This afternoon, President Obama outlined his plans for a national energy policy by calling for a thirty-percent reduction in U.S. imports of foreign oil. With average national gasoline prices at $3.54, the Administration is feeling the political heat and attempting to deflect blame for rising energy costs.
In his address, President Obama noted that the recovering global economy, economic growth in India and China, and turmoil in the Middle East has resulted in energy demand and price increases. The President claimed that limited domestic production and growing foreign dependency has created volatile price fluctuations for years. Obama noted, “We’ve known about the dangers of our oil dependence for decades, and every President has said that we need to seek energy independence.”
In an effort to limit our dependence on overseas oil, President Obama suggested that we increase our support of importation from friendly, neighboring countries like Mexico and Canada. In addition, the President touted the prospect of new discoveries off the coasts of Brazil as a substantial long-term source of energy for the U.S. To help ramp up Brazil’s new oil production, the President called for the support of American know-how to take advantage of the South American nation’s newfound resources.
Currently, the U.S. imports nearly 11 million barrels of oil per day. Unfortunately for the President’s plan to increase importation from neighbors, it’s a fact that nearly half of our nation’s imported oil already comes from Canada and Mexico. So where are these new oil imports going to originate? In regards to Brazil, it seems hypocritical that the Administration would support $2 billion dollars in U.S. investment in Brazil’s offshore industry while continuing to shut down energy development in the Gulf. It seems that American tax dollars along with “know-how” will ensure Brazil’s economic future.
The one thing that is certain for our economic future is that we plan to shift dependency from one source to another.
For the U.S. to achieve these reductions in oil importation we are going to either need to use less energy or find more. President Obama asserted that his Administration is working to support exploration and push the oil industry to take advantage of the opportunities they already have. As a talking point, Obama took note of the Interior’s recent offshore lease report that claimed over two-thirds of leases are inactive.
Outlined in the new energy plan are measures to potentially shorten the terms of offshore leases. A simple question, how can you incentivize oil and gas production while limiting lease terms? This policy approach makes little since and will certainly backfire by resulting in higher developmental costs for companies and additional delays for production to come online.
The President is correct that there is no short-term fix for the energy problems we face as a nation. He is also right on point with his call to increase the use of natural gas as a larger factor in our nation’s energy future. However, today’s speech and energy plans seem to be some of the same rhetoric of President’s past. Until we see a concerted effort by this Administration to expedite permitting in the Gulf of Mexico, talks regarding energy independence are nothing more than talk.