In what is being labeled as “Onshore Oil and Gas Leasing Reforms” Secretary of the Interior Ken Salazar announced tougher new leasing rules that will inevitably make it more difficult and more expensive to drill for oil in the United States. Despite the recession, gas prices have crept up steadily in the past year – about a $1 increase per gallon from a year ago today. The national average is currently $2.68. Instead of increasing access to supply and creating jobs the administration is doing more to limit opportunities – or at least have it take longer to make use of those opportunities and make them more expensive. The Institute of Energy Research president Thomas J. Pyle weighs in:
“When it comes to paving the way for the responsible development of homegrown, job-creating energy resources, no administration in history has done more to ensure producers do less. It’s a superlative not achieved by accident. Over the course of a single year, we’ve seen the Interior secretary block commonsense exploration through a number of creative means – from executing a pocket veto on a sensible plan to produce offshore, to outright rescinding existing lease contracts in Utah.
But while the means and methods have changed, the loser continues to be the American taxpayer. In 2008, the Interior Department collected 10-times the amount of revenue from lease sales than it did in 2009. Thanks to today’s announcement, that number has nowhere to go but down in 2010.”
The biggest loser is the American taxpayer and the American energy consumer, but the government is losing out, too, adds American Petroleum Institute president Jack Gerard:
“Since Salazar has taken his position, revenues from federal onshore oil and gas leasing in the five states that make up the Inter-Mountain West (Colorado, Montana, New Mexico, Utah and Wyoming) have plummeted over 80 percent, and the amount of total acreage leased by the government has shrunk to the lowest level on record. In Wyoming alone, nearly 70 percent fewer lease acres were issued by the federal government in 2009 than in 2008.”
Although the reforms aim to bring consistency and certainty, it will only reduce the incentive for companies to pursue projects that would increase jobs and the supply of energy without the help of the federal government. And it could be just the start. There are host of other things Congress and the Obama administration are doing to bring back higher energy prices. Senior Policy Analyst Ben Lieberman explains, and offers more prudent alternatives, in this paper.
Federal stimulus spending is stimulating business for contractors helping the government figure out how to spend the stimulus money, reports the Washington Post. Government agencies say they can’t properly oversee the $789 billion stimulus package without hiring outside help. As a result, the region around the nation’s capital is doing just fine. Reports the Post:
Of the stimulus grants and contracts awarded so far, the District has received nearly 10 times as much per capita as the national average, and Maryland has received more per capita than much harder-hit states, among them Florida, Michigan, Nevada and Ohio. Virginia’s statewide average is relatively low, but of the 496 stimulus contracts the state has received, two-thirds of them, with a total value of $562 million, have gone to Northern Virginia, home to hundreds of contractors.
Virginia’s unemployment rate is 6.6 percent, and Maryland’s is 7.3 percent, well below the 10.2 percent national average. And data released Wednesday puts the Washington metro area’s unemployment rate at 6.2 percent, an increase of two percentage points over last year, while the jobless rates in other metro regions has gone up much more – to 9.3 percent in New York, and above 10 percent in Chicago, Atlanta and Los Angeles.
The Post article identifies a number of the contractors getting multi-million dollar contracts from the feds, including Fig Leaf Software. Fig Leaf won a $1.1 million Interior Department contract to build a computer system for stimulus funding recipients to report back to the government. The contract enabled Fig Leaf to hire three more people at its office in the District. Dave Gallerizzo, a principal at Fig Leaf Software, told the Post: “I look around the country at all the places that are hurting and the one place that has jobs is here. And I don’t have a problem with it. If the money went to Michigan and employed three people there, what’s the difference?”
That, of course, is the “drop the money out of an airplane” theory of government spending, which, we would like to think, is not normally espoused by the people hired to help the government keep track of how it has spent its money.
(Cross-posted at InsiderOnline.)
Update: In the comments below, Mr. Gallerizzo says the Post quoted him selectively and he provides the full quote he says he gave to the Post. We quoted him directly from the Post article, and in so doing it seems we have incorrectly imputed to Mr. Gallerizzo the view that all government-created jobs are equal. The point we make—that bureaucracy plays the role of leaky bucket in government transfers of wealth—remains valid; but we agree that this is not Mr. Gallerizzo’s fault.