Sep 05 2012
U.S. Senator Orrin Hatch (R-Utah) today spoke at the Uintah Basin Energy Summit held at the Western Park Arena in Vernal. The summit was organized by the Daggett and Uintah County Commissions and discussed a number of issues important to Utahns and development of our natural resources, including expansion of current development, Bureau of Land Management (BLM) guidelines, and the economics of the energy industry. Hatch is a member of the Senate Western Caucus and the chairman of the caucus’ Public Lands Subcommittee, and has made increasing domestic energy production a priority of his.
In his remarks, Hatch said that “Commercial oil shale production is on its way in the Intermountain West, in spite of the best efforts of the present administration. And the lion’s share of the world’s oil shale sits in the United States, mostly on federal lands in regions already active in energy development.” Hatch added that “Unfortunately, the president seems determined to keep us dependent on expensive energy and foreign oil. He has taken every step imaginable to stop domestic coal production and oil production on public lands and offshore, and he has been very creative in trying to stop oil shale and oil sands development on federal lands.”
Hatch’s full remarks are below:
I’m very pleased to have been invited to participate in this important Energy Summit, and I give credit to the Daggett and Uintah County Commissions and all those who have helped to organize this event. You know better than most that energy is the lifeblood of a healthy economy. According to the Department of the Interior, Utah ranks fourth in the nation in federal revenue from energy production. And regions like the Uintah Basin fuel our nation’s strength and international competitiveness.
When I’m in Vernal, I feel like I’m home. My great grandfather, Jeremiah Hatch, helped establish a small settlement on the bench of what was becoming Uintah County. That small settlement was first named Jericho, then Hatch Town, then Ashley Center, and finally Vernal. I’m sure those early farmers had no idea this remote community would one day become the base for one of Utah’s, and our nation’s, critical energy centers. But they knew they were doing something important.
Over the last century our nation has consumed 1,090 trillion cubic feet of natural gas, about 60 billion tons of coal, and more than 340 billion barrels of oil. The real miracle is that there is plenty more where that came from, and we’re only now beginning to tap into our very abundant oil shale resources.
In the past, global oil production reflected a pipeline filled with light sweet crude, on which the West Texas Intermediate standard was established. But today, light sweet crude is being replaced with increasing levels of heavy and unconventional oil products sold at a discount to WTI.
Unconventional oil consists of heavy oil, oil sands, oil shale, and coal to liquids. It is because of Alberta oil sands that Canada is now second only to Saudi Arabia in proven oil reserves. Alberta’s neighbor Saskatchewan is just beginning oil sands development. It is a significant but oft-ignored fact that Canada is the top U.S. energy supplier. There have been times when as much as 40 percent of the oil refined and sold in Utah has come from Alberta oil sands.
Along with the shift toward global dependence on unconventional oil comes a geopolitical shift away from the Middle East and toward the region with the largest, best, and most accessible unconventional resources — North America. The total combined proven world oil reserves equal roughly 1.2 trillion barrels. A recently published Department of Energy report conservatively estimates that recoverable oil from oil shale in just Utah, Colorado, and Wyoming would be 800 billion barrels or more depending on technological advancements since the 1970s.
The Oil Shale and Tar Sands Development Act — now known as Section 369 — which I worked hard to enact, called on the Department of Energy to begin developing North American energy partnerships. In working on that legislation, I believed that with advances in technologies related to conventional and unconventional energy resources, North America would become increasingly dominant as an energy region.
Commercial oil shale production is on its way in the Intermountain West, in spite of the best efforts of the present administration. And the lion’s share of the world’s oil shale sits in the United States, mostly on federal lands in regions already active in energy development. The Rocky Mountain Energy Corridor extending from Alberta down through New Mexico contains more recoverable energy in oil shale, oil sands, coal, coal-to-liquids, and natural gas than the entire world’s fossil fuel reserves a few times over. Energy resources in the Rocky Mountain Energy corridor give North America the choice of becoming the next global energy power.
I am pleased that Governor Romney has made this a priority in his energy plan for our nation. I agree strongly with his assessment that our nation has sufficient domestic energy resources to become independent of non-North American energy sources — if only our government would allow the free market access to our domestic resources.
Unfortunately, the president seems determined to keep us dependent on expensive energy and foreign oil. He has taken every step imaginable to stop domestic coal production and oil production on public lands and offshore, and he has been very creative in trying to stop oil shale and oil sands development on federal lands. Apparently, the President would rather ship in oil from the Mideast, Russia, and Venezuela than develop it at home or even bring it down from our friendly neighbor to the north. Just by allowing the Keystone Pipeline, the U.S. could reduce our imports from OPEC from 47 percent down to 35 percent.
