PrintJanuary 14, 2011
America Is Losing the Resource Race
Although the Obama administration seems completely oblivious of the fact, the U.S. has now embarked on a race of global proportions, one that will have even greater consequences than did the space race of fifty years ago. The resource race in which we are now engaged will determine the future prosperity, security, and very survival of America as a nation.
Our main rival in the resource race is China. Unlike our present leadership in Washington, the Chinese leadership recognizes the vital importance of natural resources. In response, they have adopted a long-term strategy to secure rights to crucial natural resources on every continent. From iron ore to coal, from farmland to oil and gas, Chinese state-controlled companies are determined to acquire the energy, minerals, and food supplies that will be necessary to propel China into the forefront of nations by the middle of the 21st century.
Evidence of this effort surfaces daily. In 2011, the Chinese are expected to acquire five times the amount of overseas resources as they did in 2004. In April 2010, the Chinese oil company "Sinopec" purchased a large stake in Canadian oil sands. Chinese companies have bought up iron ore rights in West Africa and acquired massive Australian coal reserves. In October 2010, CNOOC, a state-run Chinese oil company, acquired substantial lease rights from Oklahoma City-based Chesapeake Energy. In joint deals with American gas-producers, the Chinese are set to acquire advanced technology necessary to exploit shale gas fields at home and overseas. They have entered into long-term joint ventures with Russia, Mongolia, Brazil, and dozens of other countries to assure a plentiful and affordable supply of resources.
What of the United States? How are we faring in the resource race?
It is true that Energy Secretary Steven Chu has spoken of an "energy race" with China, but his use of the phrase in just another Obama-appointee exercise in Orwellian newspeak. Secretary Chu is a man with no experience in the production of conventional fuels or in the private sector generally, and when he speaks of the energy race, he does not mean a race to develop greater energy resources, as one might assume. Instead, he means the destruction of our current sources of energy and their replacement by unproven and costly alternative fuels.
In other words, America has an energy secretary who is fixated on subsidizing technologies that supply only one percent of our nation's energy needs. Meanwhile, he is ignoring -- and, worse than that, undermining -- the development of the other 99%. He believes that by starving America of fossil fuels, intentionally driving up the price of gasoline to $4 a gallon, and more, he can force the public to espouse less efficient but politically correct green technologies.
Unlike China, which is pursuing a well-coordinated policy of securing resource rights, America is hobbled by an administration that is ideologically hostile to the exploitation of natural resources. Obama's fetish for green solutions has created a regulatory climate that has blocked the development of domestic resources, including mountaintop coal and offshore oil. The same bias has resulted in tax and regulatory policies such as SEC ruling 1504, which forces American resource companies to disclose lease pricing while overseas companies do not. That ruling, driven by ideological bias rather than reason, puts American companies at a disadvantage when it comes to acquiring overseas resource rights.
Another case in point is the report recently issued by the president's hand-picked drilling commission -- a commission stacked with academics, environmentalists, and Democratic politicians, but not a single representative of any resource company. By laying blame on "structural problems" in the oil industry and inadequate regulation of said industry, the commission has set the stage for greater bureaucratic control by government. The commission's recommendations include increased funding for new regulation and the lifting of liability caps on energy companies. These recommendations will delay energy exploration in the Gulf and drive all but the largest companies out of the region.
As it is, Obama's regulators have not approved a single new deep-water drilling permit in the Gulf of Mexico since the Deepwater Horizon accident, nor are they expected to until well into 2012 at the earliest. Now the president's drilling commission tells us that this is not regulation enough!
The drilling commission was one of a thousand cuts intended to bring down America's resource companies. The anti-growth regulatory actions of the Obama administration are far too numerous to cite here, but they include the EPA's finding that carbon dioxide is a pollutant, the EPA's apparently baseless investigation of groundwater pollution from hydraulic fracturing, the EPA's "war with Texas" over state-level environmental regulation of industry, the raising of CAFÉ standards for cars and trucks and the subsidy of electric vehicles, the SEC's proposal that all listed companies must assess the potential effects of climate change in their annual reports, the presidential directive to extend wilderness protections to as much as 140 million acres of public land, the blocking of offshore drilling along both coasts and offshore Alaska, and on and on.
Not content to bleed resource industries dry by regulation and taxation, the Obama administration has facilitated environmental and class-action lawsuits directed against resource companies. The Justice Department has made no effort to support companies such as Chevron facing lawsuits drummed up by American tort lawyers on the behalf of overseas peasant plaintiffs. Nor has the administration created a business-friendly legal climate in the United States, as it might by introducing "loser pays" and other fair protections for defendants against frivolous legal actions. As a result, resource companies, which are often the target of such suits, are drained of capital, and projects are stalled for decades.
In effect, Obama has sold out his country to every special interest group opposed to resource development and economic growth. Sadly, Americans will be paying the price for this administration's enslavement to these special interests for decades to come.
Unless government changes direction quickly, America is going to lose the resource race. When that happens, the effects will be devastating and permanent. Without access to cheap and reliable fuels and other resources, the U.S. will sink to the level of a second-rate nation. Having won the resource race, China will stride ahead, eventually surpassing America as a military and economic powerhouse. And for this, America will have Barack Obama to blame.
Jeffrey Folks is author of many books and articles on American culture and politics.
