From Russia with Love (of Oil and Gas)
Imagine a president who gets behind drilling, welcomes the cutting-edge technology of companies such as ExxonMobil, and offers generous 15-year tax breaks to ensure that new drilling projects move forward. That's the kind of energy policy America needs in order to achieve energy-independence. Unfortunately, it's not Barack Obama who's behind those positive energy policies; it's Vladimir Putin.
As Russian president-elect, Putin has made it clear that he intends to open his country's arctic and Black Sea regions to drilling. The potential is so great, and the necessary investment so immense, that even Russia's giant state-run oil companies, Rosneft and Gazprom, lack the resources and technology to proceed. So, with Putin's blessing, Rosneft and Gazprom have entered into joint-production agreements with Exxon, Italian major Eni, and other Western companies. The stakes are huge -- not just for these companies, but for the Russian economy.
The arctic and Black Sea fields being jointly developed by Rosneft and Eni contain an estimated 36 billion barrels of oil equivalents. Those under development by Rosneft and Exxon, which may ultimately require an investment of as much as $500 billion, contain estimated reserves of 36 billion barrels in the arctic Kara Sea fields alone. (Total recoverable arctic reserves have been estimated at 134 billion barrels of oil equivalent but will likely go higher as exploration proceeds.) In addition to the arctic and Black Sea fields covered in the Exxon and Eni agreements, president-elect Putin has expressed an interest in the possibility of joint ventures to develop vast Siberian tight shale formations.
Instead of permitting delays, EPA harassment, Interior Department exclusions, and environmental lawsuits, drillers in the Russian arctic and Black Sea can expect considerable support from the Russian government. Both the Eni and Exxon agreements were signed in Putin's presence, the latter in the company of Rosneft and Exxon CEOs at Putin's estate outside Moscow. These two deals alone should generate new domestic oil production of more than 80 billion barrels. At current European Brent Sea prices of $120 per barrel, that production (two-thirds owned by Rosneft) amounts to a $6.2-trillion boost to the Russian economy.
The same thing and more could be happening in the U.S., but it is not. Because of Obama's hostility toward fossil fuels, America is missing the opportunity of energy-independence and all the blessings that come with it.
Rather than develop our own arctic reserves (conservatively estimated at 26 billion barrels) and our enormous offshore fields and onshore reserves on public lands, Obama shovels $100 billion of taxpayer money to bankrupt solar and wind projects. Meanwhile, he does all he can to block domestic oil and gas exploration and development. Every year he proposes new taxes on America's oil and gas industry, the one sector of the economy that shows the greatest promise. He c ontinues to stall offshore drilling in the Atlantic, late last year imposing a new five-year moratorium (already having reneged on his 2008 campaign promise to allow drilling there). He continues to block drilling in ANWR, thus endangering the future of an "increasingly hollow" Trans-Alaska pipeline, which may have to be closed down by 2020 if new production does not come online to maintain minimum operating flow of 200,000 bpd. That, of course, is one of the goals of the environmental radicals in his administration.
No one in this country would wish for an American Putin, but in terms of energy policy, Obama is worse than Putin. Much worse.
America's oil majors are the world leaders in exploration and drilling technology, and this technological advantage exists right under the president's nose. His response is to undermine this vital American industry and shift the advantage off to our competitors. It is because of Obama's opposition to domestic drilling that America's major oil companies are aggressively pursuing opportunities abroad. Were it not for the president's irrational hostility toward fossil fuels, one million new highly paid jobs would have been created here at home, untold wealth would have flowed into our economy, and increased revenues and royalties from drilling would have helped balance state and federal budgets. It is the president who is destroying jobs and impoverishing America with his senseless antagonism toward drilling.
As a result of Obama's actions, America will be left less prosperous, less secure, and dependent on costly alternatives insufficient to power our economy. That point was bolstered at a meeting of the Society of Automotive Engineers World Congress last week in Detroit, where a senior automotive engineering executive ranked the delivery efficiency of the lithium-ion battery at "zero" in comparison with that of gas and diesel engines. But it is exactly those zero-efficiency vehicles that Obama wants every American to be driving by 2025.
The madness of Obama's energy policy is becoming increasingly obvious. On April 17, America's largest solar company announced the reduction of its workforce by almost a third. Considering the fact that half a dozen other major solar companies have filed for bankruptcy in the last year, these job cuts are not surprising. What is surprising, and extremely troubling, is that President Obama continues to propose even larger subsidies for troubled solar companies. At the same time, he heaps onerous new costs and regulations on oil and gas companies that have the potential to revive the American economy.
That raises the question of whether Obama really wants the American economy to prosper. Does he want the U.S. to add $6.2 trillion in new oil production, with all the new jobs and prosperity that involves, or does he want the American people to remain unemployed, impoverished, and dependent on government assistance? From his actions, the answer is obvious.
Jeffrey Folks is the author of many books and articles on American culture, including Heartland of the Imagination (2011).