Conservative Think Tank Blasts Obama's Energy Policies


Today on Capitol Hill, big oil will be front and center once more when the Energy and Power Subcommittee holds a hearing to examine the effects of the Middle East events on U.S. Energy Policy.

Former U.S. Shell Oil President John Hofmeister is one of the witnesses testifying, and after speaking with John about his testimony, I can guarantee you that it will be a spirited exchange with lawmakers.

With all the buzz around black gold, I decided to speak with Thomas Pyle, president of the Houston-based not-for-profit energy think tank, The Institute for Energy Research (IER). The organization does research and analysis on government energy market regulations.

The IER has been described by Rush Limbaugh as "the energy equivalent of the Heritage Foundation," the well-known conservative think tank based out of Washington, DC. In IER's opinion, free markets provide the most efficient and effective solutions to meeting the global energy and environmental challenges facing society.

LL: In a recent op-ed Congressman Upton argued that many of our energy problems would be solved if the Obama Administration adopted President Ronald Reagan's energy policies. Do you agree?

TP: Yes. The more the government gets involved in energy, the more expensive energy becomes and the less we produce here at home. The Department of Energy was created to reduce dependence on foreign oil.

We have doubled imports since then. The constant drumbeat of "energy plans" pushed by politicians simply pick winners and losers in the energy business, rewarding political friends on both sides of the aisle. The less government is involved, the more consumers can make decisions for themselves.

LL: What specific policies do you think were a huge success and could they be applied today?

TP: President Reagan moved away from central-planning and freed the private sector to supply energy to meet America's needs. Instead of micro-managing the energy sector, the Reagan Administration removed government impediments to energy production. The result: production went up, prices went down, and the entire economy benefited. The government is not the solution to our energy is the problem.

LL: The Obama Administration has been very consistent in its message on green energy. How much of taxpayer dollars have been used to fund "green jobs" and are these jobs real?

TP: We are still counting all the billions billions of dollars the administration has wasted on the green jobs agenda. The stimulus bill alone had $41 billion in spending on energy—much of which could be categorized as spending on "green jobs." Regardless of the exact amount, green jobs are not real, sustainable jobs and that is the central problem.

Green jobs are created and completely reliant on government subsidies and mandates. When the subsidies and mandates go away, the green jobs go away. The money to pay for green jobs subsidies has to come from somewhere. In the case of the subsidies, that somewhere is the taxpayers pocket. And since these policies lead to higher energy prices, we all pay. A study in Spain, for example, found that 2.2 jobs were lost as an opportunity cost of every green job created.

LL: It wasn't too long ago ethanol was the golden ticket in green energy, that has since faded. What do you think is the biggest misconception in alternative energy right now?

TP: The biggest misconception is that windmills and solar panels will help reduce foreign oil. They make electricity; oil is used for 98 percent of our transportation. America is a huge country, and transports things all over that make us more productive. We are basically independent of foreign sources for our electricity, because we have the most coal, and may have the most natural gas in the world. We also have the most nuclear. Squandering taxpayers' money to buy expensive forms of electricity when we have cheaper sources here at home is economically inefficient, and makes us less competitive.

LL: Do you think Obama's energy plans are similar to the 70's that targeted oil producers?

TP: Absolutely. It is déjà vu all over again. The 70's was a decade in which the government thought it could solve all the problems of the world by making decisions in Washington. At the end of the decade we were poorer, weaker and less energetic.

North Dakota is booming in oil production because it's all on private and state land. Meanwhile, federal lands are embargoed from energy production from the government. It is truly sad, because American families and jobs are suffering because the government won't let us develop our own energy on taxpayer-owned lands.

LL: In your opinion, is there a free marketplace right now for the oil industry or it is being plagued by the central planning of the federal government?

TP: The oil industry operates in a market that is only partially free. Ninety-seven percent of federal lands are currently not leased for energy exploration and production. The federal government also refuses to issue permits for new exploratory drilling in the Gulf of Mexico and refuses to issue the needed permits to explore for oil in the Beaufort Sea in Alaska, for example. In short, the federal government places substantial roadblocks to energy production in America.

It is even more ironic that our government is in most cases overtly hostile to our domestic oil companies since they are competing on a global level with mostly state-owned oil companies from countries like China, Russia and Venezuela.

LL: How many jobs have been lost in this unofficial moratorium and are they forever lost? What is the economic impact of these lost jobs?

TP: According to data from the Energy Information Administration, the unofficial continuing offshore moratorium will reduce our oil production by 260,000 barrels a day in 2011.

At $90 a barrel of oil, that mean will spend $8.5 billion a year to buy foreign oil that would be produced here in America if not for the Obama administration's policies. Based on the administration’s own data, the Gulf region stood to lose 19,536 jobs, $5 billion in economic output, $1.1 billion

in earnings, and $239 million in state and local tax revenues during the 6-month moratorium. As the "permitorium" continues, more and more companies will pull up stakes in America and permanently move their business—and the jobs—elsewhere.


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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."