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'Major Energy Policy Reset' Called Key to Fiscal Recovery

Dramatically increasing the production of domestic natural gas, oil and coal offers the United States its best opportunity to create sustainable jobs, but political wrangling stands in the way of achieving that goal, according to a new report from the Manhattan Institute for Policy Research.

"The impediments to realizing these economic benefits are no longer technology- or resource-based. They are virtually all political," said Digital Power Gropu CEO Mark P. Mills, who authored the Manhattan Institute report. "Only a major energy policy reset, one that takes into account the sweeping technological, economic, and demographic changes that have occurred over the past several decades, will spur a fiscal recovery, a manufacturing revival, and even balanced budgets."

In the first in a series of reports issued by the Power and Growth Initiative earlier this year, Mills wrote that hundreds of thousands of jobs have been created and billions of tax dollars generated from unconventional plays in North America (see NGI, July 16). Policymakers need to capitalize on the further potential for job creation, trade and economic development that North American energy resources offer, he said.

In this second report, Mills identified specific steps that he said U.S. policymakers should take to realize three to five million high-paying jobs and $3-7 trillion of revenue that tapping the nation's newly accessible energy resource could make possible.

"The United States can quite literally drill, dig, build, and ship its way out of the current economic and jobs malaise," Mills wrote. "But we can do so only if the nation adopts new energy policies that reflect the technological, economic, and demographic realities of 2012."

According to the report, the president and Congress should establish a clear, pro-development, pro-export hydrocarbon policy emulating the North American Free Trade Agreement; establish a single federal portal for approval of all major energy projects; and declare a time-out on all new federal regulations.

Mills also recommended several specific changes for the Department of Interior's Bureau of Land Management (BLM), which has significant regulatory control over development of the nation's oil, gas and coal resources. The agency should be held accountable for the timely processing of applications, should not be allowed to "arbitrarily designat[e] huge new swaths of land as 'Wild Lands,' thereby preventing access for resource assessment and for development, and should suspend any plans to further regulate hydraulic fracturing, he said. In addition, the Interior should be required to adhere to the statutory provision in the Federal Land Policy and Management Act, Mills said.

The report also recommended that legal challenges to development "be limited to those whose legal rights will be directly and adversely affected," plaintiffs be required to pay for legal action dismissed on frivolous grounds, and federal lands currently deemed off-limits to energy development opened up for exploration. To encourage innovation, the research and development tax credit should be made permanent, Mills said.

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