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Obama’s Offshore-Drilling Plan: A Start

Thursday, 1 Apr 2010 | 9:32 AM ET
off shore oil rig
off shore oil rig

In some sense, I’m glad President Obama is opening the door to offshore oil drilling.

But in the spirit of free-market deregulation, I do think that much, much more should be done in the Atlantic, the Gulf of Mexico, the Pacific, and Alaska.

With oil prices high, and new technologies coming on stream daily, drillers and producers have tremendous incentives to generate much more oil and gas.

If only we let them.

It goes without saying that a growing economy needs more fuel. That’s why I want to deregulate the entire energy industry. I’ve called for this countless times over the years. We need to remove government obstacles for oil, gas, clean coal, nuclear, and the so-called renewable green-energy sources.

And yes, I oppose government subsidies of any kind. Let the marketplace decide what makes profitable economic sense.

As for offshore oil drilling, get this: By some estimates, the U.S. has 86 billion barrels of oil reserves offshore. For some perspective, that’s enough energy to fuel 65 million cars for 47 years. That’s why the stakes are so high.

Those reserves will give us plenty of time to transition into the development of nuclear power and natural gas for the home and highway. Of course, millions of American jobs would be created in the process. This power can fuel tremendous economic prosperity for years to come.

On a related note, this so-called tri-partisan Senate cap-and-trade bill is a far cry from free-market capitalism. In my view, if this legislation is put in place it could spell economic disaster. In fact, a new study by the Heritage Foundation estimates that the new cap-and-trade bill from Sens. Lindsey Graham, John Kerry, and Joe Lieberman could reduce GDP by as much as $10 trillion over the next two decades. It could force $4.6 trillion in new energy taxes on Americans, kill 2.5 million jobs, and raise the cost of goods and services by $3,000 a year.

Is that what we want?

More government controls like this are exactly the wrong energy medicine. Let the market work, I say. Use all of our resources, all of our technology, and all of our wealth.

Look, if you really believe in this man-made-global-warming carbon problem -- which I do not --then here’s a response that’s much more efficient than government controls and subsidies: Put a tax on carbon. Then legislate that all those carbon-tax revenues be recycled in the form of lower marginal tax rates for all individuals, families, and businesses, and finance true, single-rate, flat-tax reform. That’s what you do if you buy into the man-made carbon problem.

But most of all, let’s liberate the great American energy sector from the shackles of government control. Energy freedom and economic freedom should go hand and hand. This is part of our history. True energy freedom will help resurrect our economy by providing the fuel to power American prosperity for as long and as far as the eye can see.

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Questions? Comments, send your emails to: lkudlow@kudlow.com

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  • Lawrence Kudlow is a CNBC senior contributor. Previously, Kudlow was anchor of CNBC's prime-time program "The Kudlow Report"