On Thursday the President flew down to deliver a speech on why gas prices have been rising so much. The jist of his comments can be boiled down to two words spoken by the President -- “it’s complicated”. Well, yes Mr. President it actually is complicated. It is complicated by this administration and the Federal Government in general. Mr. President, the economics of oil and gas are not a relationship status on the Facebook, they are a real life issue which is having a truly negative affect on the pocketbooks of every American citizen.
The President then made the statement that the price of gas and oil was not controlled by the United States, but by the world market. Well hell yes, sure took long enough to figure this out. Seems funny that the President is finally getting around to recognizing and speaking out about this when for the past three SOTU speeches, as oil prices rose, he claimed it was the fault of others such as the big oil companies and anyone else he could vilify.
The President made an effort to blunt his failings in this area by making the statement that we should all be prepared for the Republicans coming comments that they have the solution and it is based on three words - Drill, Drill and Drill. He said anyone saying that we can see “immediate lower gas prices are either uninformed or dishonest”. Yes he actually said those who say that we have to drill more are being dishonest. Of course in the next sentence he stated that we were in fact drilling more today than we were before the Gulf Oil disaster in April of 2010 because of the policies of his administration. I’ll leave it to the readers to decide who is being dishonest.
Here’s what he didn’t say, the increased drilling and production is not coming from public lands, but from private lands where the Federal government cannot stop the recovery process. What he did not say is that the EPA in conjunction with the Department of Energy and the Executive branch are not issuing permits for the recovery of oil and Natural Gas on public lands. So the increased production the President takes credit for and that he claims isn’t really solving the problem is actually occurring in spite of, not because of the Federal Government.
The President barely mentioned the fact that he turned down the Keystone XL pipeline, but in the few statements made, he defended his position. The President knows as well as anyone who studies the situation, or at least he should, that with increased oil production coming from the Bakken fields of N. Dakota and Montana, the Keystone XL is a necessary step to get the oil to the refineries expeditiously and at the most reasonable cost. He knows that the Keystone XL has been approved by ALL the states over which it will cross. He knows that there are literally hundreds of pipelines already crossing the “environmentally sensitive” Nebraska aquifers and that the Keystone XL will be the best designed and built pipeline in the history of the world. Further, he knows that turning down the construction of the pipeline is one of the causes of gas price increases. Yet he still feels the need, even in spite of the rising gas prices, to defend this failing on his part.
The President, didn’t mention Natural Gas in his speech yesterday in spite of how he made it a major part of his SOTU address in January. I assume the reason he didn’t mention it on Thursday is because the EPA hasn’t actually lessened the regulatory restrictions on its development and use that the President promised. Let me make a point here, there has been growing criticism about the use of the drilling technique called “fracking” in the recovery of Natural Gas. This may be the reason the EPA isn’t moving very fast, but the fact is, the fracking process has been used for more than 40 years in more than 1 MILLION, yes over a MILLION wells without one incident of underground water contamination due to the fracking process. Above ground disposal problems have occurred on rare occasions, but they can be eliminated with enhanced monitoring.
As he began to speak about his “Long View” of the President claimed that energy is “one of the major challenges of your generation” and that "anyone who tells you we can drill our way out of this problem doesn't know what they're talking about -- or just isn't telling you the truth." I will tell you the truth, we do need to drill, the economic life of our nation depends on it and we can drill our way out of it. I agree with the President that we can’t drill our way out of the looming crisis with oil, but we can drill our way out with Natural Gas. Natural Gas is the bridge to our future. Our immediately recoverable Natural Gas resources exceed the needs of our country for the next 10 generations. Far longer than it will take to commercially develop alternative sources of energy. Natural Gas can be used as it comes out of the ground. There are no requirements to refine it so the gas is more economical to use. There are currently existent, natural gas pipelines under more than 50% of all the roads in America so accessibility is not an issue. Personal use vehicles (cars and trucks) are very easily and cost effectively convertible to the use of Natural Gas and it burns much cleaner than gasoline or diesel fuel. Converting 35% of the personal transportation vehicles to the use of Natural Gas over the next 5 years will eliminate our need to import any oil or gasoline from sources outside the North America and at the same time cut the demand for oil so dramatically that gasoline prices will drop substantially. The President knows this, yet he chose not to make mention of it because it will shed light on the failings of the EPPA and this administration. So I have to ask, who is being dishonest when they say we can’t drill our way out of the rising gas price crisis?
