The markets – including old-fashioned American technological know-how – has almost turned the Obama Administration’s original energy policies 180 degrees.
But there is still a lot to be done. And it will require the cooperation of a Congress, too long besotted with narrow-minded subsidies for powerful lobbies.
The Obama Administration which started out six years ago calling for outrageous gasoline prices to force the country into so-called new, green energies, has lost the game. That’s been acknowledged by several recent quiet White House decisions along the way toward an enlightened energy strategy, the basis, of course, of all economic and most of our social activity.
With the growing technological breakthrough in shale gas and oil, the U.S. again has the potential to be a net exporter. And letting the markets – rather than government fiat – decide which and where would be a major step in energy rationalization is obviously the way to go. Along the way, we would joint Gov. Rick Perry and others who have called for dismantling the Energy Department, which, where effective, duplicates other federal government activities.
New and hugely important developments are popping up everywhere:
The White House has just okayed a swap of lighter American crudes for Mexican heavier petroleum for which we have refinery capacity in the southwest [designed originally and still working on similar Venezuelan imports]. That’s not the lifting of all export controls which ought to be a high priority, their heritage going back to the 1970s embargos and our dependence on foreign oil.
The Sabine Pass, Texas, liquified natural gas facility, originally designed for imports, has signed a deal on 2011 permits to ship LNG to France. With U.S. domestic gas prices a fraction of LGP delivered prices in East Asia, there are a dozen applications for the expensive export facilities to cash in on the global market, now Europe too reinforced with the US-EU sanctions against Vladimir Putin’s machinatioins in Ukraine menacing his high-cost oil and gas exports..
Dutch Shell, which has already spent $7 billion looking for oil and gas off the Arctic coasts of Alaska, has now received permission for offshore deep drilling for gas. Later this month Alaska Governor Bill Walker argue in a personal session with Obama l that his state’s LNG and natural gas development is a main strategy to cut carbon emissions and lower energy costs. With proposals for his state to take 51% of some new oil and gas developments, he has a sheaf of proposals for a huge boost for Alaska’s revenues, impacted by the general economic downturn.
Looking back, luckily there were enough private shale holdings to develop the technologies which have brought about the whole energy revolution. And kudos again go to the industry for meeting – at least so far – Saudi efforts to undercut American shale production by going full blast in their own production and export to keep world prices low.
Yet several factors have so far defeated the Saudis in their effort to sabotage American selfsufficiency: the increasing skills of American technology, the cutbacks in China’s imports because of a rapidly declining economy and a moderation in the anticipated Indian takeoff, and the cutback in American imports because of the shale bonanza.
The Obama Administration has even timidly announced what could be one of the most important reforms in the domestic economy: removing the forced use of grain alcohols [ethanol] in gasoline sold gasoline sold at domestic pumps. Although ethanol has been a hallowed icon for some enviromentalists, its actual application has been a $10 billion a year bill for the taxpayer. Furthermore, the process distorts the food chain: making ethanol of corn requires huge tracts of land, fertilizers, pesticides, tractor and truck fuel, and natural gas for processing. That’s even a pretty strong argument against forcing the motorists to use it for the dedicated enviromentalist.
There is a worldwide economic and moral issue as well. Turning corn into ethanol raises feed prices and thereby the cost of beef, pork, chicken, eggs, fish and international food aid. It raises world food prices, a critical problem for many in the backward parts of the world who are food importers. So in addition to other concerns, there is a humanitarian aspect as well.
Ethanol is a bobanza of course, for the auto repairman. It wreaks havoc on the automobile itself, especially older cars. It can cause gaskets and other rubber parts to fail, causing fuel leaks and even engine failure or fires. With every prospect of American fossil fuel surpluses for the foreseeable future it is time to step back to the market and end required ethanol additives for gasoline and diesel fuel.