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NTU Comments on Oil and Gas Leasing in Outer Continental Shelf

September 21, 2009

Ms. Renee Orr
Chief, Leasing Division
Minerals Management Service, MS 4010
381 Elden Street
Herndon, VA 20170-4817

Comment Subject: 2010-2015 Oil and Gas Leasing in the Outer Continental Shelf

Dear Ms. Orr:

On behalf of the 362,000-member National Taxpayers Union (NTU), I am pleased to offer comments on the Minerals Management Service’s (MMS) Draft Proposed Program for Oil and Gas Leasing in the Outer Continental Shelf (OCS). As an organization with a 40-year history of advocating for lower taxes, limited government, and economic freedom, we believe that an expedited plan to allow for greater domestic oil and gas development is imperative.

Since the days of price controls and windfall profits taxes during the Nixon and Carter presidencies, public officials have attempted to manipulate free markets in order to fulfill their visions of what a “national energy policy” should look like. These efforts have been proven failures.

Instead of picking winners and losers in the industry, we believe officials should pursue a policy that applies low, simple taxes to all forms of energy production, avoids government subsidies, and eases regulations that stand in the way of developing new resources.

In order to develop those resources, federal restrictions on energy exploration must be revisited. In essence, MMS’s plan will determine where (and for that matter whether) oil and gas leasing will take place from 2010 through 2015.

Many of the factors leading to current energy prices are outside the control of the federal government. However, the extent to which we allow domestic companies to explore for energy is very much within Washington’s control. Ending these costly restrictions would have the benefit of providing a steady stream of oil supply, thereby helping to calm market volatility.

Domestic energy exploration is possible without creating major environmental hazards. The nation’s offshore areas where there currently is not a drilling moratorium, such as portions of the Gulf of Mexico, did not experience any oil spills or significant environmental problems after being struck by Hurricane Katrina, a Category 5 storm.

In addition, allowing for responsible exploration would help to lower taxes and reduce budget deficits. This would occur by producing an influx of tax revenue from additional lease sales and royalties, as well as from income and excise taxes.

The Congressional Research Service recently estimated the potential federal revenue from Arctic National Wildlife Refuge (ANWR) oil development at $191 billion over 30 years – roughly $18.36 per barrel, based on projections of recoverable reserves. Applying that formula to the 107 billion-plus barrels of recoverable oil that federal agencies estimate is in ANWR, in the nearby National Petroleum Reserve, and offshore tells us that sensible drilling could yield nearly $2 trillion in overall revenue over 30 years, or an average of about $65.5 billion per year. That amounts to sufficient money, for example, to completely repeal the Alternative Minimum Tax without boosting budget deficits.

As NTU’s own Director of Government Affairs Andrew Moylan noted in an article for The Wall Street Journal, “We helped create our energy supply problem by putting resources off-limits. Let’s develop those resources and use the revenue to help alleviate tax burdens in this difficult economy. More supply, lower gas prices, greater energy security, and lower taxes. What are we waiting for?”

Accordingly, we urge MMS to proceed with finalizing the 2010-2015 OCS Oil and Gas Leasing Draft Proposed Program with all deliberate speed, and with the confidence that no delays in the development of this thoughtful plan need take place. Furthermore, the plan itself should continue to include all of its current proposed lease sales since, again, these provisions have been carefully analyzed. Finally, MMS should make every effort to maintain the time outline of lease sales as stipulated in the Draft.

Producing more oil and natural gas here at home would have many benefits, including more domestic energy supplies, stable fuel prices, lower utility bills, and new jobs. But policymakers should bear in mind that this process would also enhance America’s fiscal security. The nation’s taxpayers would certainly agree.


Pete Sepp
Vice President for Policy and Communications