Reckless Energy Policy Will Cost Americans Money and Jobs

With the Obama administration’s oft stated preference for alternative energy sources, what will happen to the industries built around conventional energy sources like coal, oil and natural gas?

The whitehouse.gov Web site proclaims the following in The Agenda - Energy & Environment: “President Obama and Vice President Biden have a comprehensive plan to invest in alternative and renewable energy, end our addiction to foreign oil, address the global climate crisis and create millions of new jobs.” Notice the only mention of any of the current major forms of energy was getting less oil from foreign sources, and the “millions of new jobs” apparently will not come from expanding the search for domestic oil and gas supplies.

It goes on: “The energy challenges our country faces are severe and have gone unaddressed for far too long. Our addiction to foreign oil doesn't just undermine our national security and wreak havoc on our environment – it cripples our economy and strains the budgets of working families all across America.”

Once you get past the exaggeration, there is a little bit of truth in that statement.

Here is what the administration proposes:

* Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
* Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
* Put 1 million Plug-In Hybrid cars – cars that can get up to 150 miles per gallon – on the road by 2015, cars that we will work to make sure are built here in America.
* Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
* Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.

President Obama’s very ambitious energy policy implies that coal, oil and natural gas, staples of American energy production, will simply be phased out. But this plan begs the question “how can we reduce the use of foreign oil as quickly as proposed without increasing domestic oil production?”

Gary Luquett, President of Chevron North America Exploration and Production Company, told the House Committee on Natural Resources recently that “even with the most aggressive development of renewables and alternatives, every major study of our energy future underscores the critical importance of oil and gas in meeting America’s energy needs for decades to come.”

No sensible energy policy can ignore the fact that alternative sources are inadequately developed to make a significant contribution any time soon, and they are expensive, to boot.

We’ve known for years that we must end dependence on foreign oil; the US cannot continue to rely for so much of our energy needs from countries that don’t like us. But on this issue we have been our own worst enemy: the primary reason we still are under the thumb of foreign oil producers is that Congress has blocked the oil and gas industry from drilling in the places where enormous oil and gas supplies are most likely to exist. Therefore, the best way to reduce dependence on foreign oil is to open offshore areas to new exploration, and increase our own oil supplies. We can then continue at a normal pace to develop alternative sources to a point where they are efficient and affordable enough to begin to replace fossil fuels.

But looking to new, undeveloped, unproven energy sources to replace existing, abundant and proven energy sources that already have the infrastructure in place for accessing and using them is foolish and short-sighted.

Reading the administration’s itemized list of goals makes it obvious that the President opposes using fossil fuels because of the wildly popular idea that burning coal, oil and natural gas damages the environment. It is by no means certain that pollution from these abundant fuels is actually harmful to the environment, however, and to use that criterion to determine that national energy policy needs a radical change is unjustified and would unnecessarily subject Americans to economic penalties.

Trying to force under-developed, expensive and unproven new energy technologies on the American people at a time of economic stress is ill-advised and would negate the benefits of the tax breaks of which Mr. Obama is so proud.

Furthermore, the cap-and-trade scheme can be expected to raise the cost of electricity and gasoline, as fossil fuel burning businesses implement costly measures to reduce carbon emissions, buy another business’ excess carbon credits, or pay fines for exceeding their caps. And the more aggressive the reduction in allowable emissions, the higher the costs businesses will encounter and pass on to consumers. Higher energy prices will cost jobs as economic activity slows and manufacturing is forced overseas where energy costs are lower.

Even though burning fossil fuels has been shown to not increase pollution to dangerous levels, it makes sense to move to less polluting technologies. What doesn’t make sense is to rush into alternative energy sources before they are adequately developed, and heap higher electricity and fuel costs, and job losses on the country for no better reason than somebody wants this goal met in a hurry.

Cross-posted from Observations