For the last two years, the president and his party have done all that they could to lower domestic oil production. We have seen constant charges against the oil companies that they are something akin to representatives of the devil. We hear over and over of the need to raise taxes on energy producers. Beyond the words, we have seen Obama destroy the off shore drilling industry in the name of the environment, and that happened because on well out of tens of thousands drilled over the last fifty years had a catastrophic blowout. We cannot minimize the damage done by the oil leak, but we do know that it was much, much less than originally thought. We also know that much of the problem with the well was the incompetent nature of the response from the administration. So Obama has stopped all drilling because the Obama administration looked so bad during the oil spill. The cut-off lets Obama and the Obamacrats look like they are actually doing something. Of course, since we are told that it will be at least seven years before drilling can recommence, what they are doing is stalling and nothing more. Any competent group could have come up with revised procedures and regulations that would have allowed drilling to start again within six months. Indeed, there has already been a ruling from a federal court that holds the administration in contempt for ignoring a court order that found the drilling halt to be illegal.
The big point now, however, is that oil prices are soaring on the news out of the Middle east. Libya may soon have all oil exports cut off. The same is true in Bahrain. Algerian production is at risk and so, to a lesser extent is that of the big one: Saudi Arabia. If there are any of these disruptions, oil could fall into a supply squeeze. More would be consumed each day than produced. that will drive the price higher and higher. It is very possible that the current price of oil could double.
So what would that price rise do to the USA and its economy? Nothing good! A rise of $100 per barrel of oil would suck about an extra $300 billion per year out of the US economy to send overseas. It would also pull at least double that amount out of the pockets of consumers. In short, it is a recipe for another recession, and not a mild one.
It would be a very good idea for Obama to now take steps to push domestic energy production. A decision to go back to drilling now could lead to higher production in a year or maybe less. There has already been great damage to the drilling industry, but fast action could save most of what is there. Two more years of stalling by Obama is likely to cost millions more jobs in this country.
Obama could also put on a push to help people convert from the use of oil to natural gas, a fuel that is both plentiful in the USA and much less expensive. In the last thirteen years, the portion of electricity generated from natural gas has jumped from 13% to 23%, and there is not much oil fired electricity generation to change over. Home heating, however, is another matter. Particularly in the Northeast, there are millions of homes that heat with oil. Switching these homes over would save billions each year (and reduce emissions as well). Of course, instead of an effort to foster natural gas growth, the Obamacrats have been taking actions to threaten further development of domestic gas reserves.
The current crisis may turn out to be a big nothing. No matter what happens, however, it ought to be a wake up call for Obama and the Obamacrats. If the past is any indication, however, Obama is likely to hit the snooze button when the alarm goes off.
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