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Speech: America's Energy Security

National Press Club

Governor Sean Parnell

February 25, 2011

Thank you to the National Press Club for the opportunity to speak with you.

Recent events in North Africa and the Middle East have made clear the strategic importance of oil to America’s national and economic security. Gasoline prices at the pump are surging, the cost of goods sold will increasingly pull more money from every American’s pocket, and our economic recovery,…such as it is…is at risk.

This is the moment our federal government must re-examine its “no new wells” policy when it comes to oil exploration and development here at home. The U.S. foolishly imports more than 63 percent of its crude oil, leaving us vulnerable to economic shock from disruption of oil supplies from the international front.

The revolution that began in Tunisia, spread to Egypt and spurred uprisings in Bahrain, Libya –and beyond, – is far from over. It is central to the harsh truth that we, as a nation, have needed to face for some time. And that is, we have allowed our national security and economy to become ever-more tangled up in Middle East and North African oil. Let’s face it. We’re dependent on an open, free-flowing Suez Canal. A canal through an unstable region, the security of which has been purchased with American tax dollars for decades.

America has forgotten lessons of the past. Come with me, for a moment, back to the 1970s. The OPEC oil embargo. Lines of people at gas stations, Americans waiting for hours to buy gas. Fights breaking out in line. Rationing plans: Cars with even numbered license plates could buy gas on some days, cars with odd number license plates could fill up on other days. What waste of our national productivity – Americans fighting each other for a gallon of gas.

In just a few short months, the price per barrel rose by 130 percent. The power of OPEC became clear and indisputable.

One of the most significant-but-forgotten outcomes of that OPEC embargo was the Trans Alaska Pipeline system. Back then, Americans knew we needed to develop domestic energy to balance the power being wielded over them by “cartel oil.” For 40 years, the oil coming from Alaska has allowed our nation to stand with some degree of energy independence. It seemed a smart strategy at the time. But in hindsight, building the pipeline on American soil in Alaska seems positively brilliant. And it is certainly a fallback position if ever things go quite badly in the Middle East again.

I see Secretary Donald Rumsfeld’s face is everywhere these days with his memoir, “Known and Unknown.” For years, you heard the former Defense secretary here at Press Club talking about, “There are known-knowns, and known-unknowns,” etcetera.

Sometimes Alaskans feel like our state’s potential to help diminish our nation’s reliance on foreign oil is in the “unknown-unknown “category here in the Capital.

Here’s what we do know: Our oil supply line from the Middle East and North Africa is at risk, our military is stretched defending it, our national debt is $14 trillion and counting, and our economic recovery is completely dependent on access to secure, affordable energy. What could possibly go wrong?

Well, looking at the map of the Red Sea region, it’s kind of obvious: A known choke point of the Suez Canal at one end. And at the other, Yemen – a known major exporter of international terrorism. Thirty thousand ships pass by Yemen each year, with millions of tons of oil. To the southwest of that, Sudan. Political instability. War lords -- known and unknown. Civil war.

Further east: Pirates seizing U.S.-bound oil tankers off the coast of Oman, with $200 million worth of crude, in one of the biggest raids in the area to date.

The Oil and Gas Journal quotes industry leaders saying piracy in the Indian Ocean is spinning out of control and is threatening to disrupt flows of oil to markets in the U.S. and around the world.

Libya in revolt. / Iran sending warships through the Suez Canal on their way to Syria. The shortest shipping link between East and West hangs by a thread woven by American dollars. Egypt controls the Suez. What could possibly go wrong?

Well, that’s another “known.” A Zogby poll conducted last July for the University of Maryland reveals:

- 85 percent of Egyptians hold an unfavorable attitude toward the U.S.

- 87 percent of Egyptians have no confidence in the U.S.

- 92 percent of Egyptians believe the U.S. is one of two nations that is the greatest threat to them. The other is Israel.

I have travelled and briefly studied in Egypt, Jordan, and Israel, and have spoken to Egyptians, some of whom hold Americans in high regard. Still, we cannot ignore the overwhelming number who view our nation so negatively.

