In an episode of “Curb Your Enthusiasm,” protagonist and “Seinfeld” co-creator Larry David is flustered when a homeless man declares he’s hungry and needs money but is picky enough to refuse leftovers. This comedic exchange is reminiscent of the not-so-humorous state of our nation’s economy, weighed down by $14 trillion in public debt while Washington refuses to take advantage of the fossil-fuel “free lunch” under our collective feet.
In May alone, Americans forked over $41 billion to import enough crude oil to meet growing energy demands here, just 37 percent of which was supplied domestically. The payments to close that “energy gap” ended up in the treasuries of foreign governments, many of which are hostile to U.S. interests, unstable politically or both.
In an ideal world, it would make economic sense to acquire fossil fuels from least-cost producers no matter where on the globe they are located. But this is not an ideal world. What makes no sense in such a climate is continuing to rely on unreliable foreign energy suppliers, especially when Congress’ own research service estimates that the United States has more proven energy reserves - coal, oil and natural gas - than any other nation on the planet.
Rather than exploiting these abundant domestic resources, the Obama administration (1) all but shut down expansion of energy production in the Gulf of Mexico for more than a year, (2) failed to follow through on promises to open areas in Alaska and on the Eastern and Western seaboards for drilling permits and (3) plans to slow and possibly halt development of the nation’s hundred-year supply of natural gas, some of which has been discovered only recently in Pennsylvania and neighboring states.
Such policies have sacrificed billions of dollars in unrealized economic growth, unnecessary job losses and deficits larger than they would be otherwise in our international trade balance.
As a matter of fact, mesmerized by his vision of a “green” economy and apparently unfazed by losses of nearly $100 million in taxes paid to the federal government daily by the domestic oil and gas industry, President Obama wants to punish “Big Oil” even more.
The president and his congressional allies are pushing for $61 billion in new energy taxes, a proposal that if it passes will add to pain at the pump, raise utility bills and increase the cost of doing business nationwide. Such a counterproductive policy may enlarge federal revenue in the short run, but it surely will reduce it in the long run as a larger tax bite lessens the oil and gas industry’s incentives to invest in finding more energy deposits and delivering them to energy consumers.
Unlike the private sector, which lives or dies on the profitability of decisions to bet on new products or new markets, large public “investments” in politically correct projects, such as corn-derived ethanol, add to government spending but offer little or no return to taxpayers, now or in the future.
Although Congress recently and rightly voted to deny taxpayer-financed subsidies to corn farmers, President Obama has proposed regulations requiring automobile producers to double the fuel economies of new cars and trucks two decades hence.
If you are old enough to remember Jimmy Carter’s promise to develop a synthetic replacement for fossil fuels or Bill Clinton’s pledge of a public-private partnership to produce an automobile averaging 100 miles per gallon, you should be skeptical of the current administration’s energy policies.
Politicians score cheap electoral points by promising to reduce the federal debt and promote energy “independence.” Denying access to domestic resources while helping Brazil and other nations develop their own reserves is proof positive of the Obama administration’s anti-American mindset.
Actions speak louder than words.
William F. Shughart II, a senior fellow of the Independent Institute, is J. Fish Smith Professor in Public Choice at Utah State University’s Huntsman School of Business.