If you want to lower the price of something, the best solution is to produce more of it. This is basic Econ 101 stuff. But nowhere in the administration’s new energy proposals, presented by the president this Wedesday in a speech at Georgetown University, is the idea of pumping more oil in the United States addressed, except to say it is impossible.
To reach this conclusion, the president had to speak a gross untruth, one he tells so often that he even felt a need to apologize before saying it again: that the United States sits on only 2 percent of the world’s oil supplies, while using 25 percent of the world’s oil. As I pointed out in an article recently, the Department of Energy, which most assuredly vetted this speech before it was released, has known for years this is wrong. In just one 35-miles-square area of the Midwest there is more recoverable oil than in the entire Middle East.
This may be just the tip of the iceberg. Oil shales throughout the region may hold trillions of barrels more. There may even be hundreds of billions more barrels off our coasts and in other areas from which they can be recovered relatively cheaply. We won’t know for a few years yet, as the administration will not let the oil companies look for it. Instead, the president presents the tired canard that 57 percent of onshore and 70 percent of offshore leases are not being developed — the implication being that since the companies are not fully exploiting their current resources, giving them access to more would not help.
Think about that. Oil companies can sell oil at over a $100 a barrel, and yet they are not developing these lands. Why would they do that? The simple answer is that the oil companies do not believe there is any oil in these areas. The argument Obama was pretending to refute is unaffected by this fact: Why not let the oil companies lease and develop the areas where we already know the oil is?
Rather than increasing the oil supply, Obama wants to invest (spend) money on all kinds of green initiatives. Of course, this comes with the promise of creating hundreds of thousands of “green jobs,” which is a reduction from the 5 million green jobs the president promised during his campaign. We should all be thankful the administration failed to keep that promise, as the Europeans already went down the green-jobs route, with devastating consequences. Independent studies in Britain and Spain show that every new green job cost 2.5 to 4 other wage earners their jobs.
Obama also placed a tremendous emphasis on increasing our production of biofuels. Never mind that we are already plowing-under a quarter of our corn supply, so as to turn it into an inefficient and costly fuel. Worse, this unprecedented destruction of food supplies is raising the price of food worldwide, sparking riots and upheavals on a global scale. In fact, rising food costs are the driving force sending many Arabs into the streets and adding a huge risk premium to the cost of oil. In no small measure, biofuels are the root cause of $4 gasoline — some irony.
The speech was not all bad, though. The president put his stamp of approval on natural-gas exploitation and reaffirmed his support for nuclear energy. It remains to be seen whether he will expend any political capital battling his environmental base on either issue. Still, he gave them lip-service, and one must sometimes be grateful for small mercies.
One might wonder if Obama understands how important oil is to maintaining a thriving economy, if it were not for the fact that he recognizes its importance to other nations. During his speech, he mentioned that one of the reasons he went to Brazil was to talk about how they could use American technology to develop recently discovered oil reserves off their coast. If only he was as keen to let American oil companies use their technology to search for and develop the fields off our own coasts.
Anyone who was expecting new ideas or directions for U.S. energy policies — so as to cope with $100 oil — must be chagrined. Instead, the president presented a litany of failed and failing policies that are already damaging the economy without solving our energy problems. The president went to Georgetown University to prove to Americans that he was taking the increasing price of energy seriously. It takes a true master to speak almost 6,000 words on the topic of reducing energy costs without ever addressing the one sure method of addressing those costs — drill, baby, drill.
What makes this speech truly special, though, is that every alternative Obama offered for expensive oil is more costly than oil itself.
We have to do better than this.
— Jim Lacey is the professor of strategic studies at the Marine War College and author of the forthcoming The First Clash. The views in this article are the author’s own and do not in any way represent the views or positions of the Department of Defense or any of its members.