ROBERT E. WARREN, Senior Partner, Solid Executive Inc.

As 2010 came to a close, many sectors of the US E&P business were still reeling from the aftershocks of the Macondo tragedy. The end of 2011 brings an eerie sense of déjà vu: The US economy and jobless levels are far beyond discouraging, certain European economies are on life support, revolutions rage in the Middle East, and an American election is less than a year away. This comes closer to a global “perfect storm” than any time in recent memory.

 With numerous policy and regulatory barriers restraining the vigorous growth of oil and gas production, politicians are missing a golden opportunity. With joint resolve and little effort, elected leaders could demonstrate their commitment to employment by encouraging heavy, long-term investment in the oil and gas sector while linking production to the security interests of this country.

Clearly, that is not the priority today, as powerful factions continue to demonize this industry without objection from a White House whose stated priorities are maximum support for alternative energy and a powerful regulatory presence. This regulatory apparatus has assumed a mission so broad that delay and denial of approvals become a steering mechanism working against the production of hydrocarbons.

Consider the Keystone XL pipeline from Canada to Texas. The astonishing announcement in November that the State Department would defer a decision on pipeline construction until after the 2012 election demonstrates an extremely short-term, politically driven perspective. This giant pipeline project would involve thousands of US construction jobs and add tens of millions of dollars to states’ and the US economies at a time of great need, not to mention reduce US reliance on oil from less stable regions of the world. A vital energy project has been put on hold simply to avoid a leadership decision.

Since the Macondo incident, the US has lost upwards of 60,000 jobs and billions of dollars in economic impact, including wages, royalties, taxes and general business revenue. The six-month drilling moratorium and subsequent regulatory modifications and compliance smackdown have affected employment and revenues in many states beyond the Gulf Coast.

By contrast, the E&P sector in other major producing countries is healthy, even growing. Operators in West Africa and Brazil pounced on the opportunity to take idle floaters from the US offshore fleet. Meanwhile, analysts describe the US Gulf of Mexico as a greater business risk than exists offshore Nigeria due to the uncertain regulatory environment.

The US onshore sector is currently more active than offshore, but the regulatory Sword of Damocles threatens the hydraulic fracturing methods that have made this growth possible. A new, congressionally mandated study by the Environmental Protection Agency is underway to determine whether the many previous studies of fracing are valid—and the efficient, profitable extraction of an entire energy source hangs in the balance.

One year from now, American voters will have chosen their president for the following four years. Until then, the Democratic Party will pull out all the stops to retain the White House, with the GOP contenders wielding a flamethrower to take control. All the while, we’re sliding deeper into the quicksand.

Offshore, permits will be issued for the Gulf of Mexico—but slowly, so slowly. Even if there were solid federal support for oil and gas production, it will take years to rebuild a healthy Gulf of Mexico infrastructure and years more to expand for a major increase of domestic production, time we don’t have.

Onshore, shale gas development will continue strong, but with a tenuous rig count, and increasing political pressure against fracing. Gas is the energy of choice on many levels, but until there’s broad support in Washington, D.C., and an end to the finger pointing, there’ll be slow progress.

The administration’s recently announced five-year offshore drilling plan, expanding access in the Gulf of Mexico and some Alaskan waters, is a tentative step in the right direction, but forget about the Arctic National Wildlife Refuge and the East and West Coasts, for now.

Oil and gas tax credits and exemptions will continue to be hammered by politicians as a “giveaway” to the wealthy and “Big Oil.” As a result, slashing these tax benefits will likely be a major part of any budget reform deal to come out of the so-called deficit “Super Congress.”

The Middle East will continue to see entrenchment and expansion of the powerful forces that have led to revolution in country after country, and the resulting regimes won’t necessarily be friendly toward the West. Anticipate increased shipping exposure at the Straits of Hormuz and then at the Suez Canal—with impacts from increased shipping premiums to downward movement of world markets, to soaring gold prices and $5 fuel at the pump. Then we’ll see domestic oil and gas production become a US priority.

Perilous times lie ahead for the US oil and gas industry, economy and national security. Industry leadership and our associations have a greater role in the political arena than ever before, which gives us all a responsibility to become political activists and help shape the outcome of this national debate. The sound of many fiddles in the nation’s capital grows louder by the day.