June 2014 Brief: Volume 21, Number 18
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The Grasshoppers (And Workers) Are Making Money,
by Deborah D. Thornton
When our parents took us on vacation as children, as we drove through Louisiana, Oklahoma, and Texas, my dad would point out oil pumpers on the roadside, saying, “The grasshoppers are making money!” As they moved up and down, some slowly – some quite fast – looking exactly like grasshoppers eating; he would explain that oil was being pumped from under the ground to provide gasoline for cars and fuel for heating homes. On one trip we actually were able to climb the metal stairs on an oil storage tank in the Texas panhandle and look out over the land, both impressed that magical things were happening underground and scared at how high up we were.
That was in the mid-1960s. Fast-forward 50 years later. Grasshoppers and people are still making money from oil and gas, except not on federal lands.
The oil and gas boom driven by free-market demand is providing hundreds of good-paying jobs in states such as Pennsylvania and North Dakota. In these states, most land is privately owned and private enterprise has figured out a cost-effective way to get the oil out of the ground. As a result, according to the Office of Natural Resources Revenue, the United States produced over 7.2 million barrels of oil per day in 2013, up from 5.2 million barrels per day in 2009. This is over a third more.
The International Energy Agency reports that the United States will become the top oil producer in the world, ahead of both Russia and Saudi Arabia, by 2015. Our crude distillation capacity is already number one. In 2012 we were already the top natural gas producer, at almost 20 percent of the world’s total. We were number two in coal production at 12 percent. Finally, even with all the efforts by radical environmentalists to halt nuclear energy production in the U.S., we remain number one, ahead of France, producing almost 32 percent of the total nuclear energy in the world. Energy independence is a reality.
However, the amount of both oil and natural gas coming from federally owned lands has fallen, both in real terms and in percent of the total production. In 2009 there were 1.7 million barrels of oil per day; today there are only 1.6 million. This represents a fall from 34 percent of daily oil production to only 23 percent.
In natural gas, the amount produced on federal lands has fallen from 25 percent in 2009 to only 15 percent in 2013. This is important because the federal government owns about 279 million acres of land, most in the Western Plains states. Of this land almost 60 percent is off-limits to oil and gas extraction. Over 50 percent of the land which is leased for potential drilling is not in production. The end result is that only about 11 million acres, or less than 5 percent of 279 million total acres of federally owned land are actually actively producing oil and gas. The grasshoppers are not making money, and neither are the workers.
According to the Congressional Research Service, federal drilling permits took an average of 194 days to process in 2013, compared to as little as 10 days for a private-land, state-approved permit. Ten days compared to 194. The grasshoppers are not making money – neither are the workers.
The states where oil and gas production is growing, North and South Dakota, Oklahoma, Montana, and Wyoming, have some of the lowest unemployment rates in the country. Oil and gas workers make very good money. The average hourly salary for a welder is $22, for a supervisor $43, and for production managers over $72 per hour. Electricians make an average of $31 per hour. Many other businesses support the workers and the processing of oil and natural gas.
The economy was at a virtual standstill in the first quarter of 2014. Unemployment remains high and long-term unemployment, resulting in a loss of skills, drives more and more people completely out of the potential labor force. In a March NBC News/Wall Street Journal poll, 57 percent of those polled said we are still in a recession. Only 27 percent believe the country is “headed in the right direction” and even fewer think the economy will improve in the next year.
When you consider the lack of federal support for the oil and gas industry, for our jobs, our workers, and our families – and you don’t see grasshoppers on the side of the road working – one has to agree. If the President really wanted to reduce income “inequality,” he would direct the Environmental Protection Agency and the Department of the Interior to release the federal land for leases and would return much of it to the states. The federal government should not be sitting on millions of acres of potentially productive land.
Increased production of oil and gas results in lower prices for families trying to heat their homes and take their children on vacation. These children, like we did, need to see and feel the awe of watching huge mechanical “grasshoppers” working to make their lives better.
Deborah D. Thornton is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact her at Public.Interest.Institute@LimitedGovernment.org.
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