U.S. energy policy is ‘willfully malevolent’

Many think the United States has long lacked a coherent energy strategy. Recent events have shown that our current federal energy policy is neither, as many conservative pundits allege, “feckless,” nor, as many liberal pundits claim, “enlightened.” It is rather willfully malevolent.

But hope, as they say, springs eternal. It is painfully transparent that, until recently, the Obama administration policy was “study forever, drill never.” Facing the pending wrath of the federal judiciary and a contempt of court citation, Interior Secretary Ken Salazar recently lifted the drilling moratorium, and drilling permits are ever so slowly beginning to trickle out.

The president now tells us the new Bureau of Ocean Management, Regulation and Enforcement is a shipshape regulator, notwithstanding the recently released 398-page Presidential Drilling Commission Report, which calls for Congress to create yet another agency to supervise offshore drilling. What a stunning thought — yet another layer of federal bureaucracy to oversee the federal bureaucracy that is already failing.

Much akin to the changes to the national security establishment that occurred after 9/11, layering more bureaucratic oversight on top of an already top-heavy national security tetrahedron, none of which makes me feel one bit safer, you?

And far be it for me to question the uncanny coincidence of lifting the moratorium nearly in lock step with the “Black Swan” events playing out across North Africa and the Middle East. It seems the eggs of change — the petrostates of Egypt, Tunisia, Libya, Yemen, Iran, Algeria and Bahrain — hatched almost as one.

Of course $100/BBL oil is good for Texas, for some anyway, but conversely it will be devastating to the average working man, particularly if oil goes considerably higher, as many fear it must. Of course the administration fancies higher gasoline prices as a way to reduce the consumption of fossil fuels.

Despite assertions to the contrary, the administration repeatedly demonstrated an anti-domestic energy production bias, best evidenced by its seven-year ban on offshore drilling off both coasts and the eastern Gulf of Mexico. It is keeping the Arctic National Wildlife Refuge off limits and designating oil-and-gas rich Alaskan waters as “Critical Polar Bear Habitat,” despite a dramatically increasing polar bear population. It has also designated 6 million acres in energy-rich Utah, Colorado and Wyoming with “wilderness characteristics,” off-limits to drilling in a nation starved for energy and jobs.

Not only does the administration not favor domestically produced oil and gas, it ardently despises coal as well. It is pulling permits from already approved “mountaintop removal” projects and tightening emissions regulations, which will almost certainly cause energy prices to skyrocket and force older coal plants to shut down. By 2015, 40 percent of them will have been in service for more than 50 years.

The harsh reality is that rising domestic energy demand, without increasing domestic supply, will require more oil from abroad.

The theory that subsidizing bio-fuels at home, while halting the “subsidizing of yesterdays’ energy” so the government can cut costs and boost revenues and dedicate more spending on developing alternative energy sources, is simply ludicrous. The president’s 2012 budget calls for eliminating a dozen tax incentives that benefit producers of coal, oil and natural gas. The president is anxious to eliminate what he calls “costly tax cuts for oil companies.”

He has dedicated himself to “breaking our dependence on oil using clean biofuels,” as he said in his State of the Union address. But in 2010, the Congressional Budget Office reported that the cost of using corn ethanol to reduce one gallon of gasoline consumption was $1.78. The corn ethanol industry will produce about 13.8 billion gallons of ethanol in 2011, the energy equivalent of about 9.1 billion gallons of gasoline. That means a direct cost to taxpayers for ethanol will be about $16.2 billion this year alone. This is compared to the $4.4 billion in forgone tax revenues from the administration’s proposed changes to oil and gas tax rules.

Bottom line, annual ethanol subsides are very nearly four times as great as those provided for oil and gas, despite the fact that domestic drilling provides 36 times as much energy to the U.S. consumer. Thus, according to the president’s own Congressional Budget Office, per unit of energy, the tax preferences given to corn ethanol are over 140 times those given to oil and gas.

We have many challenges in formulating an energy policy that is sustainable yet environmentally sensitive, particularly as it relates to ensuring that “slick water” fracking, coupled with horizontal drilling — which poses difficult wastewater disposal challenges, among others — is safe. Yet, despite assertions to the contrary, our country cannot thrive with skyrocketing energy prices settling in the stratosphere. If indeed there is even a slight recovery under way, higher prices would be just the thing to derail the train and, Mr. Obama, if you continue to prevent new electricity generation capacity from coming on stream, where will your GM (Government Motors) find the watts to power its Volts?

Our government has been putting many of our natural resources off limits, leaving us hostage to unstable foreign energy sources. Bottom line, to maintain our sovereignty, our autonomy and our options, we need to stop borrowing money and begin a “Manhattan Project”-scale effort to enhance our domestic energy resources and fast track their development. Anything less is grossly negligent.