Guest editorial: Energy and economy
Certainty. It's hard to come by in the best of times, but nearly impossible to find in challenging economic times like these.
What did Ben Franklin say? "In this world nothing is certain but death and taxes."
We also thought federal laws were certain. When the Bureau of Land Management auctioned 116 parcels of Utah land in December during its quarterly lease sale for oil and natural gas development - as required by federal law -- it was reasonable to believe the lease sales were valid. Imagine our surprise to learn that the law is not so certain after all when the United States Department of the Interior cancelled legally valid leases sold for 77 parcels of federal land here in Utah.
Maybe we should revise the old saying: Nothing is certain but death, taxes and the unpredictability of the federal government.
The oil and natural gas investors who trusted that the leases were valid were beginning to execute plans for investing in the development of their rightful properties. They were stunned by the Interior Secretary's announcement. Investors, as a rule, don't like surprises. They much prefer reliability and certainty.
With the cancellation of the Utah BLM leases, the Obama administration signaled the business and investment community, here and abroad, that it will "flip flop" on federal government commitments. It can literally take back what it has sold, if it wants. Investors will likely read the Interior Department's action as anti-business. If they do, they will conclude that investments in U.S. energy development are too risky, and take their money elsewhere - like overseas.
At this time, as the nation sinks deeper into recession and more people and institutions look to Washington for aid, you would think the federal government would embrace industries like those in the energy sector. Energy companies are poised to invest in new development, create new jobs and generate new revenues right now. These are, after all, the stated goals of the president's reinvestment and recovery plan.
The "green jobs" contemplated in the economic stimulus plan won't exist for years, as new industries develop around alternative and renewable energy sources. Those jobs will come too late to help the current recession. Utah's energy sector as we know it would create new jobs over the next few weeks and months, boosting the national economy as well as Utah's state and local economies. One expert estimates that expanding offshore drilling and opening up new sites in Alaska and the Rockies (including Utah) could result over time in some 160,000 new jobs and generate about $1.7 trillion in revenues for all levels of government. Isn't that called "stimulus?"
Some say that with the worldwide decline in oil prices, exploration here in Utah is a moot issue. But does anyone believe oil will stay down forever? Does anyone really believe that wind and solar - as important as they may become - will completely replace our need for domestic oil, coal and gas? These may be the same people who believed housing prices would go up forever, as would the stock market. The day will yet come when we will need every domestic energy resource available. Preparation today could help avoid an economy-damaging mad scramble when that day comes.
Utah will be hurt by the Interior Department's reversal on the lease sales. Our state would have enjoyed the creation of good-paying jobs and the benefits of a cash infusion as investors proceeded to develop their parcels. Although Utah's unemployment rate is below the national average, we still have the need for new opportunities and enhancing existing ones.
With the recession looming larger and the economic stimulus package looking less promising every day, the investments the energy industry is prepared to make couldn't be more timely and crucial. The development of Utah's parcels would have helped the U.S. produce much-needed energy safely, responsibly and within its own borders - an important step as our nation tries to accelerate domestic energy production.