Unlocking Resources Could Fix the Financial Crisis

Marita Noon
Issue CLXXX 
December 17, 2008
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America is taking a new look at our most northern state due to Sarah Palin’s recent sudden prominence on the public platform. Previously, the majority of us haven’t given Alaska a thought. Now we know that Alaska ’s citizens don’t pay taxes and even get a bonus check each year from the state government. Why is Alaska in such good financial shape while many other states and the federal government are facing record deficits?

The answer is simple. Alaska maximizes its development of natural resources. The US Congress has put much of our natural resources in a lockbox, preventing us from tapping into their wealth. Unlocking them could mean added relief at the gas pump and on Wall Street. Extracting our resources would provide jobs for our nation’s unemployed, spurring spending, and flood the federal coffers with cash. It sounds too good to be true—but this plan is real!

In New Mexico , where I live, we have the Valle Vidal which contains one of the nation’s largest known reserves of natural gas—yet Congress locked it up with the Valle Vidal Federal Protection Act. The American people cannot get the financial benefit of this natural resource. At the edge of the Valle Vidal there is an invisible line. On the other side of that line is a private ranch with 1000 natural gas wells extracting 68 MMcf per day—essentially putting their straw into our cup and sucking out the resource. We could assume that if we were allowed to drill on our side of the line, we’d have similar results, and that would pour more dollars into the federal accounts in leases, royalties, and taxes. Not to mention the increased supply. Remember: increased resources usually mean lower prices for those of us who use them.

Off the southern coast of Florida there is another invisible line. This line separates the United States from Cuba . Again, there are known resources under U.S. waters—estimated to be 3.7 billion barrels of oil and 21.5 trillion cubic feet of natural gas in the eastern Gulf of Mexico. We in America have been prevented from accessing that resource. Meanwhile Cuba is making plans to lease the mineral rights on its side of the invisible line—just 50 miles off the shores of Key West . Would you rather trust Chinese drilling rigs and Cuban oversight? Shouldn’t Americans be sipping from that cup?

In a totally different region there is another invisible line. In the Great Lakes, America is also prohibited from drilling as a part of a 2005 comprehensive energy bill. If the ban were lifted, it is believed that at least 30 wells could recover the reserves. On the other side of the invisible line, Canada allows offshore drilling for natural gas, as well as directional drilling for oil, and has been producing both from under Lake Erie since 1960, with 500 natural gas wells and 22 oil wells. Canada is the source for some 16 percent of our natural gas, but wouldn’t we also like to see the financial benefit from production of American energy resources going to help offset America’s trade deficit—and lowering the cost to consumers?

In the midst of the current financial crisis, big energy news happened, but received virtually no press coverage: the offshore drilling ban expired after being in place for 26 years. The rescue bill is $700 billion. Federal estimates indicate that opening up the restricted areas would bring more than $900 billion in royalties and taxes alone—not counting bonus bids or rents on leases which are paid annually until production starts, or the flow on from this production.

This is a huge opportunity for Americans. In this election season we have the chance to shape the future; we can vote for representatives who support unlocking the resources! Many of those up for a vote are on record as wanting to reinstate the ban. Others want to drill here and drill now.

The Pickens Plan is right when it touts natural gas as a clean alternative that can be incorporated almost immediately. Also correct is the fact that the “alternatives” are not ready yet. Pickens is accurate when he says that we have all the resources we need right here in America . But let’s take it a step further, follow Alaska ’s lead and access those resources! America needs energy freedom. America needs to refill its empty bank accounts.

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