High unemployment, an energy crisis and even “stagflation.” President Obama’s first term has been the second term Jimmy Carter never had. Carter campaigned as “A leader, for a change,” while Obama’s slogan was “Change we can believe in.” If those parallels weren’t enough, Obama can now claim his own hostage crisis.
Instead of U.S. diplomats, this time it’s America’s energy security that’s being held hostage. And this time Iran isn’t the only hostage-taker — it has joined forces with other virulently anti-American OPEC nations, including Venezuela and Algeria.
OPEC meetings broke up on Wednesday after OPEC’s member states failed to reach a consensus to raise oil production. Anticipation of an agreement had provided American consumers with a modicum of relief, but with vanished prospects for an accord, fresh rounds of gas-pump torture are likely inescapable.
This latest challenge underscores America’s reliance on foreign oil from unstable regimes and the urgency of ramping up domestic energy production by removing unnecessary impediments. And don’t count on change from the Obama administration any time soon. The Bureau of Ocean Energy Management, Regulation and Enforcement, which is in charge of issuing drilling permits, has only issued a handful since the end of the Gulf of Mexico drilling moratorium.
Domestic offshore oil production will fall 13 percent in 2011, a loss of about 220,000 barrels per day, mainly due to the continued de facto moratorium, according to the Energy Information Agency.
The United States now imports more than 25 percent of its oil from OPEC, including from regions where the only certainty is a reliable pattern of uncertainty — leaving the nation’s energy security dangerously vulnerable to disruption. Nevertheless, prior to imposing the moratorium, an administration report declared, “Currently, there is sufficient spare capacity in OPEC to offset a decrease in [Gulf of Mexico] deepwater production that could occur as a result of this rule.” It is the administration’s policy of intentionally increasing America’s reliance on inherently unstable foreign suppliers that led to this debacle and courts further disaster. “We can just get more oil from OPEC” makes as much sense as “we can just print more money.”
This policy of stifling domestic energy production comes with a dramatic price tag. Lost production in the Gulf means that the United States will be forced to import an extra 88 million barrels of oil each year by 2016, translating into $8 billion exported abroad annually. Some analysts have predicted that we are on our way to fuel prices that may rise as high as $5 a gallon by the end of the year. At that point, many consumers will face stark choices between filling up the tank or taking a vacation, or perhaps cutting back on groceries and other necessities. And then there’s the ripple effect. Rising gas costs are already putting pressure on the price of everyday commodities, further weakening our buying power. Higher supply costs may mean that businesses have to renew their hiring freeze, sending economic recovery into reverse. In short, Obama may complete our transition back to the Carter-era malaise.
If we were out of oil, as the president likes to tell us, there wouldn’t be much we could do about it. But the Congressional Research Service says “America’s combined recoverable oil, natural gas, and coal endowment is the largest on Earth.”
America is rich in energy, but the government won’t let us touch it.
The collapse of any OPEC agreement to raise production underscores the urgent need to develop our own vast supplies of oil and natural gas, not less. It’s not too late for Obama to abandon reckless energy policies that may leave him with yet another Carter legacy: a failed presidency.
Thomas J. Pyle is the President of the American Energy Alliance.