Magazine article Newsweek

The Bias against Oil and Gas

Magazine article Newsweek

The Bias against Oil and Gas

Article excerpt

Byline: Robert J. Samuelson

Expanding any fossil-fuel production offends many Americans. But policies placating this prejudice aren't in our national interest.

Considering the brutal recession and the widespread warnings of a feeble recovery, you'd expect the Obama administration to be obsessed with job creation. And so it is, say the president and his supporters. The trouble is that there's at least one glaring exception to their claims: the oil and natural-gas industries. The Obama administration is biased against them--a bias that makes no sense on either economic or energy grounds. Almost everyone loves to hate Big Oil (the Exxons and Chevrons), and even small oil, but promoting domestic drilling is simply common sense.

Contrary to popular wisdom, the United States still has huge oil and natural-gas resources. The outer continental shelf (OCS), including parts that have been off limits to drilling since the early 1980s, may contain much natural gas and 86 billion barrels of oil, about four times today's "proven" U.S. reserves. The U.S. Geological Survey recently estimated that the Bakken Formation in North Dakota and Montana may hold 3.65 billion barrels, about 22 times a 1995 estimate. And then there's upwards of 2 trillion barrels of oil shale, concentrated in Colorado. If 800 billion barrels were recoverable, that's triple Saudi Arabia's proven reserves.

None of these sources, of course, will quickly provide much oil or natural gas. Projects take 5, 10, 15 years. The OCS estimates are just that. The oil and gas must still be located--a costly, chancy and time-consuming process. Extracting oil from shale (in effect, a rock) requires heating the shale and poses major environmental problems. Its economic viability remains uncertain. But added oil from any of these sources could ultimately diminish dependence on imports, now almost 60 percent of U.S. consumption, while the exploration and development process would immediately boost high-wage jobs (geologists, petroleum engineers, roustabouts, steelworkers).

Though straightforward, this logic mostly eludes the Obama administration, which is fixated on "green jobs," and wind and solar energy. Championing clean fuels has become a political set piece. On Earth Day (April 22), the president visited an Iowa factory that builds towers for wind turbines. "It's time for us to [begin] a new era of energy exploration in America," he said. "We can remain the world's leading importer of oil, or we can become the world's leading exporter of clean energy."

The president is lauded as a great educator; in this case, he provided much miseducation. He implied that there's a choice between promoting renewables and relying on oil. Actually, the two are mostly disconnected. Wind and solar mainly produce electricity. About 70 percent of our oil goes for transportation (cars, trucks, planes); almost none--about 1.5 percent--generates electricity. So expanding wind and solar won't displace much oil, though there might be some small effect on natural gas for heating. Someday, electric cars may change this. But at best, that's decades away. …

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