Drilling depends on funding the regulators

President Barack Obama is calling on oil companies to increase production in the US, accusing them of sitting on tens of millions of unused and unexplored acres of leases on public land waiting to be tapped. But this must be put in context.

It would be one thing to make this accusation if companies were simply able to lease acreage and set to work exploring, drilling and producing. But the reality is not so. Even before the Macondo accident in the Gulf of Mexico, regulators have long forced oil and gas companies to go through a variety of hoops before producing on a lease. In some cases, they did approve permits without proper scrutiny, but there were many others, such as in Wyoming, where they forced the industry to go above and beyond before granting permission to drill.

And the Macondo incident has made getting approval to drill far tougher in the Gulf, where new regulatory rules – requiring more people with more expertise to grant approvals - have considerably slowed down the process. Activity in Alaska also has come under so much scrutiny that Royal Dutch Shell had to cancel plans to drill this summer. And this slowdown in permitting cannot be sped up without the people with the expertise to ensure it is being done safely.

This is an argument regulators have made, and that Congress and the Obama administration have heard. Only if sufficient funding is approved to ensure companies are allowd to explore and produce as quickly as possible, can they be blamed for holding leases without an obvious plan to develop.

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