Oil-funded study: More drilling would add 1 million jobs (Reuters)

WASHINGTON (Reuters) – The United States could create more than one million jobs by 2030 by expanding offshore drilling, limiting federal regulation of shale gas development and quickly approving a Canadian oil sands pipeline, according to a study commissioned by a major oil industry trade group.

The study's bottom line would depend on some major policy shifts by President Barack Obama and Congress, and comes just ahead of a key speech by Obama on his plan to boost U.S. employment as the nation struggles to regain its economic footing.

The study was conducted by consulting firm Wood Mackenzie, and paid for by the American Petroleum Institute, and the findings were released on Wednesday. The consultants found that 1.4 million new jobs could be created through more oil and natural gas development.

"Our new analysis is what our industry has to offer: jobs, increased federal revenue, economic and energy security. Our industry has long been a leader in these areas, but what we are here to say is we can do even more," API head Jack Gerard said on Wednesday at an event on Capitol Hill.

The urgency to address the employment situation has increased for lawmakers after a Labor Department report last week found that the economy did not create any new jobs in August.

Gearing up for upcoming budget battles in Congress, oil and gas industry advocates have argued that the fossil fuels sector could be an engine for economic growth and should not become a target for more taxes or regulations.

In addition to creating jobs, the study said that expanding oil and gas production would generate more than $800 billion in additional government revenue by 2030 from taxes and drilling leases.

But for these outcomes to be realized, some politically difficult actions would need to be taken by Congress and the Obama administration.

For example, the report assumes the Arctic National Wildlife Refuge (ANWR) would become open to oil drilling, a move that would likely need Congressional support and is strongly opposed by many Democrats.

The job creation cited in the report would also depend on speeding up permits for offshore drilling in the Gulf of Mexico and quickly approving TransCanada's Keystone XL pipeline, both politically sensitive issues which fall under the purview of the Obama administration.

The jobs scenario also depends on regulation of shale gas development remaining at the state level. Environmental critics of the hydraulic fracturing or "fracking" technique used to tap shale gas have called for more federal regulation of the practice.

Republicans in the House of Representatives have passed legislation aimed at increasing drilling permits in the Gulf and setting a firm deadline for making a decision on Keystone XL, which would transport Canadian oil sands crude to the U.S. Gulf coast.

But these efforts have met resistance in the Democrat-controlled Senate and it's unclear what energy bills could get passed into law with the partisan gridlock in Congress.

Doc Hastings, the Republican chairman of the House Natural Resources committee, said that he plans to propose the opening of ANWR to the so-called "super committee" in Congress, which is supposed to focus on reducing budget deficits.

While opening ANWR has been a lightning rod in Congress in the past, he said he hopes to be able to gain support from Democrats on the select committee.

"Maybe with the price of oil where it is, the price of gasoline where it is, the national security aspects, maybe some of these members will have an epiphany," Hastings told reporters after delivering a speech at the energy jobs conference.

(Editing by Bob Burgdorfer)

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Bernanke: Default on debt would increase deficit (AP)

WASHINGTON – Federal Reserve Chairman Ben Bernanke warned U.S. lawmakers Thursday that they would deliver a "self-inflicted" wound to the nation's economy by holding up efforts to raise the government's borrowing limit.

Republicans have held up increasing the borrowing limit because of concerns of growing spending that has widened the federal deficits.

Bernanke told a Senate panel that a default on the debt would lead to even greater federal deficits. Interest rates would rise, and the government would be forced to pay higher rates on its debt. At the same time, higher rates would slow the economy and an already-weak job market. That would curtail tax revenue.

The government hit its $14.3 trillion borrowing limit in May. The Treasury Department said it will default on its debt if the limit is not raised by Aug. 2.

"I think it would be a calamitous outcome. It would create a severe financial shock," Bernanke told the Senate Banking Committee during his second appearance before Congress this week. "Treasury securities are critical to the entire financial system ... A default on those securities would throw the financial system potentially into chaos."

Bernanke was on Capitol Hill to deliver his semiannual economic report. But his second day of testimony was dominated by questions over borrowing limit impasse.

Republicans are demanding that any increase be accompanied by an equal amount of spending cuts. President Barack Obama and Democrats have insisted that tax increases be a part of any long term deficit-cutting deal, something Republicans have rejected.

On Wednesday, Moody's Investors Service said it will consider lowering the United States' credit rating because of a small but rising risk that the government will default on its debt.

A downgrade would raise interest rates on U.S. treasury bonds, increasing the interest paid by U.S. taxpayers. It would also push up rates for mortgages, car loans and other debts, which are linked to Treasury rates.

The United States pays an average of about 3 percent on its existing debt, according to the Treasury Department. In 2010, that added up to $197 billion in interest payments.

The nonpartisan Congressional Budget Office has forecast that interest payments will rise to $463 billion by 2014. That is under an assumption that the U.S. keeps its top credit rating. A reduced rating would force the government to pay higher interest rates.

The impact of a default would also destabilize U.S. and global financial markets, Bernanke said, which would weaken economic growth

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