Pro: Strategy is sabotaging an economic recovery
Kicking the can down the road, as President Obama did in delaying a decision on construction of the Keystone XL oil pipeline from Canada to Texas, certainly pleased the green lobby. But it did absolutely nothing for jobs creation. Nor did blocking access to new federal offshore areas for oil and natural gas drilling produce any jobs.
At a time when more than 13 million Americans are unemployed, you’d think the president would be doing everything possible to stimulate employment. But his jobs-creation policy lacks direction and focus, based largely on blind faith in renewable energy sources and a childish trust in the good intentions of solar energy companies.
Putting off a decision on the Keystone pipeline and stalling offshore drilling was grossly counterproductive, compromising our commitment to North American oil production and potentially threatening our energy security. These and other regressive actions, such as pulling the plug on the Yucca Mountain nuclear waste project in Nevada and imposing a moratorium on mountaintop coal mining in West Virginia, don’t augur well for domestic energy development.
Is conventional energy production risk free? Of course not! But the environmental risks must be weighed against the economic and national security benefits of fully developing America’s vast energy resources. The current White House policy has been to keep our energy production system operating below capacity to placate environmentalists. A more sensible policy would aim to expand energy supply in such job-generating sectors as oil and gas drilling, coal production and nuclear power.
A study by Wood Mackenzie, an energy consulting firm, found that U.S. policies that encourage the development of new and existing resources could, by 2018, increase domestic oil and gas production by millions of barrels a day and support a million new jobs. Another study, by IHS Global Insight, estimates that returning permitting approvals to their historic levels before the oil spill in the Gulf of Mexico would generate 230,000 jobs in 2012. And these are mainly blue-collar jobs that could make a huge difference for millions of American households.
Continuing to pursue policies that slow down the issuance of leases and drilling permits, increase the cost of hydraulic fracturing for shale gas and delay the construction of oil sands pipelines are having a detrimental effect on jobs. If these obstacles are not addressed, we’ll be missing out on creating the millions of jobs needed to bring the economy back to pre-recession employment levels.
Moreover, hiking taxes on the oil industry makes no sense, especially in today’s sub-par recovery. Isn’t it clear by now that these taxes would divert capital that might otherwise be spent on energy production, which would create thousands of jobs?
The administration’s actions directly contradict what the market requires. What we need are not new taxes on oil companies, but instead for the administration to let the oil and gas industry pick up the pace of work in the Gulf of Mexico, Alaska and elsewhere.
Considering that Americans spend more than $500 million a day for imported oil, it would be absurd if we didn’t make better use of our domestic energy resources. In his “Jobs for America” speech in the fall, Obama didn’t even mention the huge investments in shale-gas production in Pennsylvania, Texas and other states that are creating thousands of jobs and millions of dollars in revenue for governments. Nor did he propose developing oil and gas resources that are still off-limits in the Outer Continental Shelf off the East Coast and in the Gulf of Mexico.
Despite great handwringing over America’s anemic job creation, the president demonstrates little understanding of the damage his policies are doing to millions of unemployed American desperate to find work. Unfortunately, pleasing the environmental lobby seems much more important to him now than jobs.
Mark J. Perry is a professor of economics at the Flint campus of the University of Michigan and scholar at the American Enterprise Institute. Readers may write him at UM Flint, 4173 WSW Building Flint, MI 48502-1950; website: www.aei.org.