EDITORIAL: Abundant oil changes U.S. energy policy (The Washington Times)

August 23, 2015


The markets and American technology are turning the Obama administration’s original energy policies around by 180 degrees. There’s still a lot to do, particularly by Congress, so long besotted with subsidies for certain powerful lobbies. But prospects are bullish.

The administration set out six years ago to raise the price of gasoline to put everyone at the mercy of expensive and unreliable green energy. He has lost the game, acknowledged in several recent White House decisions. With the technological breakthrough in shale gas and oil, the United States can be an oil exporter, and that’s a game changer. Enabling the markets – not the government – to determine the whys and wherefores of production is the way toward an effective energy policy. Gov. Rick Perry of Texas even wants to dismantle the Energy Department, which duplicates other federal bureaucracies.

The administration has approved the swap of lighter American crude for the heavier Mexican crude for which, along with similar Venezuelan oil, some refineries in the United States were designed. Lifting all export controls, dating from the Arab oil embargo on the 1970s, should be next.

The liquefied natural gas refinery in Sabine Pass, Texas, designed to take imported oil, now ships liquefied natural gas to France. A hungry foreign market, particularly in Asia, awaits American oil and gas. Dutch Shell has spent $7 billion looking for oil and gas off the Arctic coasts of Alaska, and now has permits to begin deep drilling there. Later this month, Gov. Bill Walker will come to Washington to persuade President Obama to put natural gas development in his strategy to cut carbon emissions and the cost of energy.

Fortunately for America, abundant private shale holdings enabled the exploitation of the technologies that produced the energy revolution. American oil producers, so often derided on the left, withstood the Saudi attempt to undercut American shale production by keeping their Saudi spigots open, suppressing the price of Middle Eastern oil. Several factors have so far defeated the Saudi attempt to sabotage American self-sufficiency. American technology continues to expand, China’s shrinking economy compels cutbacks in imports, and the economic takeoff in India has been delayed.

The administration has timidly announced an important reform, suspending the required mixture of ethanol and gasoline sold at domestic pumps. Ethanol has been the holy water of environmentalists, but a $10 billion a year bill for the taxpayer. Making ethanol from corn requires great tracts of dedicated farmland, fertilizers, pesticides, tractor and truck fuel, and natural gas to refine it. Turning corn into ethanol raises feed prices and thus the price of beef, pork, chicken, eggs, fish and international food aid. This hits hardest in the backward parts of the world where food must be imported. Reality, after all, is the most effective market regulator.

You May Also Like