July 2008 Newsletter

With gasoline around $4 and natural gas above $9, Americans are feeling the energy pinch.  On the bright side of this otherwise painful situation, Americans are paying more attention to the global energy situation and, in some cases, beginning to change their behavior and attitudes.  The latest energy polls, for example, shows a dramatic shift with a growing majority of Americans favoring more domestic oil and natural gas exploration and production for the first time in decades.

This month our nation's lawmakers have focused on limiting speculation in the oil market to address high gas prices rather than dealing with the fundamental reality that energy demand is outstripping supplies of oil and natural gas.

Expanding domestic exploration and production is one of 13 energy policy pillars that the Institute for 21st Century Energy and more than two dozen former cabinet, Congressional, and national security officials unveiled at the U.S. Chamber of Commerce on July 16.  The bipartisan group put those pillars before policymakers in an open letter to the 44th president and the 111th Congress.  In an election year about change, please vote for a strategic, new energy policy direction by visiting www.energyxxi.org, reading the open letter, and signing it.

Taking action on the letter and joining the consensus about putting real energy solutions ahead of tired partisan politics is a critical step in strengthening our nation and our economy as well as safeguarding our families.
 
We must urgently move our elected leaders to enact a comprehensive energy policy that will diversify and expand renewable and traditional supplies, while also using energy resources more efficiently and preserving the environment.  More domestic oil and gas is part of that sensible energy approach for the United States.  New technology can allow us to use these resources in a clean, environmentally sound manner.  If we have the political will to take bold steps forward, we can put our nation, and lead the rest of the world, on a clean energy path that safeguards the environment and sustains our global economic competitiveness.

Between 2005 and 2030, worldwide demand for energy is expected to increase by 50 percent, and the U.S. demand could increase by as much as 30 percent.  Yet, today a substantial amount of our nation's resources beneath federal lands and in the Outer Continental Shelf (OCS) are off limits.  For many years, Congress and the White House representing both political parties have prohibited exploration in about 85 percent of the OCS acreage offshore the lower 48 states.

In the OCS, the U.S. Department of Interior (DOI) estimates proven reserves at 8.6 billion barrels of oil and 29.3 trillion cubic feet (tcf) of natural gas.  However, there could be significantly greater amounts according to DOI estimates: the OCS may contain as much as 420 trillion cubic feet of natural gas and more than 85 billion barrels of oil.

There is also limited access to vast federal lands, with resources totaling 231 trillion cubic feet of natural gas and 30 billion barrels of oil.  DOI found in a congressionally-mandated study that only 8 percent of onshore federal oil and 10 percent of onshore federal gas are accessible under standard lease terms.

Untapped oil and natural gas resources off America's shores and beneath our land could yield 116 billion barrels of recoverable oil and more than 650 trillion cubic feet of natural gas for the American people.  Accessing these onshore and offshore resources using environmentally responsible technology could provide enough oil to replace U.S. oil imports for 23 years and enough natural gas to warm all American households, heated with natural gas, for well over a century.

This month, President Bush took positive action and lifted the Executive Branch ban on more offshore exploration and production.  But Congress must now act to allow access to these resources.  We can do this safely.  U.S. Coast Guard data shows that our offshore oil and gas industry has a 99.999 percent record for clean and safe operations.  U.S. oil and gas companies can explore and deliver new energy in an environmentally sensitive way.  Advanced technologies such as horizontal drilling and three-dimensional seismic know-how allow greater precision for capturing oil and natural gas. 

Now is the time for Congress to take action and allow for the exploration and development of taxpayer-owned oil and gas resources.

Additionally, the U.S. Geological Survey reported this week that the area north of the Arctic Circle has an estimated 90 billion barrels of undiscovered, technically recoverable oil and 1,670 trillion cubic feet of technically recoverable natural gas.  The Arctic accounts for about 13 percent of the undiscovered oil and 30 percent of the undiscovered natural gas in the world.  It is fact-based analyses such as the USGS work and the anticipated November report by the International Energy Agency that will detail known reserves in existing fields that should inform our policymaking.  We need more transparent and fact based discussion on our energy options.

To remain a nation of great influence, the United States requires affordable, reliable, and diverse energy supplies.  Without the right policies, we will become increasingly dependent on foreign energy sources over which we have no control.

Clearly, we can and must do a much better job to secure America's energy future.  At the Institute, we're building the case for policymakers to adopt a responsible energy strategy.  In my experience in Washington, D.C, once Main Street calls for action, both ends of Pennsylvania Avenue must answer.

Sincerely,

James L. Jones, USMC (Ret.)
President and CEO
Institute for 21st Century Energy

OTHER RECENT ACTIVITIES AT THE ENERGY INSTITUTE

• Gen. Jones and 26 other former Cabinet, Congressional, and national security officials, on July 16 unveiled an open letter to the 44th president and the 111th Congress outlining the pillars of a comprehensive, commonsense U.S. energy policy.
• On July 9, Gen. Jones co-hosted a working lunch with the Atlantic Council to launch a transatlantic energy dialogue.  Attending the luncheon were representatives of 25 U.S. corporations that have energy-related business interests in Europe.
• Gen. Jones and the East-West Institute co-hosted a July 9 energy and national security dinner with two dozen influential American citizens and Aleksandr Voloshin, chairman of Russia's RAO UES.
• On Thursday, July 10, Gen. Jones addressed the national Democratic Policy Council at a Capitol luncheon about national security implications of our energy challenges.
• The Institute held its second energy conference call with more than 150 state and local Chambers of Commerce on July 10.
• On July 15, Executive Vice President and Managing Director Karen Harbert discussed the open letter and presidential energy politics at a National Journal forum in Washington, D.C.
• Harbert previewed the Institute's open letter, "Securing America’s Energy Future," in a July 16 interview with CBS Radio.
• Gen. Jones touted the open letter in interviews on CNBC's Kudlow & Company and for an hour-long energy special that aired on CNN.
• Harbert recorded a podcast on the open letter for Energy Tomorrow Radio.

FUEL FOR THOUGHT

1. U.S. oil pipelines would go around the equator eight times.
2. U.S. natural gas pipelines would reach the moon and back nearly 5 times.
3. Oil pipelines transport 17% of all goods shipped within the United States.
4. The United States produces 84% of the natural gas and 40% of the oil it consumes.
5. Western Hemisphere nations provide the United States with 50% of its imported oil and 99% of its imported natural gas.