David Holt - Stop Sacrificing Economic Growth for Political Gain


Hope is not a strategy. Nowhere is that truism more evident than in President Obama's energy policy.

While it may be the most newsworthy, the misguided decision on the Keystone XL pipeline isn't the only example of sacrificing American jobs, economic competitiveness and energy security for quick political gain.

Indeed, we could have easily telegraphed Obama's decision by looking to Alaska where similar decisions have stymied efforts to develop resources in the Beaufort and Chukchi Seas.

There, Obama sacrificed the ability to produce safely nearly 1.4 million barrels of oil a day to appease special interest groups that have misused the federal administrative process to stop exploration of the Arctic at every turn.

In spite of nearly four years of review confirming the project's safety, Obama imposed an arbitrary, and highly political, stoppage time in Shell's conditional permit.

The"approval" advanced by Obama ignores both science and the safety equipment Shell will bring to the region and amounts to a 40 percent reduction in time allowed for exploration work.

This decision comes after Obama's Bureau of Ocean Energy Management, Regulation and Enforcement declared it "found no evidence that the proposed action would significantly affect the quality of the human environment."

Even more mystifying is the fact that Shell's comprehensive response, which utilizes resources from that company, local experts and the federal government, and would have allowed for response as late as December if needed is not even mentioned in the report.

This arbitrary timeline may seem like a good political compromise to the president -- an approval with such restrictive terms that it may not be economically viable to execute.

In reality, it greatly sacrifices the ability to harness the full benefits of the project. The project is expected to provide a robust suite of economic benefits over the next 50 years, including 55,000 new jobs per year, $145 billion in new payroll and $193 billion in additional government revenues.

Thedecision also sacrifices the economic security of the entire West Coast, home to the world's fifth largest economy, by forcing continued reliance on foreign sources of oil in an increasingly unstable global market.

Make no mistake, this dependence is severe. Due to declines in production from mature fields, the West Coast has gone from 100 percent domestic supply to almost half now arriving from foreign oil supplies.

Who is making up the difference? The answer is OPEC, which provides 48 percent of the region's supplies, and Russia, which supplies an additional 37 million barrels a year.

With this extensive dependence on foreign sources, and Obama's decision to cut the Beaufort and Chukchi development schedule nearly in half, the West Coast isessentially now captive to the whims of hostile regimes and unstable supplies.

These dangers couldn't be more clear and present than with Iran's threats to block the Straits of Hormuz, and the recent Arab Spring uprisings. Of course, with news like this having dominated headlines the better part of the last year, it seems likely to even the most casual observer that instability is the new normal.

If Shell's efforts are thwarted now, other companies may decide to give up on Alaska development, risking the future of the Trans-Alaska Pipeline, billions of barrels of oil, tens of thousands of jobs.

As our nation's energy needs continue to grow, and our economy falters to fully emerge from the largest economic downturn since the Great Depression, Obama should be making bold energy choices based on engineering and sound science, not false compromises designed to appease a small yet vocal minority.

Restricting the supply of safe, secure and reliable supplies of energy from American markets with only the hope that the rest of the world will help America fill in the gaps is naive, dangerous, and puts the global balance of power in the hands of regimes who are only too happy to see America fail.

David Holt is president of the Consumer Energy Alliance.



·      The U.S. Alaskan oil supplies are running out.  The Trans-Alaska pipeline is experiencing a steady decline in the amount of oil flowing through it from a peak of 744 million barrels of oil in 1988 down to 245 million barrels in 2009.

·      The pipeline is threatened because it cannot handle pumping less than 300,000 barrels per day without incurring expensive repairs and alterations because the oil, which under normal flows is pumped 800 miles over a three day period, is flowing at such a low rate its temperature is chilled to much causing clogs and ruptures to the pipeline. It now takes five times longer to arrive at the Port of Valdez often at temperatures as low as 40F, versus 100F.

·      To increase the flow, the oil companies are trying to drill other oil fields in the area.  But the Artic National Wildlife Refuge (ANWR), and offshore drilling and the National Petroleum Reserve-Alaska (NPR-A) are off limits.

·       Saving the pipeline has become a political issue in Alaska. The pipeline, which employs 2,000 people, still delivers more than 11% of the oil produced in the U.S. Almost all of it ends up in refineries in Washington, California and Hawaii.

·       The end of the pipeline would likely translate into higher gasoline prices, which hit an average of $3.98 a gallon last week, the highest in nearly three years.

·      The only solution to saving the Alaskan pipeline is to add more oil.  Oil companies and many Alaskan officials argue more lands should be opened to drilling so that the pipeline can get the crude it needs to flow fast and safely.