As environmental organizations work toward their goal of keeping fossil fuels in the ground, a new study released Wednesday by the American Petroleum Institute (API) highlights the impacts this type of national energy policy would have on the U.S. economy and jobs.
The key findings of the study show a loss of 5.9 million jobs, a loss of $11.8 trillion in cumulative gross domestic product (GDP) and a potential increase in annual household costs of $4,552. In addition, the study estimates that the price of crude would increase by $40 a barrel (WTI), the price of natural gas would rise $21 per million Btu and electricity rates would go up 56.4 percent.
“Cutting U.S. oil and natural gas production wouldn’t magically reduce world energy demand,” said Jack Gerard, API president and CEO. “But it could raise costs significantly for American families and manufacturers, profoundly damage the U.S. economy, diminish our geopolitical influence, and severely weaken our energy security.”
The study assumes a scenario with no new private, state or federal oil and natural gas leases; a complete ban on hydraulic fracturing; no new coal mines or expansion of existing mines; and no new energy infrastructure including pipelines.
Prepared for API by On Location Inc. of Vienna, Virginia, Gerard said the study uses the same data and modeling employed by the U.S. Energy Information Administration (EIA) to forecast energy trends and impacts.
“While 80 percent of American voters support increased U.S. oil and natural gas production, a vocal minority are working to obstruct energy development and infrastructure projects, reducing our energy options under a false belief that oil and natural gas production and use are incompatible with environmental progress,” Gerard said. “Their vision is one of constrained energy choices, with less energy certainty and reliability, and with less assurance on affordable power.”
Gerard said the study vividly illustrates the reality behind anti-energy rhetoric and added, “This is what 'keep it in the ground' means.”
Under the most optimistic scenarios for renewable energy growth, Gerard noted that oil and natural gas will supply 60 percent of U.S. energy needs in 2040. Furthermore, he said projections show worldwide energy consumption will increase 38.6 percent by 2040 with 67 percent of this demand met by fossil fuels.
Gerard said the U.S. energy industry generates economic benefits for American families and businesses. For example, shale energy supported 2.1 million jobs in 2012—a number projected to increase to 3.9 million jobs by 2025. He believes increased energy production and infrastructure investment could create hundreds of thousands of additional jobs.
“Extreme activists would not only erase, but reverse, all those gains, taking the United States back to an era of energy dependence—all based on the false idea that we must choose between energy security and environmental progress,” Gerard said. “In reality, we lead the world both in reduction of carbon emissions and in production and refining of oil and natural gas.”