Tomorrow night at Hofstra University presidential debate moderator Bob Schieffer is sure to ask: "How does the economic crisis affect your plans for the future?" It will be the third debate in a row that candidates have heard the question, and it isn't getting any easier to answer. Having spent countless hours planning, no one wants to have to think about scrapping half their platform before they even get the job.
So we're going to help them. We're going to give them more than $1.56 trillion to fund future priorities. And we're going to do it by opening up a piggy bank that has been locked up for almost three decades, a piggy bank called the Outer Continental Shelf (OCS).
The OCS contains 85 billion barrels of oil. For each barrel of oil that is produced the U.S. government receives a royalty payment. Since the OCS has been off-limits for three decades the royalty amount has not yet been established. So let's look at Alaskan oil where the industry pays a royalty of $18.36 per barrel. Assuming the royalty will be similar, it is a simple calculation of $18.36 per barrel times 85 billion barrels that gives us our base funding number -- but wait.
These numbers are conservative. First, the United States has not physically inventoried the area in decades. Second, with new equipment and drilling techniques it is very likely to have much more than 85 billion barrels. This has certainly been the case in other areas such as Alaska. Thus, we could be talking about trillions of dollars in royalty payments to the citizens of the United States.
On top of the royalties, there would be corporate taxes in the hundreds of billions of dollars and income taxes on the thousands of jobs that would be created. Furthermore, these calculations do not even include the royalty payments on the 420 trillion cubic feet of natural gas in the OCS.
Congress, in the last few weeks, let the prohibitions on drilling in the OCS expire; however, many members want to reimpose them in the next Congress. Nothing could be more foolhardy, especially at a time when the revenue is needed. At some point this nation needs to pay for what it spends.
In addition to revenue there is another huge benefit. The 85 billion barrels in the OCS would also offset purchases of foreign oil. Even if oil dropped to $50 a barrel the United States would reduce its purchases of foreign oil by $4.25 trillion over the life of the OCS.
For decades, many in the business community have pushed to open up the OCS and have been frustrated by the fact that Congress locked up these reserves. Nevertheless, like many thing in life, it has worked out for the best. We now have a piggy bank with huge savings, just when we need it most.