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President Obama’s Domestic Energy State Of Delusion

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Larry Bell, Contributor

President Barack Obama’s administration has claimed a number of remarkable accomplishments that will reduce dependence upon foreign oil and secure future energy security. Statements leading up to and during his January 24 State of the Union address take credit for highest levels of natural gas production in more than 30 years, record oil production in eight years, reduction of oil imports by an average of 1.1 million barrels per day, and making the U.S. a net energy exporter.

To hear him tell it, these achievements, to the extent they really exist, are appropriately attributable to his foresight and actions, rather to than to an entrepreneurial energy industry. Speaking at a January 17 meeting of his Jobs and Competitive Council he complained about lack of recognition of this fact, stating, “Folks are acting as if that [natural gas boon] just sprung out of thin air and is one more example of the dynamism of the marketplace.” Yup, under his leadership, government did it.

Furthermore, his masterworks have but only begun. Next he will open up 75% of our potential offshore oil and gas resources for development, and approve enough renewable energy projects on federal land to power three million homes.

Of course there is obviously a small catch. He will need a little more time, another four years beyond this one, to really solve everything. But before we cast those 2012 ballots to allow that to happen, let’s review the veracity of his many claims thanks to lots of fact checking help from the Institute for Energy Research (EIR) and Politifact.com.

First, he’s right about natural gas production being at record high levels and oil up very slightly, but he apparently forgot to mention that is occurring on private and state-owned lands, not on federal lands that presidents have control over.In fact the U.S. Energy Information Administration (EIA) has reported that both natural gas and oil production have declined on federal lands since the beginning of the Obama administration.

As for domestic oil, it is also true that production has reached slightly highest levels since 2003, but yields on federal lands have fallen 43% over the past 9 years, and have done so most rapidly under Obama’s watch. While total levels have been quite stable, EIA’s estimated production for 2012 is only about 13% higher than for the lowest year over an eight-year period (about 2,055,646,000 barrels, compared with 2,073,453,000 barrels in 2003). In January 2009 when President Obama was inaugurated, the U.S. produced 5,154,000 barrels of oil per day. By November 2011 (the last month for data), the U.S. was producing 5,874,000 barrels per day.This 700,000 increase occurred once again on private and state lands. Not only is the Obama administration making it more difficult to produce energy on federal lands, his minions are also leasing out less lands than in the past. Due to actions that limit offshore areas where oil can be produced and cancel other leases, production on federal lands will most likely continue to fall.  Yet fortunately, the most recent EIA “Short-Term Energy Outlook” published in January forecasts increases in total crude oil production in 2012 and 2013 thanks to increases in onshore production in the lower 48, which overshadows decreases in Alaska and the Gulf of Mexico.

Has the president, as he bragged, caused the amount of oil we are importing to be reduced? Very likely, the answer is a clear “yes”. More than half of this reduction is because of the ongoing recession along with much higher fuel prices which have caused consumers to drive less. But has the U.S., as Obama stated, become a net energy exporter? He didn’t provide any information source to back up that claim, and it contradicts EIA data that shows this to be far off the reality mark. In 2010 the U.S. imported 21 quadrillion of the 98 quadrillion Btus of energy used.

And what about that bold new proposal to make more than 75% of undiscovered oil and gas resources off our shores available for development, while putting in place common-sense safety requirements to prevent a disaster like the BP oil spill from happening again? For historical perspective, let’s remember that when Obama was elected, nearly 100% of the offshore areas were available for exploration and development. Since then his administration has imposed severe limitations. One case in point is that despite bi-partisan support from the Virginia delegation, including Democratic senators, exploration off Virginia’s coast has been prohibited.

Do you happen to remember when the Obama administration imposed a nearly year-long deep water drilling moratorium following the BP oil spill that blocked U.S. access to an estimated 7.5 billion barrels of oil and nearly 60 trillion cubic feet of natural gas? And when that very same administration also invested more than $2 billion in trade credits with Brazil’s state-owned oil company Petrobras to finance offshore exploration in their Tupi oil field in the Santos Basin near Rio de Janeiro? (Investor’s Business Daily has recently reported that an Ex-Im bank source informed them that the amount could go way higher, “in the neighborhood of $20 billion”.) Do you happen to recall that March 19, 2010 White House press conference when the president pledged that America would become one of their best customers?

