The United States is by far the world’s leading oil importer. Thus, it follows that when the price of oil goes up, our economy is severely taxed and, therefore, it goes down. Indeed, every oil price increase for the past four decades, including those in 1973, 1979, 1991, 2001 and 2008, has been followed shortly afterward by a sharp rise in American unemployment.
It is in this light that the extreme malfeasance of the Obama administration in preventing the implementation of the Keystone XL pipeline becomes apparent. While much has been made of the loss of 20,000 jobs building the pipeline, that is the smallest part of the matter. The real issue is that by forbidding the pipeline, the Obama administration is acting to block the introduction of 270 million barrels per year of Canadian oil into the world market. At current prices above $100 per barrel, this will cause a loss to the North American economy of $27 billion per year, sufficient to create 270,000 North American jobs - at $100,000 per year each. (Canada draws 65 percent of its imports, which amount to 31 percent of its gross domestic product, from the United States. The two nations thus share one economy.)
Furthermore, because oil prices are inelastic, it would be conservative to estimate that each 1 percent addition of oil to the market would drive prices down by 5 percent. For comparison, the 2 percent temporary reduction of Middle Eastern oil supplies caused by the disorders associated with this year’s putative Arab Spring caused oil prices to go up 20 percent - a 10-to-1 ratio. Assuming the fivefold ratio, the addition of 0.85 percent to the world’s supply represented by the Canadian oil could be expected to drive prices down by about $4.25 per barrel. This would save us an additional $20 billion, equivalent to an additional 200,000 jobs.
In summary then, what is at stake in the Keystone pipeline is not 20,000 jobs but something on the order of a half-million jobs. Congressional Republicans are thus entirely correct in linking approval of the payroll-tax cut and the unemployment insurance extension to approval of the pipeline, as without the revenue that comes from economic growth, such benefits are unaffordable.
But there is a still larger issue. In acting to blockade Canadian oil from reaching the world market, the administration is acting in accord with the interests of the Organization of Petroleum Exporting Countries (OPEC) oil cartel, which wishes to see supplies limited so it can maintain high oil prices at the expense of the West. In so doing, it is imposing a tax on the U.S. economy inimical to an economic recovery, without even offering the fiscal benefit of other types of taxes. The revenue in question will be paid not to our own government, but to other governments, several of which are engaged in supporting, promoting or preparing acts of war and terror against the United States.
At a time when the need for action to deal with the threat of the Iranian atomic-weapon effort demands that the government do everything in its power to assure supplies of liquid fuel from non-Middle Eastern sources, the Obama administration is doing the exact opposite. Instead of seeking to create energy security, it is maximizing our energy vulnerability.
While the administration claims that it wishes to stop the Iranian nuclear bomb program, its Keystone decision serves not only to protect it, but to help fund it.
The administration’s policy of propping up oil prices by blocking the development of North American resources also serves to fund and arm Saudi-backed jihadis, such as the Taliban killing U.S. soldiers in Afghanistan, and to assure the finances of the Hugo Chavez regime in Venezuela, which recently set up training camps for the Iranian-allied terrorist group Hezbollah. At the same time, the administration pushes down the value of our real estate, corporations and media organizations while filling the coffers of the sovereign wealth funds of OPEC powers seeking to acquire positions of influence within our society.
There is a war going on right now for the future of the world - one being fought not primarily with firearms, but with money. The outcome of that war will be determined by the price of oil. Every dollar added to the price of oil weakens America and strengthens her enemies. Every dollar cut from the price of oil weakens the enemies of freedom and strengthens America.
It comes down to this: The pro-American policy is the one that forces oil prices down. The way to do that is to flood the world market with liquid fuel from every source possible. The anti-American policy is the one that keeps oil prices up. The way to do that is to help OPEC limit the amount of liquid fuel available to humanity.
The president has a constitutional duty to defend America, not assist those seeking to loot or destroy her. Instead of erecting a wall to stop North American oil from reaching the market, the administration should be doing all it can to see that it gets there.
Mr. Obama, tear down this wall.
Robert Zubrin is president of Pioneer Astronautics and a member of the Steering Committee of Americans for Energy (AmericansforEnergy.us). His new book is “Merchants of Despair: Radical Environmentalists, Criminal Pseudoscientists, and the Fatal Cult of Antihumanism” (Encounter Books, 2012).
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