Obama Clueless on Energy – Part 2

In Part 1, we looked at energy policy regarding electricity. This time we look at transportation fuel.

According to the White House website, the Obama administration wants to: Within 10 years save more oil than we currently import from the Middle East and Venezuela combined. Presumably, the real goal is to be independent of these foreign sources so we are not at their mercy. I agree with this goal, but not the way the administration plans to go about it.

Between coal, oil, oil shale and natural gas, we have sufficient domestic resources to be energy self-sufficient. Government and environmentalists are the only impediments. In Obama’s home state of Illinois, for instance, coal deposits have the energy equivalent of all the oil in Saudi Arabia and Kuwait combined. We could use that to make both gasoline and electricity.

The Minerals Management Service has estimated potential resources of technically recoverable oil and gas in our outer continental shelf as follows:

West coast 10.5 Billion barrels oil, 18.3 Trillion cubic feet (cf) of natural gas;

East coast 3.8 billion barrels oil, 37 Trillion cf gas;

Eastern Gulf of Mexico 3.4 billion barrels oil, 19.4 Trillion cf gas.

Yet all of these resources are off limits due to Congressional moratoria, and these moratoria are not only depriving us of transportation fuel, but they are also depriving the government of considerable revenue.

According to a report at MasterResource.org, the Energy Information Administration has estimated oil and gas production in the United States with and without restrictions. By the end of the next decade (2019), restrictive permitting and tax policies will reduce the potential annual government tax take from oil and gas production by more than the total expected yield of the Obama tax program in the oil and gas sector. In the ten years to 2019, the time-frame used in the government’s tax increase proposal, restrictions and new taxes will have reduced the tax take from oil and gas production by more than $118 billion.

Instead of exploiting our own abundant natural resources, the Obama administration thinks we can “save” our way to energy self-sufficiency.

Obama proposed increasing the Corporate Average Fuel Economy (CAFE) standards. Currently, automakers must meet a CAFE standard of 27.5 mpg for cars and 22.2 mpg for pickups and SUVs. The Obama proposal would require automakers to raise fuel economy for cars, pickup trucks and SUVs to 35 miles per gallon by 2020. Rather than let the free market decide gas mileage, the government is using coercive command and control.

The Competitive Enterprise Institute has produced a paper (http://cei.org/pdf/5967.pdf(http://www.cei.org/pdf/5967.pdf)) on why raising CAFE standards is a bad idea. Their main point is that CAFE kills. CAFE restricts the production of larger, heavier vehicles. These vehicles are lower in fuel economy, but they are also safer than similarly equipped smaller cars. A 2002 National Academy of Sciences study concluded that CAFE’s downsizing effect contributed to between 1,300 and 2,600 deaths in a single representative year, and to 10 times that many serious injuries. A 1989 Brookings-Harvard study estimated that CAFE caused a 14- to 27 percent increase in occupant fatalities-an annual toll of 2,200 to 3,900 deaths. A 1999 USA Today analysis concluded that, over its lifetime, CAFE had resulted in 46,000 additional fatalities.

Bottom Line: Obama and Congress are impediments to sound energy policy.