Moreover, inaction on domestic energy production has cost Americans hundreds of thousands of good paying jobs. A recent Wood Mackenzie study found that if our nation were to allow more domestic energy production in the next two decades, an additional 1.4 million jobs would result and federal and state governments would enjoy more than $800 billion in additional revenue. According to the study, it would mean more than 40,000 new jobs in Utah alone.
Inaction has also cost our federal and state governments billions of dollars in lost revenue from federal energy royalties. In 2011 — just from oil, natural gas, and coal development — Utah has added $432 million dollars in direct payments to the federal government, and almost $150 million for the state of Utah.
But the benefit of allowing the free market to make energy choices goes beyond even jobs and government revenue. More energy jobs mean more domestic energy which translates into lower energy prices across all sectors of the American economy. This goes directly to our national competitiveness.
Government officials in Europe bemoan the fact that energy prices in their countries are three to four times as high as in the U.S. They wonder how they will be able to compete in a global economy against the United States and China, when the cost of doing business in their countries is so high.
That’s a pretty good question, and the answer is that they won’t be able to compete.
Unfortunately for the Europeans, you reap what you sow. Too often, Europeans have turned the steering wheel over to the green movement and relegated real energy policy to the back seat. The fact of the matter is that no alternative fuel is widely available to consumers that can compete with coal for electricity, or with natural gas or petroleum for transportation fuel.
Yet rather than allow the free market to make the best choices for our nation, policymakers in Washington too often seek to pursue other unrelated goals under the guise of energy policy. They have pushed agricultural policy, environmental policy, and climate policy all in the name of energy policy, when in fact, these policies often make energy more expensive and our nation less competitive.
While energy policy is a critical element for America’s continued economic growth, it is also essential that we look at tax policy. Before we even get to tax reform, we need to deal with our current tax system. Congress has yet to address the historic tax increases set to occur in January of next year. If allowed to go forward, this tax increase would raise taxes on practically all Americans.
Federal Reserve Chairman Ben Bernanke has described these looming tax increases as a massive fiscal cliff when testifying before Congress. The Washington Post has called them Taxmageddon.
This tax hike will affect virtually every single federal income tax payer. We cannot allow this to tax increase to go forward. America is slowly recovering from one of the greatest recessions in modern history. We remain in a precarious economic situation, with a fragile recovery.
And contrary to the President’s assertion, the private sector is not doing just fine.
It is beyond irresponsible for the administration to sit idly by and allow this scheduled tax hike to occur.
Once we address this fiscal cliff, one of our greatest priorities will have to be reform of our tax code.
Our income tax system — enacted in 1913 — and corporate tax system — enacted in 1909 — are now about 100 years old. Although they have been amended many times over the last 100 years, it is time for a fresh start. We need a tax system that achieves the goals of economic growth, fairness and simplicity — not for an economy in 1909, 1913 or even 1986, but rather for the global economy of today and beyond. We need a tax code that helps to create a strong, robust, dynamic, job-producing economy.
When discussing tax reform, I believe the plan should be to promote economic growth, fairness, simplicity, revenue neutrality, permanence, competitiveness, and savings and investment.
Last year, along with most of my fellow Republicans on the Senate Finance Committee, where I serve as the Ranking Republican Member, I recommended to the bipartisan committee on deficit reduction that a new tax system include the following elements.
The income tax rate for individuals and corporations should be no higher than 25 percent. American corporations are subject to the highest federal corporate tax rate in the world. The current top corporate tax rate of 35 percent is clearly too high in today’s global economy. The average corporate tax rate in the Organization for Economic Cooperation and Development countries is about 24 percent.
The tax plan repeals the AMT, an albatross around the neck of millions of American taxpayers.
The tax plan adopts a territorial tax system. Business income earned abroad should not be subject to tax by the United States, either at the time the income is earned or when the earnings are brought back to the United States.
The tax plan would ensure that the income of small businesses would continue to be subject only to a single level of tax, computed with a minimal amount of complexity.
And, of course, we would repeal the over $1 trillion in new taxes, penalties, and fees in the President’s health care law.
I truly believe these proposals are not only achievable. They are also necessary if we are going to secure a foundation of robust economic growth.
The United States, and certainly the state of Utah, grew out of the desire of individuals to make their own choices. I believe it is always in the best interest of the people for government to protect that commitment to personal liberty. And I am confident that a commitment to liberty and free enterprise — and a rejection of overregulation and taxation — will help to provide individuals and businesses with the affordable energy resources necessary for a growing and vibrant economy.