The President's Ruinous Energy Policy: Once More with Feeling
During his reelection campaign, the president boasted that domestic oil and gas production was at an all-time high, with the implication that he was somehow responsible for this accomplishment. In fact, Obama has done everything possible to retard oil and gas exploration, including a 40% decline in production on federal lands, a continued moratorium on East-Coast drilling, and refusal to approve the Keystone XL pipeline. Obama also continues to drag his feet on a decision to allow the export of liquefied natural gas to non-Free Trade Agreement countries.
The sad irony is that this administration has practically doubled the Department of Energy's budget (including a supplemental $38 billion from the 2009 stimulus bill) but that much of that revenue has been squandered on failed green energy projects. The cost of each one of the president's green energy jobs has been estimated at $23 million per permanent employee. If those funds had been retained by taxpayers to spend as they wished, GDP would have recovered at a higher rate than the anemic average of 2% we have seen since 2009.
A sound energy policy would begin by asking what our energy needs will be and how they can be met. Recently, ExxonMobil published its annual "Outlook for Energy," and nothing could be clearer than the fact that oil, natural gas, and coal will continue to supply the majority of the world's energy needs for decades to come. Even by 2040, with wind, solar, and biofuels projected to increase at an annual 5.8%, carbon-based fuels will still provide nearly 85% of the world's needs.
A realistic energy policy would acknowledge this reality and make every effort to assist private enterprise in the development of carbon-based energy sources. This policy would include promoting exploration offshore and on federal lands, and it would expedite permitting in the Gulf of Mexico and other areas. It would also rein in the EPA's attack on hydraulic fracking and fast-track drilling by overriding frivolous environmental lawsuits. The goal at every point would be to advance America's oil and gas industry, thereby securing energy-independence and increasing jobs and prosperity for the nation as a whole.
By contrast, Obama's policy assumes that alternative energy sources will supply significantly more than the projected 3% of global needs. Obama's rhetoric promotes the leftist fantasy that carbon fuels will simply go away and die while solar and wind step in to take their place.
This scenario is so far outside the realm of possibility as to be laughable to all but the most naïve tree-hugging minority. The reality is that in the decades to come, America will need all the carbon-based fuel it can produce. If the U.S. fails to develop adequate carbon fuels, its economy will decline, and it will be outpaced as a global superpower. Those who endorse the fantasy of a carbon-free future are, in effect, promoting the destruction of America as well.
Unfortunately, our current president is one of these. Despite the fiasco of the Department of Energy's green energy loans program, Obama's latest budget demands even more funding for failing projects. And while he doubles down on green energy, Obama continues to propose massive new taxes on oil and gas companies -- $42.6 billion over the next decade. As mad as it seems, Obama really does intend to gut the only energy supplies we actually have while shoveling hundreds of billions of dollars into the bankrupt fantasy of green energy.
Meanwhile, Obama's campaign promise of expanded oil and gas production has gone nowhere. His moderate rhetoric was dropped immediately after the election. He has reverted to the mindless fantasy of vast solar farms and offshore windmills.
Clearly, Obama never had any intention of pressing for greater oil and gas exploration. That is a tragedy for America, because without abundant supplies of oil and gas, living standards will decline, and tens of millions will continue unemployed or underemployed. The Obama administration has never presented a credible plan of any sort that addresses the need for millions of good jobs. A vigorous oil and gas policy -- one that promotes exploration and development instead of restricting it -- would go a long way toward supplying those jobs.
The S&P Global Clean Energy Index, a proxy for green energy investment returns, affords a clear measure of just how disastrous Obama's green energy policy has been. Since April 2009, the beginning of the economic recovery, the index of global green energy companies has lost more than 50%. During that same time-frame, the iShares U.S. Oil and Gas index (IEO) has returned over 50%. This difference in performance mirrors the reality that oil and gas (and coal) are efficient, cost-effective sources of energy, while wind and solar are inherently flawed.
Any sane individual would prefer to be invested in oil and gas rather than green energy -- but Obama has invested taxpayer money exclusively in green energy. He has lost more than half of the taxpayer's money when he could have been backing productive companies, or simply allowed taxpayers to retain their funds and spend or invest as they wished. In other words, Obama has been the most foolish of investors. He has probably done even worse than the global green energy index with its loss of 50%.
Despite his token support for greater oil and gas exploration, Obama has done nothing in the past but oppose carbon fuels, and he shows no sign of supporting them in the future. The appointment of Gina McCarthy as EPA director is an ominous sign. McCarthy's own statements make it clear that she will continue to pursue an activist EPA agenda while flouting the wishes of Congress. "I didn't go to Washington to sit around and wait for congressional action," she has stated. How does that attitude differ from that of her predecessor, Lisa Jackson?
Obama's campaign rhetoric favoring increased oil and gas production was just that -- a campaign ploy designed to soften opposition until after the election. What we are seeing in Obama's second term is more regulation, more talk of higher taxation, more obstruction, and more foot-dragging on oil and gas development. Meanwhile, our nation's energy future is put at risk, and the economy continues to crawl along at 2%.
That's about how effective Obama has been as a president: 2%. Or when it comes to oil and gas, minus 40%. That, after all, is the level of new exploration on lands over which the president has control. All of the positive developments have come about on private lands regulated by the states.
Imagine a future in which the U.S. was not only energy-independent, but a net exporter of oil and gas. If not for Obama, we would already be close to that milestone. Instead, what we have to look forward to is a future of subpar growth and structurally high unemployment. America is paying a high price for Obama's ruinous energy policy.
Jeffrey Folks is the author of many books on American politics and culture, including Heartland of the Imagination (2013).