ARLINGTON, Texas — Economic growth is intimately tied to energy use. The UN Human Development Index is highest in countries such as in Norway, Canada and the United States where energy use is also highest. Low energy use, such as in African countries, means a life of grinding poverty.
The real estate collapse seven years ago triggered a recession. When construction came to a halt, the whole economy slowed and there was a financial reckoning. Real estate has recovered but our economy is anemic. The growth sectors are SSI disability, Food Stamps and other welfare programs people must flock to when the job market is dismal.
While the recession ended early in the first Obama term, but that means little to many folks. Average household income is lower today than it was during the recession.
Labor market participation is five percent lower than during the recession. Measured unemployment is down only because many have given up hope of finding a job. College graduates with degrees supposed to guarantee good jobs, such as engineering, no longer matter as much. What is going on?
In the midst of this sluggishness, it it puzzling that he Obama Administration is leading a war on coal and other fossil fuels that generate the vast majority of our energy.
Fortunately, landowners in Texas and some other states have happily allowed fracking to help us get more oil and gas. Production in Texas alone has more than doubled in five years. That means we keep hundreds of billions of dollars at home rather than ship the cash to “allies” such as Saudi Arabia for fuels.
Administration policies limit the value of fuels we produce. Oil refineries can only handle particular kinds of oil. We have a surplus of light crude that foreigners would be happy to swap for heavy crude, which our refineries can handle, but restrictions on oil trade limit our revenue and keep gasoline prices higher than need be.
The administration also keeps a tight lock on oil and gas in federal lands and offshore. In the West, where most federal land is located, production has declined in the Obama years. Some American Indian reservations contain huge amounts of fossil fuels, but the Bureau of Indian Affairs ensures, due to endless red tape, that Native Americans remain mired in poverty on reservations as D.C. bureaucrats block fossil fuel development.
The latest salvo against fossil fuels, announced this week, ensures higher energy prices in the future. This will discourage domestic investment in favor of going to countries such as China, India, and South Africa that are not shy about building new coal-fired power plants. Hundreds of new coal plants are being built around the world, as poor people would love to lead the life we enjoy.
Domestic reductions in carbon emissions, which will damage the economy long after Mr. Obama is gone, will be swamped by new emissions from emerging nations. The U.S. Energy Information Administration reports that carbon emissions in China exceed total emissions in the U.S. and the EU and are growing fast.
Carbon emissions are increasing. Globally they doubled between 1990 and 2011, despite being flat in the U.S. and the EU. If we are serious about reducing carbon emissions, reducing the size of our economy will not help. We need to find ways to capture the carbon. Unfortunately, the administration only pays lip service to carbon capture, focusing instead on policies that run up energy costs.
What nation is doing serious research on what is supposed to be the biggest long-term environmental threat?
The answer, of course, is China. It is pouring serious money into carbon capture projects. The Obama Administration talks a lot about climate change but does little to help produce the technology that can solve the problem. Fossil fuels are not going away.
Roger Meiners is a Professor of Economics at the University of Texas at Arlington
