The last time the American economy needed a steroid injection, one industry did most of the heavy lifting to get us out of recession: the oil and gas producers of America.
The new technologies that created the shale oil and gas revolution which began in 2006 sprouted hundreds of thousands of jobs and hundreds of billions of added output to the GDP at a time when the rest of the economy was flat on its back.
From 2007–2012, the years of the financial meltdown, the oil and gas industry was the single largest job-producing sector in America with almost 5 million added in Texas, Oklahoma, West Virginia, Ohio and Pennsylvania. Texas, which was the heart of the energy revival in places like the Permian Basin, created more new jobs over this period than the rest of the states combined.
Today, oil and gas prices are historically low — thanks to American production — which is great for American motorists and our manufacturers. We are no longer captive to OPEC, Saudi Arabia or Russia for energy imports. But how long will that last? We are shooting ourselves in both feet on energy and slowing this recovery from the COVID-19 pandemic by dumb policy decisions in Washington that are hurting our domestic production capabilities while playing into the hands of Russia and China.
Consider the new regulatory assault against American-made energy. The tangle of federal regulations is so dense that together, they cost $1.9 trillion per year, an amount roughly equivalent to 9% of the entire economy and the energy regulations are some of the most onerous. Getting rid of the red tape and directives would add more to the economy than most of the “stimulus” plans Congress is discussing.
The first place to focus high-impact deregulatory efforts should be with rules impacting the energy sector. Oil, gas and coal now account for 9% of America’s GNP. But after a bitter price war waged by Russia and OPEC followed by decreased demand as the result of the pandemic, many small and mid-sized producers are struggling just to hang on. Saudi oil sheiks and Vladimir Putin tried to plunge all American drillers into bankruptcy earlier this year by flooding the global market with very cheap oil.
Thousands, if not millions of blue-collar jobs are at stake in Texas, North Dakota, Pennsylvania and many other states. Some easy steps would save and expand our oil jobs and production. For example, leftist anti-fossil fuel “green” groups have blocked urgently needed pipelines in recent months.
The Keystone XL has been delayed and the vital Atlantic Coast pipeline was shut down last month due to phony environmental decrees. (Pipelines are the safest and cheapest way to transport gas and oil.) Russia and the Europeans are building pipelines across the ocean, but we can’t build them here in the U.S. of A.
Meanwhile, investment in oil and gas exploration is tanking because the Democratic candidate for president, Joe Biden, has announced that if he wins the election, he would level even more regulations against “new and existing oil and gas operations” on his very first day in office. He was asked earlier this year during a Democratic debate if he would do this “even if it meant losing thousands of blue collar jobs.” His one-word answer was “yes.” He says he wants to bankrupt all U.S. oil and gas producers by 2035.
It’s not too late to turn things around for this lifeline industry. If Mr. Biden were more in tune with American workers instead of billionaire activist Tom Steyer and with Rep. Alexandria Ocasio-Cortez, champion of the job-killer Green New Deal, he would help expedite pipeline construction instead of making permits more difficult to obtain.
If, as part of its stimulus package, Congress were to get rid of the regulatory delays on pipeline construction in places like the Permian basin, not only would it benefit the economy, but it would benefit the environment. New pipelines would mean that more gas would flow to where it’s need and that there would be less surplus gas that would need to be burned off. Three major pipelines across the U.S. are now in the process of being scuttled or delayed due to regulatory overreach.
The biggest lift to domestic energy production would be if Congress would make permanent recent executive actions modernizing nearly 50-year-old regulations known as the National Environmental Policy Act (NEPA). Protecting the environment is vital and the streamlined regulatory review would accomplish that goal.
As President Trump has rightly noted: The permitting process required for green-lighting everything from infrastructure updates to power grids to bridge construction and pipelines can take five to 10 years longer than in even environmentally friendly Canada and Germany. Democrats and Republicans have a rare agreement that we need more ready-to-go infrastructure projects funded right now to help get Americans back to work. Five-year delays are poison to the economy.
The states hardest hit by this recession — including Ohio and Pennsylvania — have hundreds of thousands of jobs tied to shale oil and gas in professions such as steel workers, truckers, construction crews, drillers, engineers and pipefitters. They can play a lead role in charging America out of this recession — as they did the last one — if the political class in Washington would get out of the way and stop promising to destroy an industry that has made our nation energy independent.
• Economist Stephen Moore is the co-founder of the Committee to Unleash Prosperity and a member of President Trump’s coronavirus economic task force.
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