PrintMay 2, 2011
The Boom America is Forfeiting
Australians are partying like it's 1999, but for Americans it's more like 1937. That's the year recovery from the Great Depression, already under way when FDR took office, collapsed under the weight of Keynesian spending and settled into four more years of economic stagnation.
One reason why Australians are so well off is that under the benign policies of conservative leader John Howard, their energy and mining industries were allowed to function unimpeded. Whether that pro-growth tax and regulatory environment will continue under current Prime Minister Julia Guillard is doubtful, but for the present Australians are reaping the rewards of nearly 12 years of conservative governance.
Americans, by contrast, are seeing the effects of the past five years of liberal meddling in the energy sector, beginning with the election of Democratic congressional majorities in 2006 and continuing with that of Obama in 2008.
In Australia, energy exploration is proceeding on an unprecedented scale. Chevron, the lead partner in developing the giant Gorgon natural gas field off Western Australia, recently decided to expand its production capacity by 25%, making it one of the largest liquefied natural gas facilities in the world. With markets in China, Japan, and India, the Gorgon project and others like it have locked in future sales for decades. The only problem is that Chevron can't find enough workers: the Asian LNG boom has already created high-paying jobs for all who want to work.
Wouldn't it be great for the U.S. to have that problem instead of real unemployment of over 15% and weekly unemployment claims running over 400,000?
Well, we could, if liberals and environmentalists would let us. Australian GDP has expanded during 39 out of the past 40 quarters, largely on the strength of its resource-rich economy. The U.S. possesses far greater natural resources, but it is stymied by the anti-growth agenda of the left.
America commands the world's second largest shale gas reserves, and American companies possess the world's most advanced drilling technologies. Normally, this combination would point to a bright future for the industry, and for enormous benefits in terms of jobs and wealth creation for all Americans. Having met its own needs, America could export gas to both Asia and Europe. The result would be a steady stream of revenue for American companies and an increased tax base for states, lasting into the next century.
As a matter of fact, facilities for LNG export already exist on both the Gulf and west coast of America: all that is needed is regulatory approval to convert import facilities to export. But on this, as on every other aspect of oil and gas development, regulatory agencies controlled by Democrats are dragging their feet, hoping that by delaying and driving up costs they will be able to kill development altogether. At the same time, the EPA has announced its intention of tightening regulation of natural gas production in the U.S. -- in other words, its intention of strangling this promising new resource, along with oil and coal.
Cutting off fossil fuel development is, of course, a central political strategy of the Obama administration. By regulating, taxing, and adjudicating domestic energy production out of existence, Democrats think they can shift new energy production to alternative sources. And they believe that by directing enough subsidies at these sources, they can replace fossil fuels as our nation's main source of energy.
Liberals wish to replace fossil fuels with wind and solar because they believe the use of fossil fuels is partially responsible for climate change. Climate change is, quite simply, the theory that the earth's climate alternates between cool and warm periods. The fact that it has done so for eons has not deterred the left from believing that this time is different. This time, unlike all previous periods (many of them involving much greater extremes of warming and cooling), the relatively benign changes that we have seen over the last century must somehow have resulted from burning fossil fuels. Yet, despite 20 years of Antarctic ice core sampling by leading paleo-climatologists, no evidence has been found to confirm the theory of man-made global warming. Indeed, the most recent and advanced study reported that past shrinkage of Antarctic ice did not result from warming but preceded it.
Nonetheless, it is the fantasy of climate change that is driving the administration's energy policy. That policy is to obstruct new development of fossil fuels by every possible means, including the State Department's "further review" of an oil pipeline (the Keystone XL) that would transport a dependable supply of oil from the Canadian tar sands to America. Every day, it seems, brings a new regulatory initiative, a new proposal for taxes, or a new court filing designed to block exploration and production of domestic oil and gas. Meanwhile, Obama's offshore drilling czar continues to drag his feet on approvals for oil and gas production in the Gulf.
Clearly, the Democratic policy of opposition to fossil fuels has contributed to America's high unemployment rate. By one reasonable estimate, 50,000 jobs may have been lost just as a result of Obama's Gulf drilling ban. How many more have been lost as a result of drilling restrictions in Alaska and off America's continental shelf? How many have been lost as a result of restrictions on shale gas development on federal lands and in states like New York?
Americans are suffering the effects of Obama's anti-drilling agenda. In the two-and-a-half years since Obama's election, oil futures markets have responded by bidding up the price of oil. It has risen from $30 a barrel in December 2008 to $112 today. The President has launched an investigation into the causes of this price increase: he would do well to study the effects of his own policies. It is foolish to imagine that there is no effect on global markets when the President and his party engage in an all-out war against new energy production. Now, as Americans are suffering from $4 a gallon gas prices, Obama's "solution" is to withdraw $4 billion in federal incentives for new exploration.
Wouldn't it be nice to be in the position of Australia -- a nation enjoying full employment, a strong currency, and dependable growth? The tragedy is that America possesses greater oil and gas reserves than do our friends in the southern hemisphere. Were it not for Democratic opposition, we would be well on our way to being an energy exporting nation. But that goal will have to wait until Democrats are removed from the White House and control of the Senate in 2012.
Jeffrey Folks is the author of many books and article on American culture.
