A Wiser Outlook
They control a big share of the American economy, they plan 30 years out, and they have never failed to balance their budget.
No, I'm not speaking of any federal agency. I'm talking about Exxon Mobil, which is among the world's most productive and best-run energy companies. Throughout its storied history, dating back to John D. Rockefeller's Standard Oil Company, Exxon has engaged in careful planning and capital allocation based on regular assessment of demand for oil and gas. Since 2004 it has made its annual assessment available to the public via the Outlook for Energy.
The 2001 Outlook, published on Thursday, is especially apropos in light of recent fiascoes on the part of the Obama Energy Department, including the potential loss of as much as $500 million* of taxpayer money at Solyndra and other green energy projects. With a record like that of Energy Secretary Stephen Chu, Exxon would no longer be in business. As it is, the Energy Department keeps on requesting higher levels of funding, and each year Obama gives it to them.
As for Exxon, it is not dependent on green energy subsidies or government bailouts. Nearly every year it earns a handsome profit based on prudent investment of shareholder funds. And this investment is based on carefully researched long-term planning and conservative management. Would that Exxon CEO Rex Tillerson were managing the federal budget in place of Obama! You can bet that taxpayer money would not have been invested in any of the green energy boondoggles that now stain the President's record.
As for this year's Outlook, what it says about global energy demand over the next 30 years is strikingly at odds with what Obama is telling the American people. Unlike the President's vision of a Brave New World powered by electric cars, solar farms, and windmills, the reality is that in 2040 fossil fuels will still supply almost 80% of global energy needs. Those needs, overall, will increase by 30% as billions of the world's people are lifted out of poverty and global prosperity doubles. According to Exxon's projections, demand for electricity will increase by 80% by 2040, while commercial transportation needs will increase by 70%.
This prosperity will be fueled largely by abundant new supplies of natural gas, new discoveries of oil, and continued use of coal. Left to their own devices, companies like Exxon are fully capable of supplying this increased demand for energy. The only question is whether governments like that now in Washington will have the sense to get out of the way.
If Washington continues to be governed as it is today, the chances of prosperity will be considerably diminished. During the past three years, for the first time in a half century, new well count in the Gulf of Mexico has diminished. It is inevitable that oil and gas production from the Gulf, America's most abundant source of energy, will diminish for years to come as a result of Obama's restrictions on drilling -- restrictions that are still partially in place. At least 7 major deep-water rigs have already been moved out of the Gulf as a result of the administration's drilling moratorium and subsequent slowdown of permitting. Had the Obama administration reacted in a more nuanced manner to the Deepwater Horizon accident, this threat to our nation's energy security would not have taken place.
If I had to choose whom to believe, Exxon or Obama, it would not be a very challenging decision. Obama's record of energy "investment" has been an unmitigated disaster. Exxon's annual forecast, on the other hand, has proven to be highly accurate year after year. If the White House had any sort of energy policy to begin with, which it does not, and if that policy were driven by an unbiased assessment of demand rather than by crony capitalism, its energy outlook would look no different than that of Exxon. And if its policy were based on a wise stewardship of taxpayer funds, it would do all in its power to facilitate exploration and production of oil, natural gas, and coal.
As it is, Obama deserves a failing grade for his willful ignorance and mismanagement of the nation's energy supply. Energy exploration is one of the few areas in which American firms still hold a decisive advantage over businesses elsewhere in the world. Obama is doing all he can to squander that advantage and turn our lead over to rival economies. If the President allowed himself to be guided by the wisdom of Exxon's Outlook, he would have the opportunity to lead the country toward energy independence, full employment, and a balanced federal budget. As it is, he is suppressing the one industry that holds the greatest promise for renewed national prosperity.
Obama's prejudice against American energy companies, based as it is on a sort of mystical faith in the magic of green energy, is simply perverse. If not soon reversed, Obama's punishing treatment of fossil fuels will not only cost America its lead in energy production but will endanger our global economic standing and along with it our national security. There can be no justification for taking the most productive, efficient, and best-managed sector of our economy and subjecting it to constant harassment, taxation, and environmental restriction while squandering $50 billion on ruinous projects like failing solar producers and fire-prone electric automobiles. Hopefully, Obama's appalling record on energy will soon be just another embarrassing memory of his failed one-term presidency.
Jeffrey Folks is the author of many books and articles on American culture, most recently Heartland of the Imagination (2011).