Oil Production Is Up 53% Since 2010, But It’s Declining on Federal Lands. Here’s Why.

COMMENTARY Coal, Oil, Natural Gas

Oil Production Is Up 53% Since 2010, But It’s Declining on Federal Lands. Here’s Why.

May 5th, 2015 2 min read
COMMENTARY BY
Patrick Tyrrell

Research Coordinator

Patrick Tyrrell is a research coordinator in The Heritage Foundation’s Center for International Trade and Economics.

Thanks to hydraulic fracturing and horizontal drilling methods perfected at the end of last decade, production of crude oil in the United States has skyrocketed. This chart shows the swift takeoff in crude oil production.

U.S. oil production is up 53 percent since 2010, but the increase has occurred almost entirely on non-federal lands. Production on federal lands has not seen a similar liftoff, and is actually down overall.

The reasons federal area drilling has lagged is not because of lack of oil.

Proved oil reserves under federal areas account for about 26 percent of all proved crude oil reserves. (Proved oil reserves are amounts accessible under current policy, prices and technology). If the new methods for extracting oil increase production on private lands, they can also on federal lands.

The main difference between drilling for oil on non-federal and in drilling on federal lands is whether or not the driller has to navigate the complex regulatory obstacles required by the federal government.

President Obama has said, “As Democrats, we believe in reducing our dependence on foreign oil and protecting our planet. Today, America is number one in oil; number one in gas; number one in wind power.”

But if America is number one in oil and gas, it is certainly not because the federal government is making it easy to drill. During the Obama administration:

  • Fewer federal leases are being offered than in previous years.
  • Federal permits to drill have taken longer to be approved than during previous years, and
  • According to the Congressional Research Service, the permitting process is complex and cumbersome.

In fact, the Bureau of Land Management took 227 days on average to process an application for permission to drill in 2014. State agencies sometimes approve permits in 10 days, and leave many surface management issues to be negotiated between the oil producer and the private land owner. For obvious reasons, an oil producer would rather deal with one farmer than be ordered around by a complex and multi-faced federal government.

Now the Obama administration is seeking to raise royalty fees for oil and gas leases on federal lands. That’s a shame, since more complex rules and higher costs will result in less production, not more; all bragging rights aside.

This piece originally appeared in The Daily Signal