America does not have a seat at the table in the fledgling democracy taking root in Egypt. We think about what can arise in the coming months from Egypt. The next leader is going to have to take some act to show he or she is with them. And any new leader who emerges in Egypt will likely have to take a very visible, even if symbolic, stand against the U.S. to demonstrate they can politically lead that nation.

For over three decades, the U.S. has paid its share to the Egyptian military and the Israeli military under the Camp David Accords and effectively helped foster peace in a region between two very important nations—Israel and Egypt.

Beyond that, Americans’ tax bill to secure Middle East oil has been estimated at $7.3 trillion over the past three decades. Half the size of our national debt. This serves to remind us that the years of “cheap oil” -- cheap, with a big military price tag -- are coming to an end.

Yet for the past 30 years, America has also had a domestic buffer to the uncertainty of the Middle East. We are an oil producing nation. Millions of American jobs are directly tied to our energy sector. Oil – onshore and off-shore, and natural gas too, will be part of our national energy profile for decades to come. Our own federal government ought to foster more oil development at home.

Some of you may have heard that Alaska’s legacy oil fields are past their peak production. I’m here to address the reality. Alaska ships over 600,000 barrels of oil a day through the Trans-Alaska pipeline.

Alaska’s oil patch is not dry. Far from it. It contributes 11 percent of national oil production. Prudhoe Bay has supplied oil to the nation for more than 40 years. And there is much more available…if the federal government would allow access it.

But Alaska and the Gulf states have been blocked from developing America’s oil by misguided federal policy, much of it aided by misinformation and political agendas. And with the Middle East and North Africa a powder keg, and with Americans having to soon pay $4.00 or even $5.00 a gallon at the pump, the federal government’s “no new wells” policy will soon be revealed as our nation’s Achilles’ heel—much like what happened to us during the OPEC oil embargo of the early ‘70s.

In the President’s State of the Union speech, he made it clear that he wants to increase taxes on domestic oil production. We know that anything you tax more, you get less of. Less domestic production is the functional equivalent of creating more dependence on an unstable foreign oil stream.

The federal regulatory side isn’t any better and the Department of Interior and the Environmental Protection Agency appear to be driving U.S. foreign policy in the Middle East. In many senses, the State Department is forced into a reactive, mitigating role because of the increasingly hostile stance that Interior and the EPA have taken to domestic energy exploration and production. There’s a direct link.

These are agencies that can lock down domestic oil with no responsibility for the consequences. They can force America to depend ever more heavily on foreign oil, at enormous cost of lives, tax dollars, and economic opportunity. They do this by delaying leasing, delaying permitting for exploration and development, and by attempting sweeping lock-ups of lands without congressional approval or authority.

The Department of Interior in the past few years has acted like a shopaholic with a stolen credit card and a taste for Empire building. Recently, U.S. Interior Secretary Ken Salazar decided to evaluate 87 million acres of federal land in Alaska and millions elsewhere in the West as potential “wild lands.” That designation, if implemented in Alaska, would lock up Alaskan oil without Congress having any input at all.

Putting such a sweeping initiative in motion overnight, without congressional direction and without consulting the affected states or the public, is unfathomable. Large areas of Alaska, areas the size of the Eastern Seaboard, are already off limits to resource development.

For example, in 1980, Congress passed the Alaska National Interest Lands Conservation Act, known as ANILCA, and set aside 57 million acres as wilderness. Yet Interior is now shopping for more. Interior’s new view is an end-run around ANILCA. It creates a strong presumption in favor of wilderness-style protection that is contrary to the Bureau of Land Management’s mandate to manage for multiple uses. Many uses!

Another example: Interior has set aside for polar bear critical habitat a section of Alaska larger than the state of California. Picture an area the size of the East Coast, from north of Buffalo, up in Canada, running all the way to Georgia. That action will lead to endless, costly lawsuits and will prevent resource development.

Think of it this way: Let’s say you wanted to protect the Eastern Monarch butterfly’s critical habitat, but the butterfly migrates. So you protect the entire habitat of the Monarch, which means you set aside every inch of land east of the Rocky Mountains. Any construction in that habitat? Got to go through Interior.

The irrational set-aside for polar bears has been challenged by the State of Alaska and Alaska Native groups. If allowed to stand, it could have a severe chilling effect on our country’s ability to produce more American energy, making us more reliant on foreign oil.

