Rep. Upton: We Can Eliminate Mid East Oil Imports
CNBC Senior Talent Producer
Believe it or not, Capitol Hill is not locked in a partisan battle on ever issue these days. In a vote earlier this week of 279-147, the House passed the North American-Made Energy Security Act. Introduced by Rep. Lee Terry (R-NE), the bill would expedite a final decision on the Presidential Permit for the Keystone XL pipeline.
The expansion of the existing pipeline would bring oil from Alberta, Canada and North Dakota to U.S. refineries. Energy experts say the completion of the pipeline expansion would bring nearly 1.3 million barrels of oil per day into the U.S. market.
The expansion project would also create an estimated 20,000 jobs for its construction and many thousands of off shoot jobs. I asked Rep.
Fred Upton (R-Michigan) Chairman of the Energy and Commerce Committee, about the chances of this bill passing in the Senate and if it did, what this would mean to energy prices here in the United States.
LL: You have been a vocal supporter of not only improving the nation's economy but also strengthening our energy security. How will the bill just passed do just that?
Rep. Upton: According to the Department of Energy, this one project will "essentially eliminate" oil imports from the Middle East. It will create more than 100,000 jobs and strengthen our relationship with a close ally and trading partner. A project like this should be a no-brainer, and there's simply no good reason it has been stuck in the State Department's red tape for nearly three years.
LL: Every time I hear comprehensive energy bill or expanding our drilling on our soil, I just don't believe it. How optimistic are you that this bill can pass in the Senate?
Rep. Upton: We got a strong bipartisan vote in the Energy and Commerce Committee and on the House floor because this bill is a win-win for jobs and energy security. Hillary Clinton said last year she was inclined to support the project, so I am hopeful that passing this bill will finally prod the administration into making a decision.
LL: The US needs an affordable and sufficient energy supply, this will not happen overnight. How many years in the making are we realistically?
Rep. Upton: For years, people have been saying no to energy development because it will take too long. A decade ago, we were told we shouldn't open up ANWR because it would take ten years to develop.
But just imagine where we would be today if we had started developing our own resources back then? We should stop using time as an excuse for inaction, and focus on developing all-of-the-above today.
Developing our own resources will calm the market today, even if those supplies don't reach the market for years to come. Part of what influences prices in the marketplace is expectations about future supplies, and I want to be sure America is developing our own supplies for years to come.
LL: We have seen our energy dependence on foreign oil hit American consumers in their already thinning wallets. Drilling in the Gulf is non-existent. Jobs are still lost down in the Gulf. What has your committee's research told you?
Rep. Upton: America uses 19 million barrels of oil each day, but we're only producing about seven million. One third of our oil comes from the Gulf of Mexico, and production is down and expected to stay that way because of how this administration has clamped down on production.
This leaves us increasingly dependent on imports from unstable and sometimes hostile nations half a world away. I want us to pursue all-of-the-above when it comes to energy sources. But the reality is that more than 90 percent of our transportation fuel comes from oil today, and our energy security and economy depend on our ability to access safe and secure supplies.
LL: How many jobs would be created if the US was permitted to use our vast domestic energy reserves?
Rep. Upton: Today, we have about 1 million jobs for every million barrels of oil that we produce. We produce about 7 million barrels of oil today. If we double the amount of domestic oil we produce, we could see job increases of up to 7 million. That's not a bad start.
LL: How much would energy prices fall if the US was able to tap into our domestic reserves that are currently off limits?
Rep. Upton: Energy markets are complicated, and it's hard to predict how one single factor will affect prices. But we do know that when President Bush lifted the offshore drilling moratorium in 2008, the price of oil dropped by $9/barrel almost immediately. Energy prices reflect not just supply and demand today, but projected supply for the future. If we take steps today to safely develop our resources for the future, we can quickly and consistently hold down prices. I think the American people understand supply and demand, and they understand if we increase the supply of American-made energy, prices will come down.
It's as simple as that.
A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."
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