Unleashing Our Energy Resources: Dr. John Felmy, the Chief Economist for the American Petroleum Institute, Answers Questions and Clears Up Misconceptions about Accessing America's Oil and Natural-Gas Deposits
John Felmy is chief economist of the American Petroleum Institute (API), responsible for overseeing the organization's economic, statistical, and policy analysis. He has over 25 years' experience in energy, economic, and environmental analysis. He received bachelor's and master's degrees in economics from Pennsylvania State University and a Ph.D. in economics from the University of Maryland. John is a member of several professional associations, including the American Economics Association and the International Association for Energy Economics. He was interviewed at the 2011 Conservative Political Action Conference (CPAC) in Washington, D.C., by William F. Jasper, senior editor of THE NEW AMERICAN.
THE NEW AMERICAN: API is here at CPAC as they have been in years past. America's energy picture is still a very big concern to the American people. Where do we stand right now in terms of America's total energy picture?
Dr. John Felmy: Well, what we need to do is really make progress in energy policy. We need to first of all educate folks in what the reality of energy is because there is so much misinformation about where our energy comes from and how it's used. Once you understand that, we think that people will choose the proper course. Right now over 80 percent of our energy comes from fossil fuels. For example, over 94 percent of the fuel for transportation is oil. We have 250 million cars that don't run on electricity from solar or wind or other renewables; they run on oil. So, we need to lay those facts out and then make policy that helps the average American consumer.
TNA: What percentage of U.S. oil consumption comes from within the United States and offshore United States, versus foreign sources?
Dr. Felmy: Right now we're importing about 51 percent net of oil, down from 60 percent or higher a few years ago. Fortunately, we've been able to expand oil production in places like North Dakota. We've been able to expand offshore until this year. Those were promising areas. We've been able to expand our crude production, able to have some more energy efficiency, but we still import more oil from abroad than we produce here.
TNA: On the encouraging side, we have in North Dakota and Montana the Bakken oil developments. Those are new deposits that are being developed because the economic and technological processes have reached a point where it's productive there; it's economical to produce it.
Dr. Felmy: That's absolutely right. [Using] the new technology we have, which is primarily called hydraulic fracturing, we've been able to develop these vast resources. Now, North Dakota is the fourth largest state in oil production. The estimates are in the billions and billions of barrels, so they could produce a lot more. In fact, it's wonderful for their economy. You're seeing new jobs, more revenue, a whole host of positive signs from that oil production. We would hope that we can see that in other parts of the country, too.
TNA: This is not a small find, correct? This is large, a Saudi Arabia-sized find?
Dr. Felmy: It could easily be. We really don't know how big it is. The preliminary estimates were only about four billion barrels, which is still a vast amount of oil. But it could be an order of magnitude more times that. What we've learned from other developments, once you start getting into producing, you get sometimes four, five, six times the amount that you thought you could.
TNA: What other parts of the country have very promising or already developing deposits?
Dr. Felmy: In terms of oil, the most important is offshore. But unfortunately with the moratorium we had last year and the restrictions on permits--we call it a permitorium--activity has slowed to a halt in terms of new development. There is a vast amount of oil out there, maybe 40-50 billion barrels of oil offshore. Alaska is another opportunity where you have tens of billions of barrels of oil either onshore or offshore. …