We cannot discuss the issue of domestic oil development in a vacuum because natural gas development is part of that story. That said, the short answer is yes, any legislation should include provisions to encourage domestic oil development. And it is not only the oil and natural gas industry that supports domestic production. Developing a reliable and home-grown energy supply is also a vital part of our national security. Many citizens of the states in which it would occur strongly support increasing domestic oil—and natural gas—production because they recognize both the importance of developing home-grown energy options and, especially now, the financial benefit to their states in the form of leasing royalties and jobs. However, politics and the politics of fear—specifically baseless claims about the environmental and safety threats posed by domestic production—habitually frustrate the efforts of those who wish to take action to reduce America’s dependence on foreign energy.

America’s onshore and offshore oil and natural gas production has an exceptional record of safety and environmental stewardship. There has not been a single significant oil or natural gas spill from a production rig for more than 40 years, including in the Gulf of Mexico during Hurricane Katrina! Domestic production also reduces America’s overall carbon footprint because, in addition to natural gas being the cleanest fossil fuel on the planet, local production of oil would reduce the demand for foreign drilling, storage and transportation via enormous tankers, all of which make significant contributions to carbon output.

Finally, the best way to address climate change, while still providing America with the energy it needs to grow its economy, is with a wide-ranging set of options, which is why AGA has long supported, to the fullest extent possible, the development of a diverse domestic energy supply, including oil, nuclear, wind, hydro, solar and, of course, domestic, abundant and clean natural gas.

Accessing and utilizing natural gas, and all of America’s other energy resources, is a key piece to solving the energy, energy security and climate change puzzle. But it is also important to note that increased fuel diversity would also allow more natural gas to be used directly in the residential and commercial market, where, for more than 40 years, natural gas customers have led the way in increasing energy efficiency and conservation, while reducing greenhouse gas emissions.

Congress does not need to provide the oil and gas industry with any more “boosts” – the industry has been coddled by Congress with sweetheart tax breaks, exemptions from key environmental statutes, and various other benefits for far too long.

These policies have been quite successful to date in encouraging the “Drill America First” energy policy that has resulted in the U.S. having more oil and gas wells by far than any other country, and an oil and gas industry with ready access to tens of millions of acres of onshore and offshore federal lands.

The Obama Administration is on the right track with its proposals to get rid of various unmerited federal tax provisions that have in effect subsidized the oil and gas industry for decades. Instead of providing even more taxpayer subsidies for the world’s’ richest industry, the tax loopholes that have benefited the oil and gas industry for decades should be closed, and the additional revenues that would flow to the Treasury – tens of billions of dollars – should be devoted to assisting in the development of new, clean technologies and the implementation of the vast array of energy-efficiency measures that will reduce our dependence on fossil fuels, while maintaining and strengthening our economy.

The initial postings from oil industry spokespeople on this blog don't look very promising for the idea of a compromise over energy and climate legislation -- at least with the oil industry.

The cold hard facts are that the world needs, desperately, to burn less, not more, oil -- and that the US with only 3% of the world's oil reserves cannot expect, affordably, to continue to burn 25% of its annual production of oil.

Nor can thise nation keep itself safe while continuing to rely so heavily on a fuel whose reserves are largely located in countries who wish us ill -- or whose stability is highly dubious. (Yes, there are Canada and Mexico, but they alone cannot sustain anything like current US demand.)

Opening additional areas off the coast or in our remaining wild spaces to the oil industry won't meaningfully change any of these facts or the need to make a rapid transition to clean energy. Congress being Congress, something may end up in the final bill. It will make the legislation slightly less effective at reducing our addiction to carbon. It won't help us get off oil imports, whatever the industry says. But given the tepid industry response to the last leases offered in the Gulf of Mexico, it may do much of anything -- the resources simply aren't there.

Which may explain why -- at least in the first three postings -- the industry is desperately trying to shoot down this idea.

Of course, they don't offer anything better, or new -- just get out of our way, let the prices go back to $4/gallon, and let us bring in as much as we can from wherever it comes at whatever price. It's the siren song of a pusher to an addict.

This week’s question brings to mind Will Rogers’ observation:

Never blame a legislative body for not doing something. When they do nothing, that don't hurt anybody. When they do something is when they become dangerous.

That has certainly proven true in the last year when the government took over major companies in the name of saving our economy. Now, the last thing we need is more bureaucratic intervention in the private sector.

The oil industry has faced supply and demand uncertainties for its entire history and has done a good job of meeting consumer needs without intervention from Capitol Hill. It was not too long ago that Washington attempted to deal with shortages caused by the Arab oil embargo and, consequently, managed to make a bad situation infinitely worse. That experience proved the law of unintended consequences.

Without any help from the government, the oil industry has developed advanced technologies for more accurately finding oil and gas, for going back and recovering oil left in place with the then current technology, and for drilling at great depths—the Gulf of Mexico—and hostile environments—Alaska and Iceberg Alley off of Nova Scotia. Moreover, domestic companies have done this all without taxpayer money. The energy sector has built an elaborate refining and distribution system again with its own capital. And, given the opportunity, it will invest in finding new supplies based not on today’s prices but estimated prices over its long investment horizon.

