Obama’s Energy Policy: Death By A Thousand Cuts
Christopher Helman Forbes Staff
Contributor Group Energy
This is a guest editorial by Mike Cantrell, president of the Domestic Energy Producers’ Alliance
What sounds like the title of an Alfred Hitchcock movie is actually the Obama Administration’s strategy to kill America’s oil and natural gas production. And it should scare the living daylights out of us all.
President Obama, Treasury Secretary Timothy Geithner, Interior Secretary Ken Salazar and Energy Secretary Steven Chu, have all made it clear they want to make fossil fuels more expensive. And after their failed attempt to crush fossil fuels in one fell swoop with cap and trade legislation, they’ve turned to federal agencies to impose a long list of selective and foolish regulations on America’s oil and natural gas producers.
Of course each of these regulations on their own won’t be the death of fossil fuels. But combined, they’re setting the stage for a chilling ending that will mean the loss of millions of jobs, billions in tax revenue and weaker national security.
Speaking of Hitchcock, let’s talk about birds. The Administration sued seven oil companies for the deaths of 28 birds in North Dakota. The maximum penalty per dead bird is a $15,000 fine and six months in jail. Meanwhile, the Administration is in the process of fast-tracking wind energy development across the United States and providing legal protection to wind operators that kill an estimated 440,000 birds a year. Fortunately, North Dakota Federal judge Daniel Hovland had the good sense to dismiss the complaint saying “To be consistent, the government would have to criminalize driving, construction, airplane flights, farming, electricity and wind turbines … and many other every day, lawful activities.”
Sound absurd? There’s more. In 2010, the EPA slapped a remediation order on a natural gas producer in Texas while the state’s oil and gas regulation agency was still conducting tests regarding alleged water well contamination. After testing was complete, the contamination was found to be naturally occurring and in no way related to drilling. But the EPA’s arbitrary and shameful actions proved the agency can target any company at random and force them to clean up, at their own expense, a problem they had nothing to do with.
And more costly regulations are on the horizon with the U.S. Fish and Wildlife Services now considering the addition of 100 Texas species to the endangered species list. It’s estimated that one species alone, the dune sagebrush lizard, could cost oil and natural gas producers, and state and private royalty owners hundreds of millions of dollars over the next ten years.
But perhaps most troubling could be the reporting of Greenhouse Gas (GHG) emissions on oil and gas facilities in the field. And at what cost? Training, consulting fees, data tracking and ultimate reporting will cost one large independent an estimated $10-$20 million per year. The EPA definitions and thresholds will encompass the smallest to the largest domestic producers.
And to what end? Take your pick – regulatory cap and trade, curtailment, or a new carbon tax. The Obama administration will do through regulation what they could not accomplish through legislation.
In looking for a hint of energy policy that benefits Americans one can reference the administration’s release of 30 million barrels from the Strategic Petroleum Reserve during the Libyan crisis that cost the taxpayer millions of dollars and lowered the price for about a day.
Or you could look to the Administration’s decision to deny the Keystone XL pipeline permit. That decision not only deprives American consumers of oil from a friendly neighbor, Canada, but also means most of the 500,000 bbls per day of oil from the massive Bakken field in North Dakota and Montana will continue to be transported by truck or rail at a much higher cost; ultimately resulting in higher gasoline prices. Of course it’s just a coincidence that Berkshire Hathaway, run by Warren Buffett, one of Obama’s biggest supporters, owns the railroad transporting significant amounts of that oil.
So who’s the ultimate victim in this tale of mounting regulation? The American people. The administration knows that by increasing regulation, it also increases the cost of doing business and ultimately, the price consumers pay at the pump. And by making fossil fuels artificially expensive, they’re clearing the path for their friends in the so-called “green” energy industry.
What’s even more alarming is that all of this comes at a time when America’s abundant supply of oil and natural gas could play a significant role in solving our nation’s most pressing problems—unemployment, debt and national security. For the first time in 62 years, America is a net exporter of petroleum products, and we now count natural gas reserves in centuries. Obviously, we’re now considerably less dependent on foreign oil. America is also benefiting from the $86 million a day that oil and natural gas companies pay to the federal government in taxes, royalty payments and fees. The industry currently supports 9.2 million jobs and, with the right government policies in place, it’s poised to create an additional 1.4 million jobs by 2030.
Any way you slice it, the Obama Administration is out of touch with reality. Let’s just hope this opportunity for a stronger economy and energy independence doesn’t end up like Janet Leigh in Hitchcock’s most famous scene—in a big house with a knife sticking through it.
The writer, Mike Cantrell, is president of Oklahoma City-based Domestic Energy Producers’ Alliance, a unique grassroots approach to domestic onshore energy advocacy and education. DEPA’s mission statement: “We are an alliance of producers, royalty owners, oilfield service companies as well as state and national independent oil and gas associations representing the small businessmen and women of the energy industry. We are devoted to the survival of U.S. crude oil and natural gas exploration and production.”