In 1789 after the finalization of the U.S. Constitution establishing a separation of powers between three branches of the federal government, Benjamin Franklin penned a letter to Jean-Baptiste Leroy which included a worry that even with Franklin’s enthusiasm for the document’s permanency “…in this world nothing can be said to be certain, except death and taxes.” Well, in our modern society there is one other certainty it appears we can come to expect: humanity will demand more energy tomorrow than it demands today.
In late 2021, the U.S. Energy Information Administration (EIA) projected that by 2050, global energy demand would increase by 47 percent. This report projected that by 2050, liquid fuel (oil and natural gas) would make up only 28 percent of global energy supply. However, because of the increase in global demand, this still assumed that liquid fuel demand would increase by 36 percent between now and then. In other words, even with an increase in the portion of global energy demand satisfied by other sources, such as wind, solar, nuclear and coal, the world’s demand for oil and natural gas based fuels will still grow by 36 percent in the next 30 years.
On behalf of the members of the PBPA and the oil and natural gas producing region known worldwide as the Permian Basin, we stand ready to do everything we can to satisfy that demand. We stand ready to provide people around the world with affordable, reliable, and consistent energy. We stand ready to provide power for clean water, cooking, and protection from the cold and the heat. We stand ready to lift people out of poverty and to improve the quality of life for all. It would seem logical that the Permian Basin should be a large part of the answer to the world’s growing energy demand. Not just because of our abundance of energy, which includes wind and solar along with a century-long history of hydrocarbon production, but because of our infrastructure, workforce, efficiency, and comparably low carbon intensity.
Yet, while logic and even political rhetoric at times points towards growing production from the Permian Basin as the solution to energy demand and economic concerns, our industry, and region, have received mixed signals from Washington, D.C., on our importance. We have been asked to produce more oil, to help decrease the cost of gasoline and to alleviate inflation, to produce more natural gas to strengthen energy security at home, and to help our allies overseas. Yet, what seems to be a continuous strand of new and ever more complicated regulations from an alphabet soup of federal agencies are proposed on a daily basis. Whether it is the FWS, SEC, EPA, DOI, BLM, OSHA, or any other federal agency making the proposal, each one they propose is calculated to restrict operations and each effectively increases the cost of fuel for the world.
At the end of June, earlier this summer, evidence of a sea change regarding this unending bombardment of regulatory action came in the way of the U.S. Supreme Court’s decision in West Virginia v. EPA. Directly, the Court’s decision provides that the U.S. Congress did not grant the U.S. Environmental Protection Agency (EPA) the authority to enact the Clean Power Plan, and therefore it was a violation of the separation of powers between the executive and legislative branches of our federal government. Any domino effects of this opinion are yet to be known, but many in our industry and around the country will continue to monitor the actions of those in Washington, D.C., and courts around the nation to see what this opinion will truly mean for governance and regulation moving forward.
As is clear from the EIA 2021 report, oil and natural gas will continue to be a part of not just our world’s economy but the solution to ever growing energy demand. With proven reserves showing the ability to produce hydrocarbons for decades to come, how big of a part will depend on our leadership in Washington, D.C. However, for whatever demand we can satisfy, the Permian Basin stands ready to produce. If you tell us to jump, we will ask, “How high?” We just hope the weight of regulation doesn’t keep our feet from leaving the ground.