Well, it seems they got a better offer. Ten months later Brazil snubbed Obama’s generosity with our money and opted to sell its oil to another country. China bought up a 40% stake in Repsol-YPF’s Brazil unit which has dibs on drilling in the offshore Santos Basin where the biggest deepwater discoveries are occurring, along with a 30% stake in Galp Energia, a Portuguese company that has also acquired rights there. Meanwhile, some of those embargoed out-of-business deep water rigs we had planned to use sailed off into the sunset to Brazil.

Having been jilted by Brazil, one might imagine that the president might be more appreciative of our neighbor to the north. Yet shortly before his State of the Union address he single-handedly rejected issuing a Keystone XL pipeline permit that does great injury to Canada as well as to American energy consumers, businesses and job opportunities. A scant one month earlier his administration imposed onerous regulations on the American economy through EPA standards that will have little or no measurable effect on health from targeted emissions.

While extolling virtues of natural gas and cheering his administration’s accomplishments, the president continues to call for higher taxes and restrictions on those industries we depend upon to produce it.  Included are proposed windfall profit taxes, use-it or lose-it land fees, and agency foot-dragging on leases awaiting federal permits.  At the same time, he stumps unrelentingly for taxpayer handouts and other special benefits for Solyndra-style green energy companies that can’t compete in free markets, and most likely, never will.

This is a president who promoted alarmism about a scarcity of American oil resources, mistakenly declaring in June 2010 that “We consume more than 20% of the world’s oil, but have less than 2% of the world’s oil reserves.” In reality, the Institute for Energy Research founded by fellow Forbes contributor Robert Bradley has reported, based upon government data, that North America land areas contain twice the combined proven reserves of all OPEC nations, and enough natural gas to provide for America’s electricity needs at current usage rates for the more than 500 years.

A continuation of current White House agendas will only ensure that the administration’s energy scarcity narrative is realized. Moreover, as IER President Thomas Pile observes , “If the state of the union is actually stronger, it comes despite the policies of President Obama and not because of them.”

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Obama’s Words Don’t Match with Action on Oil and Gas

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Romina Boccia
January 30, 2012 at 3:30 pm

At this State of the Union address, President Obama proudly stated that “American oil production is the highest it’s been in eight years” and declared that his Administration would “open more than 75 percent of our potential offshore oil and gas resources.” While President Obama spoke favorably of the role that oil and gas development play in America, the President’s and his Administration’s actions don’t match with his words.

There are several areas where the President and his Administration are unreasonably hindering access to more oil and gas for Americans and threatening the industry with punitive measures:

  • Keystone permit rejection. The Keystone XL pipeline would deliver oil from our Canadian ally, relieve some of the pain of high prices at the gas pump, and create jobs in America. Nevertheless, and despite a State Department environmental review concluding that the project poses no significant environmental risk, the President chose to reject TransCanada’s permit application to build the pipeline.
  • Targeted tax hikes. The President continues to threaten the oil industry with targeted tax hikes. Under the rhetoric of eliminating subsidies for the industry, the President’s proposal would eliminate certain tax treatments for oil that are available to many industries, effectively singling out the oil industry for a tax hike.
  • Slowdown of production on federal lands. While American oil production has been increasing, the vast majority of that production is taking place on private lands. Production on federal lands is actually 40 percent lower than it was 10 years ago. The House Natural Resources Committee also reports that under the Obama Administration, 2010 had the lowest number of onshore leases issued since 1984.
  • Fracking regulation. Hydraulic fracturing (or “fracking”) is a proven oil and gas extraction process that should not be subject to overly burdensome regulations. The Environmental Protection Agency is currently considering federal regulation of the fracking process under the Safe Drinking Water Act. The problem is that the agency is following a procedure that even the Department of Energy criticized for its “selective focus” on “negative outcomes.”

Words alone will not make energy more abundant and affordable, nor will they create the energy-related jobs that would make the American economy stronger. If the President is truly concerned about increasing America’s energy access, he certainly has a funny way of showing it.

For policies in that direction, Heritage policy analyst Nick Loris explains in two papers how to make gas and electricity prices more affordable and how to create jobs and raise government revenue through energy exploration.

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Natural gas sector set up by Obama to be sabotaged?

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Industry insiders fear rules, taxes

By Ben Wolfgang

The Washington Times

President Obama spoke of the role natural gas must play in America’s energy future during his State of the Union address last week, but industry insiders fear it’s merely lip service designed to distract from what they consider the administration’s behind-the-scenes plan to sabotage the sector.

“They’re trying to make it more difficult for the industry to survive while the president is standing in front of the country saying we’re going to create jobs through hydraulic fracturing,” said Ken von Schaumburg, former deputy counsel at the Environmental Protection Agency during the Bush administration.

