That the US is sitting on an ocean of oil and gas has been well reported. Whether the development of those resources proceeds is still up in the air. Joel Kotkin examined the dilemma facing President Obama and the Democrats.
Talk all you want about the fiscal cliff, but more important still will be how the Obama administration deals with a potential growth-inducing energy boom. With America about tojoin the ranks of major natural gas exporters and with the nation’s rising oil production reducing imports, the energy boom seems poised to both boost our global competitiveness and drive economic growth well above today’s paltry levels.
This puts President Obama in a dilemma. To please his core green constituency, he can strangle the incipient energy-led boom in its cradle through dictates of federal regulators. On the other hand, he can choose to take credit for an economic expansion that could not only improve the lives of millions of middle- and working-class Americans, but also could assure Democratic political dominance for a decade or more.
At this point it’s anybody’s guess what the President will do. He talked a good game during the campaign as he distanced himself from the Green agenda and seemed to embrace brown energy, to the point of misleadingly taking credit for increased production of hydrocarbons. He may well see the potential for the nation’s wealth of oil and gas resources to remake the economy, provide substantial revenues to many layers of government and significantly alter in favor of the US the geopolitical calculations imposed by the location of reserves. Freed of the need to win any more elections he might opt for the boom that exploitation of these resources would produce. Nothing guarantees a positive legacy so much as a booming economy, viz. Ronald Reagan.
The congressional democrats have on the other hand a more complicated equation. As Mr. Kotkin points out they are heavily dependent on the environmental movement for money and votes and unlike the President members of Congress do have more elections to contend with. Certainly a booming economy would be a plus for some but a congressperson from say Silicon Valley, Boston or Virginia is likely more concerned about the voters with the “Stop Fracking” bumper stickers than she is with the development of North Dakota’s oil fields or Louisianna’s LNG industry.
Regardless of the political will to develop our riches, the Green movement can be expected to fight tooth and nail. Take a look at the Sierra Club website if you think that any sort of accommodation can be reached with the environmentalists. Lawsuits, endangered species arguments, adverse academic studies, all of the tools that the movement has honed to perfection will be brought to bear to stop fracking and attendant development. The friends of the movement in the bureaucracy, there are many, can be expected to slow walk approvals, require continuous studies and issue conditional approvals which compromise the economics of projects.
Development of our oil and gas reserves is going to be a rocky road. There is no guarantee that the reality will in any way match the promise. Yes, we will probably develop a lot but a lot more may well be left on the table, or more precisely in the ground.