The President then went on to make comments about his holistic approach to energy development and barely mentioned the solar alternative or the Solyndra and Fiskars fiascos except to say "Some technologies don't pan out, and some companies will fail," Obama said. "But as long as I'm president, I will not walk away from the promise of clean energy”. It is very wise to promote the development of all forms of alternative energy, I have been doing so for many years, but the development of such technology should not be at a cost to the American taxpayer, especially when the companies receiving the funds are “friends of the administration”. The Federal government SHOULD NOT pick and choose which companies should be promoted. This is not the responsibility of the Federal Government.
President Obama went on to promote the development of Algae as a fuel source. This is a very responsible suggestion and one which I have been actively involved for the past 5 years. I wonder if the President and his advisors are aware that algae has more than 5000 distinctly different and identifiable strains and that more than 70% of these strains produce very little oil. I wonder as well if the President and Department of Energy Secretary Lu know that the microscopic spore of these algae strains fly throught eh air and easily invade the strains being used to produce oil rendering them unproductive. Many studies have been undertaken to determine the viability of the use of Algae as a feed stock for use as a biofuel. Almost all the studies have concluded that capital cost, labor cost and operational costs make the use of algae too expensive to be competitive with conventional fuels. Unless new, more efficient methods of growing and refining algae into biofuel are developed, their use may never be realized. This is not an area which the Federal Government should be investing money. I have been asking myself if the President and Secretary Lu have another crony company they either have or are preparing to provide development funding for.
He stated that "It's the easiest thing in the world to make phony election-year promises about lower gas prices". "What's harder is to make a serious, sustained commitment to tackle a problem. And it won't be solved in one year, it won't be solved in one term, it may not be solved in one decade. But that's the kind of commitment we need right now." I fully agree with the President on this and applaud him for making the statement so I am going to offer a solution which will solve the problem of rising gasoline prices in the near as well as the long term.
First, approve the Keystone XL pipeline. There is no environmental or economic reason for the delay. Denying approval is absolutely nothing more than a political move which is 180 degrees opposite his statement Thursday that "It's the easiest thing in the world to make phony election-year promises about lower gas prices,"
Second, issue permits for the recovery of oil from public land. ANWR should be the first place permits are issued, Off shore permits immediately following and the Barnett and Williston fields to come at the same time or shortly thereafter. The EPA should allow the permits on a bid basis with the only restriction being that 80% of the recovered oil must be refined and sold in the American marketplace.
Third, reduce the regulatory burden on the construction of new oil refineries. The regulatory hurdles are so enormous that the development and construction of refineries is almost impossible forcing the refining US recovered oil to off shore locations and driving up the cost of the finished product.
Fourth, eliminate all EPA restrictions on the use of Natural Gas as a fuel in personal use vehicles except one, that the exhaust emissions meet the same standards as gasoline and diesel fueled vehicles of the same class. If this is approved, the market will take over and you will see Nat Gas fueled vehicles invade the market immediately and as a result, the price of oil decrease in short order.
Finally, stay out of the energy business. It is fine to support and promote innovation, but it is not good to offer enhancements to preferred companies. Let the market develop paradigm shifting innovations at their own pace without governmental assistance or interference. The innovators will do a much better job this way. If this is not possible by the administration, it should at the very least, make the financial assistance be in the form of a post development success fee which is earned on a competitive basis rather than a handout to politically connected companies.
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