Over at the EPA: This is the agency that received about a $3 billion dollar increase in its budget last year. It produced 42 “significant” regulation packages in the first 18 months of the current federal administration, each costing $100 million or more to implement.

In Alaska, an oil company can buy federal leases, spend over $3 billion dollars in permitting and capital costs, apply for an air permit from the EPA and five years later still not get it, when the same permit takes months in the Gulf of Mexico.

Federal inaction in that one case alone by Interior and the EPA has delayed the creation of 54,700 jobs annually and $145 billion in payroll. The federal agencies won’t call it a moratorium. But this raises a question: If it looks like a moratorium and walks like a moratorium…. Maybe it is.

The EPA and Fish and Wildlife—through the Corps of Engineers--delayed another oil development known as CD-5 in the Alpine Unit on Alaska’s North Slope by refusing to allow a bridge and pipe across the Colville River. The effect is to halt future exploration and development in the National Petroleum Reserve—Alaska.

So here’s the reality. The most promising federal lands for exploration and development in Alaska are blocked by federal agency action—NPR-A, the Arctic OCS, and the ANWR Coastal Plain. These all languish under this federal “no new wells” policy.

And that is why I say that the Department of Interior and the EPA are driving U.S. foreign policy because they are driving greater dependence on foreign oil at great cost to Americans.

As Alaskans, we are frustrated. We are frustrated to watch the nation’s fuel prices rise, to watch inflation take hold, and government debt spiral out of control. And, along with other oil producing states, we wonder why the federal government has become openly hostile to a sector of our economy that has created hundreds of thousands of jobs, kept the country on an even keel even during the recession, and produces a commodity we all use every day.

Like many Americans, we are asking our federal government…Do we matter?

Turn with me now to a fact that gets lost sometimes: America is one of only five Arctic Ocean nations. These five countries sit on more than 70 percent of the world’s undiscovered oil resources. That’s right; Alaska has 2,000 miles of Arctic Ocean Coastline.

We are seeing a global shift from onshore oil exploration to offshore and Arctic drilling. But America’s Arctic oil storehouse has a lock on it –notwithstanding that it holds as much as 33 percent of the Arctic’s untapped, but technically recoverable oil.

As I mentioned, exploration and air permits languish at Interior and the EPA, gathering dust. Energy companies, which must consider many regions for investing their capital, are not going to wait on a U.S. policy. They are voting with their feet. They are exploring the Western Siberia basin, the East Barents Basin, the East Greenland Rift Basin, North Greenland, North Chuckchi-Wrangel Foreland, North of Norway, North of Russia, and in Canada. Only America’s Arctic is left out.

We are an Arctic nation. Our entire circumpolar neighborhood is being explored for oil and gas development. Everywhere, that is, but America’s Arctic. If the Department of Interior and EPA continue these policies of not permitting drilling for oil in our Arctic, what is the result?

The other Arctic nations are moving ahead without us. Even China is exploring parts of the Arctic Ocean, with an eye on producing oil. Only the United States, which is sitting on the largest untapped, technically recoverable Arctic oil resources and has the greatest environmental oversight-- is sitting it out.

In conclusion, every aspect of America’s economic recovery depends on affordable energy. There is a limit to what we can control, and a limit to what we know.

Yet, we do know that more domestic oil production—not less—better secures our nation and grows jobs here at home.

We do know that more private sector work generated here has a positive multiplier effect on our economy as capital dollars and wages circulate at home rather than being sent overseas to pay for foreign oil.

We also know that our national security is at stake if significant portions of this nation’s energy supplies come from unstable areas and from unfriendly nations.

Alaska is one of America’s key storehouses of petroleum, and many other natural resources. But these resources will be left in the ground if the federal government’s “no new wells” policy is continued. That federal policy means greater gasoline prices at the pump for every American. It means more costly goods at the store. It means more job opportunities migrating overseas rather than being created here at home.

Alaska stands ready to create jobs, improve our nation’s energy security, our economy and our national security.

Let Alaska help put America back to work. Let’s take positive steps to lessen our dependence on foreign oil.

Thank you.

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