By Institute for Energy Research ——Bio and Archives--April 2, 2011
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[W]e're actually pushing the oil industry to take advantage of the opportunities that they've already got. Right now the industry holds tens of millions of acres of leases where they're not producing a single drop. They're just sitting on supplies of American energy that are ready to be tapped. That's why part of our plan is to provide new and better incentives that promote rapid, responsible development of these resources.Well that's interesting, the President is going to have the federal government provide "new and better incentives" that promote the development of domestic petroleum resources. He didn't elaborate in the speech at Georgetown, so let's try to guess what he has in mind. When the Obama Administration wants to provide incentives to promote the development of "green" technologies, it does things like give those companies direct subsidies or tax breaks, and it threatens to put new taxes on competing technologies. So by that logic, if Obama tells the Georgetown students he is going to "provide new and better incentives" for the "rapid" development of domestic oil, he must have in mind reducing the fees that the government charges to energy companies, or perhaps he wants to reduce taxes on domestic oil producers? Actually no, the Obama Administration wants to do the opposite of these things: it wants to raise the fees it charges for leasing federal land to oil development, and it wants to raise the taxes paid by oil companies by $3.5 billion next year alone. Apparently, the way to promote "green" energy is to subsidize it, but the way to promote fossil energy is to impose higher fees and taxes. Funny how that works. The Administration's "logic" regarding oil leases is liable to drive one insane. The claim is that oil companies pay billions of dollars to the federal government to obtain the right to drill, and then purposely don't drill in order to drive up the price of oil. But wouldn't it be cheaper to not bid on the lands in the first place? And why is the oil industry in favor of expanded access to drill offshore and in ANWR, if their nefarious plot is to keep oil off the market and push up prices? Obviously the whole thing makes no sense. The reason the oil industry doesn't extract oil from certain leased land is that oil isn't distributed evenly across the globe. Companies can't be sure where it is profitable to set up a major well until they explore the land. The real beneficiaries of stunting U.S. oil production aren't domestic oil companies, but state-owned oil companies around the world. It's a good thing Energy Secretary Chu wasn't in charge of Thomas Edison's search for a commercially viable light bulb. After the 3,000th failure, Chu would no doubt have accused Edison of purposely driving up the price of incandescents. (Of course that would be construed as a good thing, in light of climate change rhetoric...)
I've asked Secretary Chu, my Energy Secretary, to work with other agencies, the natural gas industry, states, and environmental experts to improve the safety of this process [of extracting natural gas from shale]. And Chu is the right guy to do this. He's got a Nobel Prize in physics. He actually deserved his Nobel Prize. (Laughter and applause.) And this is the kind of thing that he likes to do for fun on the weekend. (Laughter.) He goes into his garage and he tinkers around and figures out how to extract natural gas. (Laughter.) I'm going to embarrass him further. (Laughter.) Last year, when we were trying to fill -- figure out how to close the cap, I sent Chu down to sit in the BP offices, and he essentially designed the cap that ultimately worked, and he drew up the specs for it and had BP build it, construct it. So this is somebody who knows what he's doing. (Applause.) So for those of you who are studying physics, it may actually pay off someday. (Laughter.)If Secretary Chu really did invent the cap, he did a good job maintaining his secret identity. Like Obama's infamous "spread the wealth around" remark to Joe the Plumber, his comments in the above quote reveal his central planning worldview. Got a problem? Just get the right expert and have him solve it. Whether it's unemployment, climate change, or democracy in the Middle East, we just need to get the smartest guys (and gals) in the room and impose the solution on everybody--with the bill sent to the American taxpayer, of course.
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The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.