At last, some promising energy news. A new discovery of oil and gas in an unexplored region is leading to hope for potentially more energy than that possessed by the oil-rich nation of Libya. Enough energy to make every man, woman, and child an instant millionaire. Americans can only dream about this happy news, because the new discovery is not in the U.S. It is off the west coast of Greenland. The discovery by Cairn Energy is the first tangible evidence of hydrocarbons within a huge underwater basin in which Chevron and Exxon Mobil are also pursuing exploration. As reported in the Wall Street Journal on August 25, Cairn's discovery of natural gas has raised hopes of large undiscovered reserves of oil and gas, estimated by the U.S. Geological Survey to contain as much as 50 billion barrels of oil and gas equivalents. Ironically, it is the shrinking of Greenland's ice cap that has made oil exploration possible, and that exploration may very well enrich the 60,000 residents of that inhospitable, ice-capped island.
The problem for us is that Greenland's oil won't do America any more good than that of Libya. Even if Cairn's modest discovery is prelude to future discoveries, it will all be "foreign oil" as far as America is concerned. At $80 a barrel, a billion barrels of Greenland oil would send $80 billion to Greenland, enough to make every citizen of Greenland a millionaire. And enough to make America a lot poorer.
Just about the only Americans who are worth $66 million are professional athletes, internet CEOs, and Powerball winners, and even fewer Americans are going to obtain wealth, or even an adequate income, if Obama's energy policy continues in force. Our dependence on foreign oil works like a tax on every U.S. citizen, stealing money from our pockets and shipping it overseas. But despite Obama's campaign promises to make America less dependent on foreign oil, he has done just the opposite. Once the economy begins to revive, our dependence on foreign producers will be painfully evident since the oil that we import will almost certainly be more expensive than it is now.
Others nations, particularly China, understand this. Our government does not. Through its partially state-owned oil companies and its sovereign investment fund, China is feverishly acquiring lease rights to petroleum reserves around the world. This year, for the first time, CIC (the state-run "China Investment Corporation") obtained oil-sand assets in the Peace River region of northern Alberta, Canada. Canadian oil sands are hardly the only asset the Chinese have been buying up. Chinese companies have been acquiring energy rights in Africa, most recently signing a major refinery deal with Nigerians officials. The deal may put China ahead of other countries in obtaining future oil and gas leases in Africa's largest energy producer. China has signed energy deals with Venezuela, Iraq, and Australia as well. It has penned agreements for oil and gas rights with South Africa, Kazakhstan, Malaysia, Qatar, and a host of other countries. Not only that, but the Chinese have been aggressively working to obtain the latest technology for deep-water drilling as well as for fracking -- a technology for recovering gas from tight shale formations. And China is by no means the only country seeking to expand its petroleum reserves.
The sad fact is that nearly every major nation except the U.S. has in place a plan for energy independence. That is exactly what governments should be doing. A policy that promotes oil and gas exploration, along with other efficient sources of energy, is merely prudent and wise. Sensible nations recognize that cheap energy is fundamental to prosperity. They also recognize that global reserves of petroleum are limited. By acquiring leases and developing them, the leaders of these nations are acting in the best interests of their peoples.
In stark contrast, ours is the only nation in the world that is attempting to sabotage its own oil and gas industry. The administration has practically shut down drilling in the Gulf of Mexico, not just with its six-month ban on deep-water drilling, but also by means of a draconian licensing policy for shallow-water wells. The result is that there has been practically no new drilling in the Gulf since the Deepwater Horizon accident.
The Gulf is not the only place that Obama has shut down. One of the first actions by Interior Secretary Salazar was to close off oil shale development in the Rocky Mountain region. Obama's campaign promise of opening up drilling off the Atlantic Coast was also reversed, demonstrating how hollow his promise was. Similarly, Alaskan reserves in ANWR and in the Barents Sea are still off limits, tied up in politics and environmental permitting. The only leadership we have seen from the White House is to dump more regulations and taxes on our domestic oil and gas industry, thus cutting jobs, raising energy costs, and sending more cash overseas.
Sadly, huge reserves of oil and gas lie untapped within our own national borders, enough to make every American, if not a millionaire, then a lot better off. Yet because of environmentalist pressure, no one has a clue how many billions of barrels of oil may lie off the east coast of the United States. That vast area has been off-limits even to exploratory mapping for forty years now. The same sort of obstruction applies to drilling in much of coastal Alaska, and to vast shale reserves in Colorado and other states. And it is not just oil that is under attack. Now that enormous reserves of natural gas have been discovered within our own borders, enough to fuel the country for the next hundred years, the EPA is moving aggressively to regulate and restrict its development.
Frankly, I do not understand the actions of the president. America is blessed with abundant reserves of cheap energy, enough oil, natural gas, and coal to make this country truly energy-independent. But while other nations are feverishly working to buy up and develop valuable energy reserves, our government has spent the last two years wrecking our energy industries and ensuring our continued dependence on hostile regimes. No rational administration would act in this manner. Maybe it's just that the president, being the Marxist that he is, simply hates Big Oil because it is the last major sector of the private economy not controlled by government.
It really makes no difference, of course, what is motivating the president. The result is the imminent destruction not just of our domestic energy companies, but also of our economy. It is obvious that Obama is planning to raise taxes beginning in 2011 -- he has already announced his intention to do so. What is not obvious is the massive energy tax that has already begun to make itself felt and that will only increase in the future, whether or not cap-and-trade is passed in the lame duck session of Congress (as it probably will be, in some form). That hidden tax, the consequence of Obama's anti-drilling policies, will act like a drag on future prosperity as we continue every decade to ship trillions of dollars overseas. Wouldn't it be better to keep those trillions at home and to create hundreds of thousands of good jobs in the energy sector as we do so? For some strange reason, Obama doesn't think so.
Jeffrey Folks is the author of many books and articles on American culture and politics.