Yes, demand will increase as economies recover from this global recession. But so will exploration activities. Today, the world’s excess production capacity is three times great than it was when oil prices spiked a year ago. And, while IEA projects a rise in future demand, it also projects that demand has essentially peaked and will not reach levels projected a few years ago.

A number of factors converged to send prices to $140 a barrel before the economic collapse caused it to drop precipitously. And, a lack of excess production capacity was just one of those. Before Congress lends a helping hand, it would do better to figure out all of the reasons that caused oil to spike last year and what role legislative and regulatory actions played in causing that spike.

The best things that Congress could do for the energy industry, American consumers and the larger economy involve removing regulatory barriers to domestic exploration, increase onshore and offshore leasing, adopt non-discriminatory tax policies, encourage more R&D and then let the industry do what it does best—find and produce abundant and affordable oil and gas. In addition, it should abandon its pursuit of a low carbon fuel standard, which has been shown to neither increase energy security nor reduce greenhouse gas emissions.

The recent increase in natural gas production demonstrates that the US is still rich in oil and gas resources. The problem is not a lack of technology or capital to develop them, it is the lack of opportunity caused by government policy. Oil industry jobs and those in its service industries are good, high paying ones. When investments are made in other countries, those jobs are created there, not here. By opening up oil and gas bearing tracts to exploration, those good paying jobs would be created here while the growth in imports from insecure sources would be reduced.

The cap-and-trade proposals Congress is considering are bad bills for many reasons, not the least of which is that they have the potential of costing millions of American jobs and driving up energy costs. Just as a new paint job would not make a clunker a better car, adding provisions to encourage domestic oil and natural gas development would not sufficiently improve them. Most senators understand that and are unlikely change their minds because of it.

The industry is not seeking help from the federal government. What it asks is that it be allowed to do its job of providing Americans the energy they need and want, in a safe and environmentally compatible manner. To that end, the government should uphold and live up to the principles that created the hugely successful oil and gas lease program for government lands, offshore and onshore. If allowed to work, this program would not only provide America with greater energy security, it would supply billions of additional dollars in revenue to state and federal coffers and add to the 9.2 million jobs for which the oil and gas industry is responsible.

As we’ve stated many times: we believe climate change needs to be addressed, but not through Kerry-Boxer, which, like Waxman-Markey, treats the country’s various economic sectors inequitably and adds significant costs to American consumers. It would make no sense to first take a positive step to help meet U.S. demand for fuels and natural gas, and then punish the people for using it. The best way to a low-carbon energy future is through research and development on new low-emission energy technology. That is why the U.S. oil and gas companies invested $58 billion since 2000 into this research -- which is nearly half of the total investment by all U.S. companies and the federal government combined.

The experts tell us that oil and natural gas will continue to meet more than half of our nation’s energy demand for decades to come. As the IEA tells us, we will need more oil as world’s economies recover. Unless we want to see yet more economic disruptions, our industry must be allowed to provide that energy.

Any government policy -- whether it’s designed to deal with climate change or energy -- that fails to recognize that truth is doomed to failure.

As the Kerry-Boxer cap-and-trade legislation emerges awkwardly from the Senate Environment & Public Works Committee to face an unknown fate, the whispers of “compromise” are already being heard in the cloakrooms. But what compromise could possibly make a cap-and-trade climate bill, in the midst of a severe recession, 10 percent unemployment, and fears of a jobless recovery, more palatable to legislators on the fence and environmentally conscious consumers back home? Not much of one.

The idea of providing incentives for increased domestic oil exploration and production through a “compromise” makes little sense within the context of climate change legislation written to specifically drive the refining community into economic oblivion, as the House and Senate versions of the bill set out to accomplish. H.R. 2454 and S. 1733 are purposely crafted in such a way that refiners are forced to pay for the free emissions allowances that other industrial sectors receive. The costs to domestic refiners, both large and small, would be staggering, and, as we’ve stated before, would result in reduced operations and potentially more facility closures beyond what has already occurred due to the recession and decreased demand. That means lost refining capacity -- capacity that would be needed to process whatever additional crude would be delivered under any proposed new incentives for domestic crude production. The Energy Policy Research Foundation (EPRINC) recently reported that even before domestic refiners face rising costs from carbon emissions, they will face a higher cost structure and increased foreign competition that threatens 2.5 million of the current 17.5 million barrels per day of domestic gasoline and diesel fuel refining capacity with permanent closure. The EPRINC study also found that in addition to the 2.5 million barrels per day of capacity at risk given the current economic climate, an additional 2 - 8 million barrels per day of domestic refining capacity would be threatened by the regulatory framework in H.R 2454, which mirrors S. 1733 in relation to transportation sector emissions.

If the United States produces more oil and gas domestically, but is forced to send its refining capabilities overseas, as would occur in the pending cap-and-trade proposals, then Congress would simply have endorsed the concept of exporting American oil to India and the Middle East to be refined into gasoline and diesel that they, in turn, would sell right back to American consumers at their costs under their own terms. A perceived benefit for the domestic oil, gas and refining community, under these circumstances, would in reality increase the nation’s reliance on foreign fuels – through the use of our own nation’s resources. In other words, a proposed reduction in crude imports through increased domestic production incentives would actually result in increased imports of refined products. A most counterproductive compromise indeed.