Reason Foundation

http://reason.org
http://reason.org/news/show/oil-and-gas-production-rises-but-do

Reason Foundation

Oil and Gas Production Up, But Don't Thank the Feds

Adam Peshek
February 28, 2012, 3:54pm

President Obama recently told a crowd at the University of Miami that “under my administration, America is producing more oil today than at any time in the last eight years,” noting the “record number of oil rigs operating right now – more working oil and gas rigs than the rest of the world combined.” But his administration has little to do with it: the increase in production is coming from state and private lands – not federally-controlled land.

According to data from the Department of Interior, production on federal lands fell by double digits between 2010 and 2011, with natural gas dropping 11% and oil nearly 14%. 

But that does not mean that President George W. Bush did much better. As Dan Simmons at the Institute for Energy Research points out:

Many people thought of the Bush administration as pro-oil and natural gas. But the reality is different. The amount of federal lands offered for lease for energy production actually fell during the Bush administration. In other words, the Clinton administration offered more lands for lease than the supposedly pro-oil Bush administration.

Only after oil hit $147 a barrel did the Bush administration end the moratorium on offshore drilling and produce a new drilling plant to expand leasing. Their belated attempts to allow development of taxpayer-owned resources were undermined when President Obama was inaugurated.

At the start of the Obama administration, the entire Outer Continental Shelf (OCS) was open to leasing. The administration’s new plan, however, doesn’t allow leasing on the vast majority of the OCS.

Neither the Bush nor Obama administrations have done much to increase production. The House Natural Resources Committee recently noted that oil production on federal lands has dropped by 44% since 2003, while natural gas has fallen by 41%.

But two wrongs don’t make a right. Under the Obama administration, 2010 had the lowest number of onshore leases issued since 1984, with only one offshore lease open in 2011. Luckily, oil- and gas-rich states have picked up the slack where the feds have dropped the ball.

The reason oil and natural gas production has increased in the U.S. is because of production on private and state lands. One example is North Dakota’s oil production. Almost all of the Bakken formation is on private lands and as a result production has dramatically increased. Over the past 10 years, North Dakota oil production has increased by nearly 250 percent, while federal oil and natural gas production has fallen over 40 percent.

The administration has stated that it intends opening 32 onshore leases this year but has also noted that is intends to delay any offshore leases for at least five more years.


Adam Peshek is Research Associate


Print This