Mr. Obama “is talking the game, but you can’t support the industry and then have this aggressive rule-making process going on,” Mr. von Schaumburg said.

At the same time the president boasts of the nation’s vast shale gas deposits, his EPA is poised to make extracting that fuel much more difficult. The agency will this year release a widely anticipated study on hydraulic fracturing, or “fracking,” the use of water, sand and chemical mixtures to crack underground rock and release huge quantities of gas. The practice is widely used in Pennsylvania, North Dakota and other states, and has helped revitalize small-town economies and led directly to the creation of thousands of jobs in recent years.

Many in the gas industry fear that the upcoming EPA study will call for harsh new regulations on the process, and many environmental groups – a key constituency for Mr. Obama during this year’s re-election bid – are publicly pushing the administration to outlaw fracking entirely.

The EPA has already dealt a severe blow to fracking with the release of a report last year alleging the process was responsible for water contamination in Pavillion, Wyo. That study was met with ridicule from across the natural gas business because it was put out before being subjected to an independent, third-party review. While the EPA has promised such an unbiased look will be conducted, the study has likely already had a negative impact on the public perception of fracking.

Possibly making matters worse, Mr. Obama has over the past week repeated his calls for increased federal investment in the renewable energy sector, a policy some view as an effort to stack the deck against natural gas.

“Job creators and American consumers should welcome the president’s latest energy promises with suspicion,” Thomas Pyle, president of the nonprofit Institute for Energy Research, said in a statement following Mr. Obama’s State of the Union speech, during which he called for an “all-of-the-above” approach toward energy independence that relies heavily on American oil and gas reserves.

“In the same breath that he extolled the virtues of natural gas development and called for higher energy taxes on the companies that produce it, President Obama continues to press for more taxpayer subsidies for Solyndra-style green energy companies,” Mr. Pyle said.

Mr. Obama’s positive rhetoric toward natural gas could also represent a desire to please both sides of the debate, though the move to the middle has, thus far, seemed to satisfy no one. After the speech, environmental groups blasted the administration for being too timid and called for an all-out war on fracking.

“We can’t wait much longer for the clean energy revolution. We need to clean up a fossil fuel industry run amok, by ensuring … natural gas safeguards that go much further than what the president suggested,” Sierra Club Executive Director Michael Brune said in a statement after the State of the Union address.

So far, however, the administration has stopped far short of what the Sierra Club and other liberal groups want to see. Mr. Obama did, however, call for legislation requiring any company drilling on public land to disclose all chemicals used during the fracking process. Several states, such as Texas and Colorado, have already passed disclosure bills, and many leading companies voluntarily post detailed breakdowns of their chemical mixtures to the website fracfocus.org, an online clearinghouse.

Potential state or federal regulations aren’t they only problems confronting the gas industry. The explosion of natural gas extraction in areas like the Marcellus Shale region has glutted the market, keeping prices low for consumers but leading to diminished returns for drilling companies.

Last week, Chesapeake Energy, one of the largest players in the game, announced plans to reduce daily gas production by 500 million cubic feet, an 8 percent drop. The firm said it’s considering slashing production even further and predicts “flat or lower total natural gas production in the U.S. in 2012” as supply outstrips demand.

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Obama loves oil — Not!

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Peter Foster Jan 27, 2012 – 8:00 AM ET

Nothing more clearly indicates U.S. President Barack Obama’s economic muddledom and ideological stubbornness than the dog’s breakfast of energy policies revealed in Tuesday’s State of the Union address. The good news is that hydrocarbons are back (as long as you forget Keystone XL). The bad news is that “clean” energy isn’t going away. Instead it’s “all of the above.”

Without his nose growing visibly, the President claimed the government was behind the technological advances that led to the current shale gas boom, and even suggested that he might take credit for the rise in domestic oil production. In fact, Mr. Obama’s administration has hampered and castigated oil companies at every turn. In the light of the hysterical grandstanding over the BP Gulf spill (whose impact proved to be greatly exaggerated), it was ironic indeed to hear the President now declare a great opening up of offshore exploration.

The industry has responded to attacks by becoming more innovative and productive. According to the U.S. Energy Information Administration, between 2007 and 2010, U.S. oil production grew from 5.1 million barrels a day (mbd) to 5.5 mbd. The agency predicts domestic production will hit 6.7 mbd by 2020, helping take imports down to 36% of domestic usage in 2035 from 60% in 2005. So much for peak oil. Meanwhile, the EIA also predicts that by 2016, thanks to the shale boom, the U.S. will be a natural gas exporter.

