How our government subsidizes job, wealth, revenue and people-killing energy policies
President Obama’s speeches sum up his views on oil, natural gas and energy prices in just 44 words.
“We have less than 2% of the world’s oil reserves. We’re running out of places to drill. We’re running out of oil. We need to end our $4 billion in annual taxpayer subsidies to oil companies. We need to invest in clean, renewable energy.”
As Congressman Joe Wilson would say, That’s a lie! Or at least a deliberate distortion of facts.
Oil “reserves” are what can actually be produced at today’s prices, with existing technologies, and under current laws and regulations. America has vast oil, gas and coal resources – centuries of potential hydrocarbon energy. We certainly have the technology to extract it, especially at $100 a barrel. What we don’t have are laws and regulations that allow us to do so.
If the President were honest, he would say: “We’re running out of oil that Democrats, my Administration and our radical environmentalist allies will let this country produce. We’re running out of places we’ll let companies drill. We have 2% of world oil reserves, because we’ve made most of our resources off limits.”
If he were honest, he would also say: “We will demonize, penalize, hyper-regulate, tax and kill hydrocarbons. But we will mandate and subsidize wind, solar and ethanol, ignore their environmental and human costs, and extol the measly, expensive, unreliable energy they produce.
“We oppose subsidies for oil and coal companies (even in the form of tax deductions for actual expenses), because they promote drilling – and their CEOs and workers rarely vote for us. We support huge subsidies for wind, solar and ethanol, because those guys help keep us in power and drive a transition to renewables.
“We know oil, gas and coal generate royalty and tax revenues, and provide 85% of the energy that powers America and supports jobs, commuting, factories, transportation, tourism, hospitals, ambulances, churches and living standards. But we don’t care about that or about revenues, except when they come from higher taxes on corporations – or rich families that make over $250,000 … $150,000 … $65,000 a year. We detest free enterprise, and think government should control more of your energy, economy and lives.
“And we love the way supply and demand laws drive prices up. DC area gasoline is already $4.25 a gallon. That’s about half of what Energy Secretary Chu and I would like it to be: European prices. And we know restricting energy supplies even further will send all prices skyrocketing even higher.”
As crazy as they sound, these ideologies are even more frightening and demented in practice.
Oil production in the Gulf of Mexico is projected to drop 240,000 barrels a day this year. That’s $9 billion more that America will have to pay this year to import replacement oil … $1.3 billion we won’t collect in federal royalty payments … thousands of jobs that won’t be “created or saved” … and billions in corporate, personal income and sales taxes we won’t collect.
The US Geological Survey says upwards of 90 billion barrels remain to be discovered in the Arctic. ANWR alone could hold 16 billion barrels of recoverable oil, producible from areas totaling 1/20th of Washington, DC. But it’s all locked up, off limits to We the People who own it.
Meanwhile, the huge Prudhoe Bay field is slowly running dry. So the Alaska Pipeline is operating at a fraction of its capacity, which increases corrosion and blockages in the pipe, magnifies the risk of ruptures and spills, and threatens the future of all Alaskan oil. Shell Oil spent $3.5 billion acquiring and exploring leases in the Chukchi Sea – but Interior and EPA refuse to issue drilling permits, because diesel emissions from the rig could cause global warming or affect the health of Natives 20-50 miles away! It all adds up to less oil, less royalty revenue, fewer jobs and more imported oil. Just as Obama & Co. intend.
Made in America technology and innovation have unlocked centuries of new natural gas in US shale formations (and similar deposits all over the world). This game-changing development has reduced gas prices … completely unhinged Obama, Democrat and other environmental ideologues … and devastated their “we’re running out” mantra. So they’ve rallied the troops, to produce a bogus “documentary” film (“Gasland”), a sloppy Cornell University “study,” and reams of new EPA regulations, to stymie shale gas. A thorough analysis by science writer Matt Ridley provides much needed facts and perspectives. (The same horizontal drilling and “fracking” technologies are also unlocking eco-nightmarish new oil riches.)
Coal generates half of all US electricity, and 70-98% in twelve states – sustaining jobs by keeping AC, heating and machinery operating costs at about half of what is typical in states that get little or no electricity from coal. But EPA has issued 946 pages of new air quality rules and launched a massive propaganda campaign against mercury emissions – even though those power plants account for barely 0.5% of all mercury in the air Americans breathe. President Obama has said he wants to “bankrupt” the industry.
All told, over a billion acres of onshore and offshore energy prospects are locked up – costing us centuries of fuel, millions of jobs, and hundreds of billions in bonus, royalty and tax revenues. Of course, there are “no quick fixes” for our energy problems, as President Obama loves to remind us. But if we’d begun drilling in some of these places 10-20 years ago, we wouldn’t be in this fix today.
As to subsidies, even the alleged billions for oil companies are a pittance compared to subsidies for wind, solar and ethanol. Subsidies per unit of energy actually produced are even more shocking. According to the Energy Information Administration, gas-fired electricity generation received a mere 25 cents per megawatt-hour in 2007 subsidies; coal got 44 cents. By comparison, wind turbines got 23.4 dollars and photovoltaic solar received 24.3 dollars per mWh.
Moreover, oil and gas is 24/7 – with 95% reliability. The industry supports 9.2 million jobs, directly and in companies that depend on reliable, affordable oil, gas, gasoline, fertilizer, plastics, pharmaceuticals and electricity. It generates federal revenue, paying billions in taxes and royalties. The same holds true for coal.
By contrast, wind and solar produce electricity just two to eight hours a day – with backup generators making up the monumental shortfall. That means we must duplicate every megawatt of wind and solar with a MW of (mostly gas-fired) backup power – which requires even more land and raw materials to support the government-mandated transition to “eco-friendly” renewable energy systems.
More appalling, instead of generating tax or royalty revenues, wind and solar require perpetual subsidies. Solar panel maker Solyndra got a $535 “stimulus” loan in 2009; then, the day after the 2010 elections, it announced it was laying off 190 people. In April 2011 alone, the Department of Energy poured $9 billion in loan guarantees into wind and solar projects that will blanket large swaths of crop and habitat land.
Ethanol receives subsidies of $5.72 per million Btu (190 times what oil and gas companies get), so that we can burn food to make fuels that government won’t let us drill for. In 2010, American farmers turned 36% of their corn crop into ethanol, which provides 30% less energy than gasoline – meaning cars get less mileage per tank for more bucks per gallon. Making one gallon of this substandard fuel also requires some 1,700 gallons of water and large quantities of petroleum-based fertilizers and pesticides. Worse, energy economist Indur Goklany calculates, biofuel policies cause up to 200,000 deaths a year in poor countries, by raising food prices, increasing malnutrition and making people more vulnerable to disease.
Overall, since assuming power in Washington, the Obama Administration has channeled over $60 billion into the “green jobs” sector. And the renewable energy subsidy train rolls on, with tanker cars of red ink bankrolled by US taxpayers and consumers – to provide less than 1% of the energy we use.
If Congress still refuses to hold inquiries and end these tax-subsidized scams, perhaps the most we can hope for is that a few courageous and publicly spirited governors and AGs will step into the breach.
Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow and Congress of Racial Equality, and author of Eco-Imperialism: Green power – Black death.