The United States could create thousands of jobs, billions in revenue, make the country more energy independent and reduce the budget deficit if it properly handles the energy revolution and opportunities that are available, U.S. Chamber President and CEO Tom Donohue said Friday.
In Louisiana alone, unconventional oil and gas plays, shale formations, directly or indirectly supported around 80,000 jobs, helped generate $10.7 billion in economic activity and $1.2 billion in state and local taxes, said Donohue, who spoke at a Baton Rouge Area Chamber event at the City Club and later addressed a luncheon in Covington sponsored by the St. Tammany West Chamber of Commerce.
Cheap and plentiful natural gas from shale formations has revolutionized the nation’s manufacturing, giving the U.S. petrochemical industry in particular a big advantage over foreign competitors.
“I would tell you there are probably 50 European companies right now walking around this part of the United States, looking for places to put a factory,” Donohue said.
The energy revolution and manufacturing’s competitive advantage mean new jobs, stronger economic growth and more revenue. An abundant supply of domestic energy means higher productivity and exports.
Despite this, the United States is missing out on an enormous opportunity: developing offshore oil and gas resources. Roughly 87 percent of the offshore areas are off limits to drilling and exploration, he said. And the federal government is not being particularly helpful in furthering the energy revolution being driven by private industry.
The recoverable oil off the U.S. coast is greater than that in Asia and Europe combined. And the amounts are probably even higher because the estimates of those reserves are 30 years old. The federal government will not allow companies to take new estimates using state-of-the-art technology.
But if the surveys were done, Donohue believes they would show the United States has the most influence in the world in terms of energy resources.
Donohue said most people are laboring under an incorrect impression: that the country lacks an adequate energy supply.
But the shale developments have shown the United States is sitting on a 200-year supply of oil and more than 100 years of natural gas.
What’s needed, he said, is a faster permitting process for drilling and a predictable and fair regulatory environment.
The country needs to put the right infrastructure and policies in place if the United States wants to capitalize on these enormous resources, he said.
Donohue touched on a handful of other topics, including reforms to entitlement programs and immigration reform.
The country must reform its Social Security, Medicare, Medicaid and other entitlement programs or face economic ruin. Not a single entitlement program will be solvent in 20 years.
The cost for Social Security, Medicare and Medicaid is now around $1.6 trillion this year. Ten years from now, those programs will cost $3 trillion. Every day for the next 17 years, 10,000 Americans will turn 65 and become eligible for Social Security.
The system can’t pay for itself because people are living longer, health costs are higher and fewer workers provide the funding. When Social Security began, there were 40 workers for each retiree. Now, there are two.
Donohue said the U.S. could achieve large savings over time while having a very small impact on individuals. Relatively small changes to payments, benefits, eligibility, administration and overhead, coverage options, and program efficiencies could be made without harming the elderly, disabled and poor.
But entitlement reform will take courageous leaders, and no one in Washington, D.C., wants to talk about that.
Donohue said Congress should also reach a compromise on immigration reform, and an agreement in that area could lead to a breakthrough in the budget process. The Senate hasn’t voted on a budget in four years. That’s got to stop.
So does this: “So many people in this country are saying, ‘We don’t want to let those people in.’ Well, who the hell do you think you are? You are those people,” Donohue said.
What’s needed is an immigration policy that secures U.S. borders, an employment-based visa program that lets business use immigrant labor when U.S. workers aren’t available, and a reliable national employee verification system. The reform also needs to address undocumented workers — there are roughly 11 million in the United States — because the economy relies on them.
Donohue touched on many of the same themes in Covington, but also hammered on how government overregulation is restricting economic growth, pointing to the Keystone Pipeline as an example of a vital project that is being stymied by Washington.
He criticized trial lawyers and the role that they have played in the aftermath of the Deepwater Horizon disaster. BP has a responsibility to make things right, Donohue said, and many small businesses were hurt in the oil leak. But he blasted lawyers, who he said are recruiting people who suffered no losses and are showing them how to game the system, making a mockery of the process.
Courageous elected officials are crucial, Donohue said, but “business isn’t off the hook.’’ After Hurricane Katrina, it was the private sector that came to the rescue. “Nobody asked, we just did it,’’ he said, bringing water, food, generators, vehicles and equipment. Bureaucracy, by contrast, got trapped in red tape.
The private sector has the flexibility, ingenuity, ideas and responsibility to lead, he said, while government’s role is to provide infrastructure and support.
“Business is the solution, not the problem. We need to rally around and provide the leadership this country needs,’’ he concluded.
Advocate St. Tammany Bureau Chief Sara Pagones contributed to this report.