This reluctant acknowledgment of the success of private innovation was accompanied on Tuesday by the usual cheap shots. The oil industry has been subsidized (a dubious claim) for too long. Its profits are too fat. The administration will demand that oil companies release details of fracking chemicals – as if they might wilfully poison Americans without public oversight.

These political sideswipes are unlikely to appease the environmental lobby. If the President thinks he won any Greenie Points by kicking the Keystone XL pipeline down the road, he certainly lost them all – and probably then some – with his support for fracking and offshore drilling. Radical environmentalists don’t want to hear about energy security, objective risks, or practical safety measures: they want to close down hydrocarbons as the work of the climate devil.

Over in the dodgy logic section, Mr. Obama suggested that shale gas success demonstrated that it took time for energy research to pay off, thus he was right to stick with promoting alternatives. However, the cases are entirely different. U.S. government research laboratories may indeed have been involved in technologies such as fracking and directional drilling, but these technologies were first developed in the private sector. Government presence should be attributed more to jumping on winners than skill in picking them. Plus, there is the private sector’s incurable penchant for grabbing government funds. When it comes to alternatives, however, while rent seekers are as thick on the ground as subsidized solar panels, the government has no winners on which to jump.

The President suggested government-stoked success in battery technology, but this is predicated on the success of electric cars, of which the President wants – Soviet target-style – to see a million on the road by 2015. Government support for “clean” energy isn’t an investment in the future: It is money down the drain. Naturally, the half-billion-dollar Solyndra debacle received as little reference as Keystone XL.

Critics have suggested TransCanada’s projection of 20,000 jobs in construction and manufacturing from the Keystone XL line, with many more spin-offs, is exaggerated. Strange how interventionists love the Keynesian multiplier when it refers to government expenditure but deplore the idea when it comes to creating real jobs. More important, job creation in subsidized wind and solar is entirely fictitious. One widely quoted Spanish study suggests that every alternative job costs two jobs elsewhere.

Mr. Obama, now presumably to his embarrassment, has referred to oil as a dwindling “19th-century” resource. If we are talking of being out of date, William Watson noted here yesterday that President Obama’s grasp of economics hasn’t yet absorbed the 18th-century wisdom of Adam Smith. Mr. Owe’s predilection for misconceived trade-is-war “mercantilist” policies was clear from his promise in the State of the Union not to “cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here.”

If they put in big destructive subsidies that threaten real trade war, then so will we. Anything they can do, we can do stupider.

One wonders if the President has the slightest clue about the flagging state of the wind and solar industries in Germany, or that what is boosting China’s alternatives industry is government subsidies … from other countries.

The President announced a plan to devote huge swathes of public land to the development of clean energy to power “three million homes.” He also apparently committed the Navy to buying a chunk of this power, as if it weren’t expensive enough to guard the Strait of Hormuz.

Mercantilist alternative energy strategies represent – as Jimmy Carter famously suggested – the “moral equivalent of war.” The problem is that it is war on one’s own economy. At least, with his partial ceasefire against the oil industry, President Obama is now only shooting himself in one policy foot rather than both.

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Obama in Fantasy Land

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Derek Hunter

This Tuesday, when President Obama delivers his State of the Union Address, we can count on it to be filled with the same platitudes, anecdotes, false promises, cooked stats and tenuous connection with reality we find in everything the man does. It will be a laundry list of progressive fantasy, couched in populist rhetoric and designed to make middle-class Americans think he has something more than the zero connection and concern for them he has.

President Obama doesn’t give a damn about the middle class, jobs, the economy or much of anything that distracts from his progressive agenda. But what do you expect from someone who shows such contempt for the nation’s pastime as to wear “mom jeans” when throwing out the first pitch at the All-Star game?

I’m kidding about “mom jeans,” of course, though only mostly. But about the contempt…not at all.

Last week President Obama went to Disney World – returning to his home country of Fantasy Land to deliver a speech about the need to boost tourism. Tourism is hurting, there’s no doubt about that. But taking a vacation is hardly a priority when you’re unemployed, and for the unemployed, Mr. Obama smacked them across the face with a dead fish.

The administration announced he would block the Keystone XL pipeline, a plan to move oil from Canada to refineries on the Texas Gulf Coast. The green left hates it because…well, it’s real energy rather than the “green” energy racket they love to milk for government subsidies. If it’s good for humans, you can count on these people to oppose it unless they’re lining their pockets with tax dollars or preparing to profit from forced customer base through regulation.

