drilling in 10,000 feet of water down to a total depth of nearly 30,000 feet – five miles beneath the water’s surface. As a result, the Gulf of Mexico now accounts for more than a quarter of U.S. oil supplies and more than 10 percent of our natural gas supplies. We can grow our offshore supply by expanding beyond the areas where we are able to explore and produce.
Additionally, our industry’s advances in technology are leading us to previously unimagined supplies of natural gas that have the potential to transform the energy landscape of our nation.
Thanks to the new application of drilling technology that produces previously unrecoverable gas from shale, the U.S. now has the potential to access trillions of cubic feet of natural gas. A recent study by experts at Pennsylvania State University indicates the Marcellus shale formation running through New York and Pennsylvania to West Virginia could be the second largest natural gas field in the world. During 2009 alone, Marcellus gas producers spent $4.5 billion to develop those resources, generating an estimated $389 million in tax revenues and creating more than 44,000 jobs. Going forward, the Marcellus could provide a 20-year supply of natural gas to the U.S. and could generate $6 billion in local, state and federal tax income while employing up to 300,000 people by 2020. And that’s just one of the new shale gas plays in the U.S.
While we debate over what types of energy are best for our economy and the environment, the reality is that the U.S. will need all forms of energy, including fossil fuels, nuclear and renewable, along with increased energy efficiency. Globally, energy demand will nearly double within the next 25 years and oil and gas will continue to play a particularly critical role. Every day the U.S. consumes nearly 20 million barrels of oil, more than one-fifth of what the world uses. But we also generate 25 percent of the global gross domestic product. Meeting the challenges of our energy future will not be easy; if any of these sources fails to deliver, we won’t meet demand.
In addition to the challenge of meeting that demand, the president has called for a 30 percent reduction in oil imports by 2025. That’s only 14 years away. In an industry with long exploration and development cycles, meeting this challenge will require us to start exploring for these new resources now.
As we face lengthy and difficult economic times, jobs are everyone’s priority. The oil and gas industry can play a key role in lifting our economy by creating high-paying jobs, generating billions of dollars in economic activity and delivering much needed revenue for local, state and federal governments struggling with budget shortfalls. Increased access to domestic oil and gas will provide safe and reliable domestic energy and can help our nation become an economic and energy powerhouse.