- The Washington Times - Friday, August 12, 2011


The current focus on economic troubles around the world and our own debt downgrade at home have obscured another issue that affects the health of the American economy: the failure of the Obama administration to develop and implement a sound energy policy - or, more properly, its stubborn adherence to a dysfunctional one. A sound policy would exploit domestic resources of all kinds and encourage cooperation with friendly countries that can reliably supply us with energy at reasonable prices.

But the Obama administration, in thrall to environmentalist lobbies and rent-seeking corporations that peddle costly “green energy” schemes that depend on taxpayer-funded subsidies, persists in embracing the exact opposite of sound energy policy, thereby undermining U.S. energy security and prosperity. We can see the consequences of the administration’s approach by examining a 2007 report by the Department of Energy’s Energy Information Administration (EIA), which predicted that oil production from federal lands and offshore sites in 2010 would be 16 percent higher than what President Obama’s policies actually have produced.

Mr. Obama’s energy policies will lead to a further, dramatic decrease in oil production on federal lands in the future. According to the EIA report, those policies will reduce oil production in federal lands and the Gulf of Mexico by 15 percent in 2011 over what it would have been under former President George W. Bush’s policies and cause it to decline by 26 percent in 2012 from the 2010 production high.

Mr. Obama and other advocates of green energy contend misleadingly that the United States controls just 2 percent of the world’s oil but consumes more than a quarter of that oil. But that 2 percent figure refers to “proven reserves” of petroleum, which depends on current economic conditions, e.g., prices and costs prevailing at the time of the estimate, operating methods and, perhaps most important, government regulations.

A better, broader measure of oil reserves is “technically recoverable” oil. By this measure, total U.S. reserves amount to 164.1 billion barrels. This doesn’t even include oil shale, which, according to the Energy Department, provides recoverable reserves of 1 trillion barrels.Yet the administration continues to reject calls for tapping these reserves.

The administration also has dragged its feet on approving the Keystone XL pipeline from the oil sands in Canada to refineries on the Gulf Coast, which would increase Canadian exports to the United States by as much as 700,000 barrels a day. The Keystone project also would create 20,000 new jobs directly, contribute to 118,000 associated jobs and inject about $20 billion into the American economy.

When the Canadian company requested a permit to build the pipeline nearly three years ago, the White House seemed to be onboard and Secretary of State Hillary Rodham Clinton was poised to approve it. But then the environmental lobby voiced its opposition to approval, and the Environmental Protection Agency (EPA) joined in, criticizing the State Department’s first environmental impact statement, which found the pipeline would have little effect on the environment. The administration deferred to its own increasingly rogue EPA, which ordered a second impact statement. Last month, EPA deemed the new study to be “inadequate.” Now Congress has taken up this issue.

Instead of pursuing a comprehensive energy strategy that would increase domestic energy production by lifting the many onerous regulatory burdens and restrictions on drilling, or easing restrictions on pipelines that provide access to oil from Canada, the administration resorts to short-term gimmicks. A case in point was the administration’s decision earlier this summer to tap the Strategic Petroleum Reserve (SPR) just before the Independence Day weekend.

On June 23, the SPR released 30 million barrels of oil, selling it to oil refiners and traders at more than $10 per barrel below the market price. The tab for this $300 million political theater was, of course, picked up by the American taxpayer. And the $300 million subsidy had little lasting effect on the price of either oil or refined products.

Of course, the SPR was never intended to alleviate periodic spikes in gasoline prices but to ensure emergency access to a secure reserve of petroleum in the event of a global catastrophe resulting in major supply disruption overseas. The approximately 700 million barrels in the SPR would supply the nation’s oil needs for only a month and replace imported oil for just two months.

Certainly, some Democratic members of the legislative branch understand that gimmicks cannot substitute for a sound energy policy. Thus, in early July, Sens. Jim Webb and Mark Warner of Virginia introduced legislation that would allow energy exploration and production off Virginia’s coast. Mr. Webb called exploring the energy potential of the Outer Continental Shelf an important “component of a comprehensive national policy to reduce energy costs for consumers and our nation’s dependence on foreign oil.”

It’s time for the president to abandon gimmicks and political theater and take the advice of energy-conscious Democrats such as Mr. Webb. The United States possesses the world’s largest energy resources, but this administration’s dysfunctional energy policies cut us off from our own domestic energy reserves and those of friendly neighbors. Our security and prosperity require that we frame new policies.

Mackubin Owens is a professor of national security affairs at the Naval War College and editor of Orbis, the quarterly journal of the Foreign Policy Research Institute (FPRI).

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