The pipeline would have meant jobs, good jobs, lots of them … but it seems, as Vice-President Joe Biden so artfully put it, that three-letter word that is President Obama’s No.1 priority – J-O-B-S – isn’t as much a priority as pleasing the cronies he desperately needs for his reelection.

How many jobs? Conservatives say a lot; progressives say not so many. I’m no engineer, but trenches from Canada to the Gulf of Mexico don’t dig themselves, and that pipe won’t magically appear once it’s dug – nor will it maintain itself. So, more than 100 but less than the millions who have lost jobs since President Obama took office. But creating some jobs beats creating no jobs, which is what President Obama chose when he took the side of his “green” elite friends against normal American workers.

Source

Obama signals State of Union a campaign rallying call

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By Alister Bull
WASHINGTON | Sat Jan 21, 2012 3:27pm EST

(Reuters) – President Barack Obama, offering a glimpse of next week’s State of the Union address, made clear on Saturday that he will deliver a starkly partisan election-year call for a “return to American values” of economic fairness.

“I’m going to lay out a blueprint for an American economy that’s built to last,” Obama said in a campaign video sent to supporters. “And most importantly, a return to American values of fairness for all, and responsibility from all.”

A reference to values is usually political code for social and religious issues, a rallying cry for conservative Republicans who want to deny the Democratic president a second White House term in November.

But Obama, who delivers his annual State of the Union address to Congress on Tuesday night, is running for re-election on his claim of being a champion for the middle class, while trying to paint Republicans as the party for the rich.

“We can go in two directions. One is towards less opportunity and less fairness. Or we can fight for where I think we need to go: building an economy that works for everyone, not just a wealthy few,” Obama said.

He is expected to use the speech to repeat calls for higher taxes on the wealthy, tax breaks to bring American manufacturing jobs home, steps to aid the housing market, and another nudge to China on currency flexibility to aid U.S. exports.

Republicans, who were holding a closely watched primary election in South Carolina on Saturday to help select their nominee to face Obama, say he is an old-fashioned tax-and-spend liberal whose policies hurt business and jobs.

Obama’s suggestions are therefore unlikely to make much headway in Congress, where Republicans control the House of Representatives.

Attacking congressional Republicans on their own turf, during a prime-time televised joint session of Congress, signals a de-emphasis on appeals for cooperation that have marked Obama’s previous State of the Union addresses.

Obama campaigned in 2008 on a message of reaching across the political aisle to change the way that Washington works, but now complains that Republicans have obstructed his efforts to collaborate and are only interested in seeing him fail.

Republicans say they oppose his policies because they view them as bad for the country, and say they are willing to work with the president on areas of genuine common ground.

FED UP

Polls show Americans are fed up with gridlock in Washington, but tend to blame congressional Republicans more than the president for the state of affairs.

Obama said he would focus on American manufacturing “with more good jobs and more products stamped with Made in America,” American energy, and skills for American workers as key parts of his plans for the economy.

“They’re big ideas, because we’ve got to meet this moment. And this speech is going to be about how we do it,” he said.

He is expected to emphasize incentives to encourage lenders to refinance underwater mortgages, which would ease a crucial obstacle to a recovery in housing and the broader economy.

He has also said he will put forward tax breaks to reward companies that bring jobs home to the United States, while eliminating tax benefits that outsource jobs overseas, and has repeatedly stressed wealthy Americans should pay more in taxes.

Obama has proposed a so-called Buffett rule, named after the billionaire Warren Buffett, who supports the president and says it is unfair that he pays a lower tax rate than his secretary because most of his income is taxed as capital gains.

Mitt Romney, a top Republican contender to face Obama and one of the richest politicians to vie for the nomination, this week disclosed he paid a tax rate of around 15 percent, because most of his income comes from investments.

Republicans say Obama is playing the politics of envy and what Americans really care about is jobs.

Voters do rate the economy as one of the most important factors in the upcoming election, and while U.S. growth has picked up, it remains fragile and unemployment, at 8.5 percent, is still high by historical standards.

Obama departs on Wednesday for a five-state, three-day tour to promote the framework he will highlight in the address, including visits to Las Vegas and Denver that were hit hard in the housing downturn, and to Detroit, home to the U.S. auto industry that Obama helped rescue through a taxpayer bailout.

(Reporting By Alister Bull; Editing by Vicki Allen)

Reuters

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