Obama’s Expensive Energy Economy Is Totally Unnecessary
“On this Earth Day,” President Obama declared April 22, “[I]t is time for us to lay a new foundation for economic growth by beginning a new era of energy exploration in America.”
Sure, the current era of energy exploration — oil, gas, coal and nuclear — has been marred by lousy government policy and radical environmentalists. But it’s hardly over. America’s ability to harness affordable, abundant and reliable energy sources created a strong foundation for the world’s largest, most dynamic economy.
If the energy of the “past” were scarce or prohibitively expensive, starting a new chapter would make sense, but that isn’t the case. Rather, the President’s desire to scrap our economy’s current foundation in favor of expensive, unproven technologies is colored by his stated belief that human activity is causing global warming.
Bizarrely, in his Earth Day address, the President said, “We still need more oil, we still need more gas.” Although Obama seems to recognize the essential role carbon-based fuels play in our economy, he clearly wants to see them phased out as quickly as possible. His $3.6 trillion budget request makes seven significant changes in the tax code and essentially declares war on domestic oil and natural gas production!
The most outlandish is a tax on production in the Gulf of Mexico, from which the nation produces significant quantities of oil and natural gas [See Deroy Murdock story on page 15]. Several tax deductions are targeted for elimination. If the desire is to move away from oil and natural gas quickly, those economically damaging policies make sense. But can he convince the American people his vision is worth their sacrifice?
Attack on Nuclear Power
The budget also takes aim at what many consider the only silver bullet in the debate on energy and climate: nuclear power. Although, there is no silver bullet, and no way to mitigate the pain associated with Obama’s cap-and-tax proposal. But nuclear energy is critically important to our future, with or without a carbon cap.
President Obama’s budget zeroes out funding for the Yucca Mountain spent-fuel repository, which is required to carry out America’s current nuclear-waste disposal strategy. He has since announced the formation of a Blue Ribbon Commission to develop a new strategy for managing America’s nuclear waste.
Structured properly, such a commission could help. The problem is that it alone will change nothing. For nuclear power to have a chance of working, the President needs to take decisive action by streamlining the permitting process and implementing a workable waste-management strategy.
It’s important to note that nearly 85% of our nation’s energy is carbon-based, so dramatic tax increases alone won’t usher in a new energy economy. Interior Secretary Ken Salazar is doing his part to reduce energy by shutting off access to many of our nation’s most promising energy reserves. One of those reserves, the Green River Formation, contains an estimated 1.2 trillion to 1.8 trillion barrels of shale oil. Saudi Arabia’s official reserves pale in comparison, with a mere 289 billion barrels of oil.
Killing ‘Old’ Energy Sources
Why does Salazar believe more R&D into this vast resource is unnecessary? Again, the answer is simple: He realizes we cannot have a new energy economy if the “old” is nowhere close to being depleted. Salazar has also repealed valid leases in Utah without a hearing and constructed hurdles that could prevent natural gas exploration in Colorado and oil exploration on Alaska’s North Slope.
As if that weren’t enough, the President’s chairman of the Federal Energy Regulatory Commission, Jon Wellinghoff, believes coal and even nuclear may be things of the past, saying, “We may not need any, ever.” Combined, those two sources provide nearly 70% of our nation’s electricity supply. At least Wellinghoff acknowledges, “Natural gas is going to be there for a while, because it’s going to be there to get us through this transition that’s going to take 30 or more years.”
Enter House Energy and Commerce Chairman Henry Waxman (D-Calif.). He’s on a back-door mission to stop natural gas production in the Marcellus shale of Pennsylvania. A process known as “hydraulic fracturing” is necessary to gain access to the trillions of cubic feet of natural gas there. The state has regulated that process for the past 60 years, but Waxman would like to use the Safe Drinking Water Act to regulate it, thus giving the finally authority on its use to the anti-carbon Environmental Protection Agency.
In less than four months in office, the President has laid the groundwork to transform our energy infrastructure by making “clean, renewable energy the profitable kind of energy.” Of course, all that requires making traditional energy more expensive to struggling American families and businesses.
Some very powerful individuals, Wellinghoff included, believe we can increase our renewable electricity generation 23-fold with almost no economic or consumer pain. Fortunately the President does not subscribe to that notion. “None of this will come without cost; nor will it be easy,” he has acknowledged.
In truth, no one knows exactly how much renewable energy will cost or if it is even possible. But the fact that vast amounts of conventional resources remain available at a much lower price suggests the government will have to engage in severe market manipulation if it hopes to achieve its goal.
Last summer’s record gasoline prices should serve as a reminder of how a misguided energy policy can weaken America. For nearly four decades, the federal government has placed restrictions and outright bans on both onshore and offshore energy deposits. A systemic abuse of the legal and regulatory systems by radical environmentalists has been equally as damaging. According to the Chamber of Commerce, environmental groups “have organized local opposition, changed zoning laws, opposed permits, filed lawsuits, and bled projects dry of their financing.”
Ironically, these radicals oppose projects that will actually produce cleaner energy than today’s infrastructure, including relatively clean coal, nuclear and windmills. Their obstruction combined with inept government policies has undermined economic growth, weakened American energy security and actually prevented pollution-saving technology from being implemented.
A radical, government-mandated, expensive conversion to renewable resources will create many more problems than it pretends to solve. The economy is still struggling to right itself after a double-whammy last fall of record-high energy prices and the collapse of our financial system. President Obama should not pursue an energy policy doomed to replicate that sweeping failure.