A Wall Street Journal March 13, 2012 op-ed signed by Governor Bobby Jindal criticizing President Obama’s energy policy was long on political propaganda and short on reference to facts. The points made by the Governor’s editorial are not substantiated by information readily available from industry reports. We address his points as follows:
The first point made by Governor Jindal’s op-ed is that President Obama is somehow responsible for currently high energy prices. Authoritative sources ascribe the problem to global uncertainty due to talk of middle east war over Iran’s nuclear policy, domestic unrest in Nigeria and the middle east, greatly increased consumer demand in India and China, and drastically reduced nuclear energy capacity in Japan forcing a shift to fossil fuels. These events together have influenced world energy prices to an extent that no domestic energy policy could have anticipated.
Yet in order to prepare for the possibility of international incident the President’s energy policy has consistently pushed for reduced reliance on foreign sources of energy and for more development of all kinds of domestically produced energy. Recent examples include the announcement in Nov of 2011 that the President was opening up the eastern Gulf of Mexico and the north coast of Alaska to oil and natural gas drilling, much of it for the first time. In fact US drilling activity in already leased areas has greatly increased. According to Baker Hughes March 16, 2012 report on drilling activity for the US “there are 478 more rigs targeting oil than last year, an increase of 57 percent.
As for gasoline prices there is plenty of available evidence that they are more subject to supply, demand and speculation in the world energy market than to actual domestic supply. According to a Feb 29, 2012 Bloomberg story the US exported more gasoline, diesel and other fuels than it imported in 2011. According to the UK research firm Wood Mackenzie US exports of gasoline, diesel and other fuels will more than double in the next three years as refiners take advantage of a growing supply of domestic crudes and ship more fuel to emerging markets,. We note that current excess US capacity has not driven down domestic gasoline prices. So the argument that more drilling for domestic oil means lower US gasoline prices is not supported by the evidence.
The Governor goes on to say that the president should create a more predictable environment for exploration and production, and that the average number of deep-water drilling permits approved monthly by the administration is down by nearly 30% from the historical norm prior to the BP Gulf oil disaster. We note again that overall US rig counts are up sharply and that because of the BP Gulf Oil disaster it was necessary for the President to make major improvements in regulatory oversight of deepwater drilling. The President’s mandate is much broader than just the rate of energy production. He is also responsible for worker health and safety, public health, and protection of diverse economic sectors including fisheries and tourism.
The Governor states that the President should also start opening new fields along the mid-Atlantic coast, the Eastern Gulf, and in Alaska's National Wildlife Refuge. We note that on March 31, 2010, 21 days before the BP Gulf Oil disaster, President Obama announced opening eastern gulf and east coast federal waters for exploration and development and only withdrew such large openings after the blowout and under pressure to reconsider the abuse ridden regulatory system that allowed it to happen.
Of the areas named by the Governor, the Arctic National Wildlife Refuge is federal land which is owned by the citizens of the United States, who have shown repeatedly that they do not want the wildlife refuge transformed into an oil field. And there is strong bipartisan opposition to expanding drilling in the eastern Gulf of Mexico off the coast of Florida because of the regional importance of tourism and fisheries.
The Governor says that the President could also send a clear signal that his administration will not shut down the revolutionary hydrofracking technique. The administration has never once said anything about shutting down hydrofacking. We note that the risks of hydrofracking have become more apparent as numerous incidents and downsides have come to light. These include contaminated drinking water, deteriorated air quality in areas of drilling activity and huge conversions of high quality ground and surface water into toxic wastewater. We support the administration’s effort to require reasonable disclosure and health and safety standards for hydrofracking.
The Governor wants the President to eliminate existing clean air regulations on gasoline and on coal fired power plants. Studies have shown that the more than forty years old clean air act has been a cost effective and publicly supported mechanism for improving health and safety of people living in areas threatened with poor air quality. The costs of clean air regulations are far outweighed by the benefits in reduced health care costs particularly for minorities and the poor.
The Governor in his op-ed states we should not be singling out one industry for tax increases that would inevitably lead to higher prices for American consumers. We note that the oil industry is beneficiary to numerous and substantial tax breaks and subsidies which were put in place during and after WWII. Reduction of no longer needed tax breaks and subsidies for the immensely profitable industry would be a good first step in leveling the playing field of incentives for all sources of energy. We note again that gasoline prices respond to oil futures sold in the international marketplace. Elimination of unnecessary tax breaks and incentives for the oil industry might affect their immense profits but would not affect the US price of gasoline.
Finally, the Governor declares that the President should reverse his decision on the Keystone XL pipeline and repeats the wildly inflated claims that the project would produce 20,000 construction jobs and 100,000 indirect jobs. These claims for job numbers are discredited by US State Department numbers and by independent studies. We note also that it was ordinary citizens who were outraged at threatened taking of family farmland and ruination of drinking water aquifers. The Republican Governor from Nebraska, Dave Heineman, was the first, in response to his constituency to call for review of the Keystone pipeline route. The cross border pipeline is designed principally to create an export market for Canadian tar sands oil and creates many environmental and public health and problems. The President was correct in postponing approval until environmental study can be completed.
The Sierra Club Delta Chapter in Louisiana believes that the President’s energy policy is a fair balance of increased energy production of all kinds with responsible regulation to protect public health and safety and to protect economic sectors such as fisheries and tourism that can be damaged by oil industry disasters. We believe that the petroleum industry should work with the administration to diversify US energy production, and that the industry can and should invest much more in protecting worker safety, public health and the environment.
Haywood (Woody) Martin, Chair
Sierra Club Delta Chapter