Engaging the Private Sector Is Key to Solving the Energy Challenge
A global energy summit held June 22 in Jeddah, Saudi Arabia, underscored the essential role of international cooperation in meeting global energy demand. The summit also highlighted the importance of the private sector in securing energy for the growing global economy.
The fact that business interests were even invited to the summit - which included representatives from 38 countries and many international energy organizations - demonstrates progress. The U.S. Chamber’s Institute for 21st Century Energy, led by General Jim Jones, was in Jeddah and played a key role in fostering discussion between government and business.
Governments have an important role in ensuring energy security for their economies and citizens, especially when it comes to providing regulatory certainty, limiting excessive lawsuits, and funding research. But it is the expertise and resources of private energy firms that will be critical to success.
Consider Venezuela, which exports about 60% of its oil to the United States. Although Venezuela has significant oil reserves, some energy companies have left the market largely because of restrictions and threats from the government of Hugo Chavez. As a result, production by the state oil company has declined significantly, falling almost 50% from its peak. What the state lacks is the expertise and technology that the private sector could bring.
Two-thirds of the world’s oil and gas reserves are in countries that substantially limit or prohibit investment from international energy companies. Some of these countries are learning the hard way that you can have oil in the ground, but it takes expertise, technology, and capital to bring it out of the ground, process it, and ship it safely and affordably to consumers. History shows that business knows how to do that much better than government.
As oil trades for $140 per barrel, now is the time for countries - including the United States - to expand and secure the role of private industry in energy development. In our Outer Continental Shelf (OCS) alone, there is an estimated 85 billion barrels of oil. However, 80% of the OCS is off-limits to exploration and production. With Americans feeling pain at the gas pump, we should expand our access to domestic energy. We must also resist any tax increase on energy producers that could discourage production and the development of new technologies or make it difficult to attract and retain the best human talent.
In solving our global energy challenge, business is not the problem - business is the solution. It’s time to let our international energy companies do what they do best.