President Obama recently suggested that the Middle East is a region to be avoided and that the stunning transformation of Americas oil and gas sector the shale revolution providentially is making the Middle East less and less important to the U.S. economy. The presidents assessment of our weakening links to Middle Eastern suppliers has opened a window on his curious thinking about the shale revolution and energy policy in general.
What makes the presidents praise of the shale revolution so odd is that his administration has done nothing to support it. In fact, at the presidents direction, the Environmental Protection Agency and the Department of Interior have developed one new regulation after another to make it more difficult and costly to produce American oil and natural gas.
This kind of doubletalk from President Obama has become very old. He knows very well that the United States consumes 19.3 million barrels of oil per day and that oil is the fuel used to meet more than 90% of our transportation needs. He also knows that the shale revolution has helped to nearly double U.S. oil production and that it has brought stubbornly high oil prices more than $100 per barrel less than two years ago back to Earth. Today, oil is below $40 per barrel, and most American drivers are paying under $2 per gallon to fill up their tanks.
As important as domestic oil and gas production is to our economy and to our foreign policy, President Obamas energy policy if we can call it that treats energy companies like pariahs.
The administration has zeroed in on the industry with new rules on hydraulic fracturing, natural gas flaring, and methane emissions, to name but a few. He has rejected the Keystone XL pipeline, imposed a moratorium on energy exploration in the Arctic, and just recently changed his mind about allowing oil and gas exploration in Atlantic coastal waters, despite bipartisan support for such development. And lets not forget his proposal to place a $10 tax on every barrel of domestically produced crude.
Some commentators have suggested that the shale revolution is a miracle of American problem-solving and ingenuity. It certainly is. But its also no small miracle that it has happened in spite of President Obamas obstructionism. Any other nation, given the opportunity to reverse decades of growing dependence on energy imports, would do everything possible to make sure it happens. Our president almost made sure it didnt.
For seven years we have heard about windmills and solar panels. Despite tens of billions of dollars in taxpayer subsidies, solar power generates about 1% of the nations electricity. The worlds biggest oil exporters think of Russia, Saudi Arabia, Iran, and Venezuela, a veritable whos who of democracy-bashing nations must be delighted with Obamas actions.
Despite the presidents best efforts, U.S. energy security is, astonishingly, stronger than it has been in decades. However, the threat of backsliding is far too real. We need a policy that allows market forces to determine the mix of energy sources that power the American economy. A balanced policy that resists playing favorites is the best way of ensuring abundant energy supplies and affordability for the all too often neglected energy consumer.
Cronyism, whether to benefit renewables or fossil fuels, is a serious problem. Robust economic growth will return if and only if Washington gets out of the way.