The shale gas and oil revolution in North America, particularly the United States, has created thousands of jobs and generated billions in tax revenue. There could be more to come, but decisions by U.S., Canadian and Mexican policymakers will be what determines whether the North American energy promise is fulfilled, a researcher said in a new report.
Hydrocarbon resources -- oil, natural gas and coal -- in North America are more than four times the resources existing in the Middle East, and the United States is now the fastest-growing producer of oil and natural gas in the world, according to a new report from the Manhattan Institute for Policy Research.
"It is time to appreciate the staggering potential economic and geopolitical benefits that facilitating the development of these resources can bring to the United States," said report author Mark P. Mills, CEO of capital advisory firm Digital Power Group. "It is no overstatement to say that jobs related to extraction, transport and trade of hydrocarbons can awaken the United States from its economic doldrums and produce revenue such that key national needs can be met -- including renewal of infrastructure and investment in scientific research."
Mills wrote that hundreds of thousands of jobs have been created and billions of tax dollars generated from shale plays in North Dakota, Ohio, Pennsylvania, Texas and other states, as well as in the Canadian oilsands. Policymakers need to capitalize on the further potential for job creation, trade and economic development that North American energy resources offer, he said.
"An affirmative policy to expand extraction and export capabilities for all hydrocarbons over the next two decades could yield as much as $7 trillion of value to the North American economy, with $5 trillion of that accruing to the United States, including generating $1-2 trillion in tax receipts to federal and local governments," Mills said. "Such a policy would also create millions of jobs rippling throughout the economy. While it would require substantial capital investment, essentially all of that would come from the private sector."
Public policy in the United States, Canada and Mexico should be pro-development and pro-export in order to realize the benefits of the continent's hydrocarbon resources, he said. "Such a policy could lead to North America becoming the largest supplier of fuel to the world by 2030. For the U.S., the single most effective policy change would be to emulate Canada's solution for permitting major energy projects: create a one-portal, one-permit federal policy for all permits."
According to Mills, a too-heavy focus on alternative energies has missed how technology has unleashed alternative hydrocarbons. Mills cited several recent studies, including one from Citi, "Energy 2020: North America, the New Middle East?" that asserts that the main obstacles to developing an oil surplus in North America are political rather than geological or technological.
"The projected growth in total world energy demand through 2030 is equal to an additional two Americas' worth of consumption," Mills said. "Every credible forecast shows hydrocarbons fueling the major share of that growth, as they have in the past. While alternative energy has grown rapidly, the overall contribution to U.S. and world supply remains de minimus and stays that way in every credible future scenario."
Mills said nearly all of the recent gains in U.S. hydrocarbon production have been realized on private lands while the federal Bureau of Land Management (BLM) manages about 700 million acres of mineral estate. While there has been access to BLM-managed land, the number of new leases sold in recent years has declined, he said. "Unsurprisingly, there is a strong correlation between the number of BLM oil and gas leases and the quantity of oil produced."
The United States should emulate Canada's solution for permitting major energy projects by creating "a one-portal, one-permit federal policy for all permits. The current regulatory morass, unintended conflicts, and frequent capriciousness are common complaints across the hydrocarbon industries," Mills said.
"The U.S. has yet to adopt a coherent policy in response to the deep changes in energy demand and supply. The world will need enormous quantities of hydrocarbons in the future, regardless of and despite substantial gains in energy efficiency and alternative energy deployment. No single region of the world could make as significant a difference to the supply dynamic as could North America."
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