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Oil Industry Report Outlines How to Create Temporary Jobs While Permanently Destroying the Climate

The American Petroleum Institute released a report this morning outlining how the U.S. could create over one million jobs in the next decade through increased domestic drilling and use of tar sands. The solution? Open up every possible pocket of American soil and waters to drilling rigs — turning “drill, baby drill” into “drill, baby, drill, ‘till there’s nothin’ left to drill.”

The report outlines aggressive oil and gas drilling scenarios for the Outer Continental Shelf, the Gulf of Mexico, onshore and offshore in the Arctic, and on various other public lands around the U.S., as well as development of the Keystone XL pipeline — all measures that would supposedly increase oil and production by nearly 50% compared with our current path (which is already set to raise production substantially) and increase tar sands production by 280%.

In other words, jobs creation through more climate destruction. And they are all temporary jobs, since they aren’t sustainable. We will be getting off of oil in the coming decades if we’re going to avoid catastrophic climate change.

“All [Obama] has to do is say the word,” said API President Jack Girard, in a challenge to the president at an event to promote the report. The study comes out a day before Obama is set to give a speech about job creation to Congress.

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Doc Hastings, a Republican from Washington State who serves as Chair of the House Natural Resources Committee — one of the oil industry’s most stalwart advocates — used the release of this morning’s report to spread the myth that Obama is anti-drilling in order to make the case for the industry to drill anywhere it can fit a rig:

The Obama Administration has hardly missed any opportunity to block, impede, delay, hinder or obstruct American energy production. Instead of moving our country forward, President Obama has moved 180 degrees in the opposite direction. Now I don’t say that lightly. It’s not 45 degrees, it’s not 90 degrees, it’s 180 degrees from my perspective.

Along with blocking, impeding, delaying, hindering, obstructing and turning a full 180 degrees, Hastings (who took $85,000 in campaign contributions from oil and gas companies last election cycle) also talked about the President “misleading” Americans on fossil energy production.

But this data on domestic oil production from the Energy Information Administration doesn’t show a 180 degree turn, much less a 45 degree pivot. It’s more like a full-court press on oil production [see picture above]

And more data released from the EIA shows a similar picture. Oil companies in the U.S. are deploying more drilling rigs than anytime since the mid-1980’s.

It’s actually the first time since 1987 that over 1,000 drilling rigs were deployed in the U.S. Why? Because of the higher cost of oil due to increased global demand — companies have the economic incentive to drill for more places around the country. As a result, production has increased substantially.

“The evidence is not there that the Obama Administration is in a war against the industry. I don’t think you give Obama credit for creating all this production, but he certainly isn’t killing the industry. You also don’t give the Bush Administration that credit. Production is up primarily because of technology and high oil prices,” explained Michael Levi of the Council on Foreign Relations to Climate Progress.

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Even though Obama probably doesn’t get the credit, the Administration is still working through permits for new drilling. In 2010, the BLM processed 5,000 drilling permit applications; in 2011 that number is projected to be 7,200.

No matter what he does, Obama will get attacked for not doing enough to support oil and gas. The question is, if he opened up new, environmentally-sensitive areas to drilling in the name of jobs, would it have the major economic impact that the industry suggests?

  • An Energy Information Analysis issued an analysis in 2009 that compared opening the entire Outer Continental Shelf to drilling with a more restricted approach. It found that by 2030, gasoline would only be 3 cents cheaper under an open-drilling scenario.
  • Fishing jobs could be put a risk by drilling. The API Report cites a possible creation of 100,000 drilling jobs in Florida as part of its broader suite of job creation numbers. Yet Floridians have consistently opposed opening new areas to drilling because of the impact it would have on tourism. A 2006 report from the National Ocean Economics Program cites 361,000 Tourism & Recreation jobs in Florida (261,000 direct, and 100,000 indirect and induced), plus about 9,000 commercial fishing jobs, all of which would be put at risk by drilling. Tourism, recreation, and fishing contributed $18.9 billion to Florida’s GDP in 2005. Other reports have pegged Florida’s tourism industry as supporting more than a million jobs.
  • Spills and other disasters are inevitable and will cost money to clean up and impact the local economy. After the BP Horizon disaster, Gulf coast fishermen experienced nearly a 40% drop in landings, and to date, BP has paid out more than $5.5 billion in claims.
  • The report assumes that “slow walking” in the Gulf continues, but the Administration has been issuing offshore leases and is about to issue more. According to BOEMRE, 68 new shallow water permits have been issued since June 2010. Permits have averaged more than 7 per month since fall 2010, about equal to 2009. 112 permits for 34 deepwater wells requiring subsea containment have been approved. And last month the administration announced a massive sale of offshore leases in the Gulf of Mexico, and approved initial permits for Royal Dutch Shell to commence exploratory drilling in the Arctic — an area where there is no infrastructure for clean-up.
  • The sheer expanse of U.S. drilling has some companies worried about recruiting employees. As Headwaters Economics stated, “It is not clear how this already booming industry could add an additional million jobs. In fact, drilling is increasing at such a fast pace that there now is the prospect of a shortage of skilled labor and machinery.” The Wall Street Journal quoted Schlumberger Chief Executive Andrew Gould saying, “The ability to provide both North American and international markets with required people in a continued growth phase will be a challenge”
  • U.S. federal lands actually have very few proven oil reserves. The U.S. has 5.3 billion barrels of proved oil reserves on federal land. That is what the U.S. consumes in just 15 months.
  • The oil and gas industry are letting millions of leased acres sit idle. Around 41 million acres of public lands are under lease to the oil and gas industry, yet just 12 million are producing. So the industry has 29 million acres that it has leased but not yet developed. According to a recent report issued by the Interior Department, “more than 70 percent of the tens of millions of offshore acres under lease are inactive, neither producing nor currently subject to approved or pending exploration or development plans.”
  • Much more acreage is under lease to drill than is protected. Around 42% of the intermountain west is already leased to oil and gas, while only 1% is off limits.
  • Increased drilling won’t lead to energy independence. For a country that consumes approximately 22% of the world’s oil but has only a fraction of the world’s proven oil reserves, no matter how much of our oceans we open to offshore drilling, it will never be enough. In 2009, the EIA estimated that even if the Pacific and Atlantic coasts and the eastern Gulf of Mexico were all opened up to drilling, the U.S. would still be importing 41% of the oil we use in 2030.

Perhaps this is why Wood Mckenzie, a reputable organization, includes a careful disclaimer in the footnotes of its study. The opinions in the report “have been arrived at following careful consideration and enquiry consistent with standard industry practices but we do not guarantee their fairness, completeness or accuracy.”

Michael Conathan and Jessica Goad of the Center for American Progress contributed to this report.