Posted by: bmeverett | October 14, 2009

Some hard choices are easy

My old friend the New York Times has another incoherent editorial in today’s paper, lauding the Administration’s decision to reduce domestic oil supplies. The Times commends Interior Secretary Ken Salazar for his decision to freeze oil-and-gas development on 60 drilling sites in Utah.
The Times is firing off all its rhetorical big guns. The Bush Administration was in a “headlong rush” to disturb “fragile lands”. The Bush Administration policy was “drill-now, drill-everywhere.” In the Arctic, “ecological damage to some of the world’s richest fisheries could be staggering.”
The Obama Administration’s policy, on the other hand, is “sensible”. The Times has consulted its favorite source on policy questions, a group called “Most Scientists.” According to the Times, this key group is urging caution. This from a newspaper that supports expensive cap-and-trade legislation based on the mushy “science” of climate change.
Most people agree that reducing US dependence on imported oil would be a good thing. The American Left, however, including the Democratic Party and the environmental movement, wants to achieve this end only through the most expensive policies imaginable: wildly uneconomic renewable energy, high-cost public transportation, high taxes and unattainable fuel standards. Most of these policy proposals would generate tiny reductions in oil use in return for very large investments.
There’s an easier way. The US probably lacks the hydrocarbon resource base to become independent, but we could undoubtedly produce a lot more oil and gas if the federal government would simply lease available land for development. The environmental objection to increased oil and gas production is weak. First of all, modern technology, even for Arctic oil development, is highly advanced, involving a minimal footprint and little if any lasting damage. Directional drilling, for example, allows wells to be drilled from a central location to access oil reservoirs miles away and miles underground. It is true, as the Times points out that oil spills are a threat. The oil we don’t produce here in the US, however, has to be imported by ship and unloaded at an American port. The chances for oil spills are no greater for domestically produced oil than for the imported oil it would replace.
The biggest advantage of increased domestic production is economic. Not a single wind farm would be built in the US without a heavy taxpayer subsidy. Wind power is intermittent and requires fossil fuel back-up to generate power when the wind is unavailable. We produce only a small amount of renewable power because its burden on the economy is so high. Leasing additional acreage for exploration is automatically cost effective. Why? Because companies won’t bid on it unless they can make money, which in turn means they can produce and sell oil at the market price. If the oil is too expensive to produce, companies won’t do it. Even if they make a mistake, they’re spending their shareholders’ money, which is voluntarily given, and not taxpayers’ money, which is coerced.
Weak dollar got you worried? How about producing more oil and home and buying less overseas?
How about the deficit? Leasing federal lands generates money for the federal and state governments through lease bonuses and royalties without any increase in taxes or energy costs.
One of the silliest imaginable outcomes is occurring in waters offshore Cuba, where oil development is underway by the Spanish oil giant Repsol in partnership with the Cuban state oil company. The Florida coast will be under the threat of oil spills from projects over which we have no regulatory control and which provide not one penny of benefit to the United States. Why in the world are we keeping US companies from exploring the waters off Florida? Don’t people in Florida drive?
It’s hard to see why the Times would consider importing oil rather than producing it domestically as “sensible.” Maybe the Times has concluded that any policy that generates profits for corporations, particularly the hated oil companies, is unacceptable. (The Times clearly detests profits, and doesn’t earn any itself.)
Sometimes governments have to make hard decisions. Our government doesn’t even seem to be able to make easy ones. Our best hope for the future is a wave of popular revulsion against a range of policies that the Times regards as “sensible” and a return to government approaches that actually work. Stay tuned.


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