Friday, January 6, 2012

Obama’s green war on jobs and energy

In spite of acknowledging the need to wean the United States off of Middle Eastern oil, the Obama Administration, prompted by core supporters in the environmental lobby, is waging a job-killing war against two projects that would help the economy, produce jobs for Americans, and, perhaps most importantly, reduce our dependence on oil imported from unfriendly foreign countries.

The first issue is the EPA’s proposed regulation of fracking. “Fracking” is a slang term for hydraulic fracturing, the process of injecting fluids, primarily water, into rocks to create larger fissures. The larger fissures allow more oil or natural gas to flow into the well. The process makes it possible to tap into previously unreachable oil and natural gas reserves. The debate on fracking centers on the Marcellus Shale formation in Pennsylvania and Ohio and the Dakota oil and gas fields. Fracking has also been used safely in Texas since the 1950s.

Opponents of fracking are concerned about the impact on air and water quality. Opponents will likely be heartened by the recent release of an EPA report that suggests that fracking may contaminate groundwater. The Wall Street Journal notes that the report, which has not been peer reviewed, admits that chemicals detected in the water in Pavilion, Wy., where the tests were done, are within acceptable limits. Further, the problematic chemical detected is not used in fracking at all, but is a common fire retardant used in plastic components for drinking water wells. This leads many to believe that the contamination is not from fracking at all.

The decision on whether to allow fracking in the Marcellus Shale is important because of the size of the field. It contains an estimated 500 trillion cubic feet of natural gas. The amount recoverable, estimated at about ten percent of the total, is almost equal to two years of natural gas production for the entire rest of the country. As technology advances, more oil and gas that was previously unreachable can be recovered.

Allowing fracking would not only create jobs in the natural gas and oil industries, it would be a boon to the rest of the economy in the form of cheaper energy costs as well. When energy costs go down, manufacturing costs decrease as well. This makes American products more competitive and helps American businesses grow.

The second project that President Obama’s administration is intentionally delaying is the Keystone oil pipeline. The Keystone pipeline would run from Canada’s Athabasca oil sands in Alberta to American refineries in Texas.

The benefits of the pipeline are easy to see. Most obviously, it would relieve U.S. dependency on Middle Eastern and Venezuelan oil and contribute to national energy security. The additional supplies of oil should also help drive down energy costs. Further, TransCanada, the pipeline’s owner, estimates that construction of the pipeline would create 20,000 construction and manufacturing jobs in the U.S. Other jobs would be created in other industries, such as restaurants and hotels, as well. The effect of lower energy prices would create positive effects across the economy. Total value to the U.S. economy is expected to exceed $20 billion.

The pipeline was proposed in 2008 and approved by Canada’s National Energy Board on March 11, 2010. Since then, the proposal has been winding its way through a labyrinth of state and federal bureaucracies. Almost two years later, no final decision has been made at the federal level.

President Obama had previously announced his intention to delay making a decision on the pipeline until 2013, but a provision in the payroll tax extension bill forces him to make a decision in 60 days, moving up the deadline to late February. Given the enormous economic benefit in a time of economic crisis, why is President Obama delaying the approval of the pipeline?

The answer lies in the makeup of President Obama’s base. Environmental groups that are key supporters of President Obama oppose the pipeline over concerns about global warming, possible groundwater contamination in the event of an oil spill, and basic opposition to any development of the oil sands.

There are problems with this position. One is that if the Keystone pipeline is canceled, the oil sands are still likely to be developed. If the United States does not gain access to this Canadian oil, it will, in all likelihood, go to the Chinese. If the Chinese buy Canadian oil, it will be transported via tankers to China, which is a far less safe mode of transportation than a pipeline.

Even though the United States still imports almost half of the oil that it consumes according to the Energy Information Administration, in 2011 the U.S. became a net exporter of fuel. With additional Canadian oil flowing to U.S. refineries combined with a weakening dollar, U.S. export numbers should continue to improve.

Ironically, Obama’s base is becoming split over the pipeline issue. While environmentalists oppose the project, unions have voiced their support for the pipeline on the grounds that it will create jobs and help the economy. If he decides against the pipeline, President Obama risks losing support to a pro-growth candidate. On the other hand, if he approves the pipeline, environmental activists may support a third party candidate, such as a Green, or stay home.

The interference of President Obama’s EPA with fracking and the president’s long delay in approving the Keystone pipeline are two examples of how President Obama’s commitment to a future green energy system and his environmentalist supporters are hurting the United States today. High energy costs could be somewhat reduced by more oil supplies and more jobs could be created if the president approves these projects.

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