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Tuesday, November 25, 2008

Weekly Published Column - United States energy policy remains a critical economic issue

Even though our attention for the last couple of months has been focused on the banking and auto industry crises, U.S. energy policy still looms as a critical issue.

Everybody except the Democrats in Congress understands that while we are trying to develop a sensible and effective energy policy, we have to avail ourselves of domestic supplies of oil and natural gas and get the United States out from under dependence upon foreign supplies controlled by OPEC.

Congressional Democrats have steadfastly refused to do the sensible thing, which is opening the offshore areas to drilling now and getting the development of the substantial oil and natural gas resources that belong to the U.S. underway.

In contrast to the Congressional leaderships’ previous position is a statement from Maryland 5th district Congressman Steny Hoyer, the House Majority Leader, who told the Washington Times that his party will not push to reinstate a ban on offshore oil and natural gas drilling next year.

“I don’t think there is any intent at this point in time ... to return to the same position we where in” before the ban was lifted, Mr. Hoyer said. That’s a different position than enunciated as recently as September when the ban was lifted, at which time Congressional Democrats said they would work with the new administration to reinstate the ban after the new Congress convenes in January.

The American Petroleum Institute supports Congressman Hoyer’s position, saying that “the American public has made clear its strong support for increased access to untapped domestic oil and natural gas resources. At least two-thirds of Americans in recent exit polling said they supported offshore drilling.

Neither Congress nor the next administration should set unreasonable, arbitrary limits on leasing because such restrictions could remove some of the nation’s most promising oil and natural gas prospects for development, and the industry has proven it can develop these resources in an environmentally safe manner.”

The position Mr. Hoyer voiced is certainly a step in the right direction, but many details are left unaddressed, such as whether the Democrats will at long last let go of the obstructionist demand for oil and gas companies to drill first in the existing leased areas, where there is scant data indicating that oil or gas even exist, and also how near to coastal areas drilling will be allowed.

However, Mr. Hoyer also said that global warming is on the agenda in the near term which, combined with the fact that President-Elect Barack Obama unfortunately clings to a proposed cap-and-trade system, does not bode well for either economic recovery or a sensible energy policy.

Cap-and-trade measures work by setting a limit, or cap, on carbon dioxide emissions from fossil fuel use. Businesses such as utilities and manufacturing companies that are able to emit less carbon dioxide than their cap could sell the excess emission levels to facilities that exceed their cap, which is the trade part of cap-and-trade. Those facilities that exceed their cap will suffer penalties. Over time, the cap would be lowered, requiring greater cuts in emissions.

Recent Congressional efforts to pass cap-and-trade legislation broke down because of concern over how much the program would cost, and which sectors of the economy would be most affected by it.

Mr. Obama recently said his presidency “will mark a new chapter in America’s leadership on climate change that will strengthen our security and create millions of new jobs in the process. That will start with a federal cap-and-trade system.”

Overall, the effect of a cap-and-trade system will be to impose rationing of coal, oil, and natural gas on the American economy, according to the Heritage Foundation, and given the position stated by Barack Obama and Joe Biden during the campaign, West Virginia’s coal industry will be negatively affected by the Obama energy policy.

Two factors are at work against the American people and their economy. First is a group of politicians in the U.S. Congress who believe that they know more about running businesses than those who actually run them. What results from these efforts to micro-manage business and the economy can be seen at its worst in the banking and auto industry crises.

Second is a headlong politically correct rush to reduce carbon emissions in the face of substantial credible studies that show doing so will make little if any difference in the global environment.

Reducing carbon emissions is a noble goal; as a matter of simple logic it makes sense to clean up manufacturing processes that produce pollution. However, what is noble is not always necessary or even sensible.

As time passes, evidence mounts that carbon emissions are not sufficient to bring about the end of life as we know it, as the environmental extremists keep screaming at us, and in fact is not even sufficient to warrant dramatic changes in the use of carbon fuels.

Environmentalism has taken on all the characteristics of a religion, and even has its fundamentalist, fanatical fringe which will do just about anything to turn people to its cause, even deliberately exaggerating the threat.

We cannot afford to be intimidated or conned into making foolish decisions about energy use.

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