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By Robert Rapier on Aug 9, 2009 with no responses

Our Ironic Energy Policy

Energy policies in the U.S. often seek to punish our domestic oil and gas producers, while at the same time we work hard with foreign producers to ensure that the oil continues to flow. I noted in a recent essay:

It is ironic that Steven Chu doesn’t seem to feel the need to work with our domestic oil industry, but warns OPEC not to cut production, and then is pleased when they don’t. I believe the blind spot in the present administration over the need to support our domestic producers will simply mean that future energy secretaries are even more beholden to OPEC.

Now, over the weekend we have two bits of news that continue to show the irony of our energy policies:

Clinton on oil mission to Angola

LUANDA (AFP) – US Secretary of State Hillary Clinton shifted the focus of her Africa trip to business on Sunday, arriving in Angola to boost relations with the continent’s key oil producer.

The top US diplomat is on a one-day visit to the southern African nation, which vies with Nigeria as Africa’s biggest oil producer but where two-thirds of the population lives on less than two dollars a day.

Angola is now China’s largest supplier of crude oil, but it is also a key provider to the United States. Angola sold 19 billion dollars in exports to the US market last year, 90 percent of it oil.

I certainly understand the need to work with other countries to keep the supply chain open, but those policies don’t seem to extend to our own country. How about sending Clinton or Chu on a mission to ExxonMobil to figure out how to better work with domestic producers?

Then, we have the following two stories:

Other countries ink deals for oil drilling off the Florida Keys

While the debate about drilling off the coast of Florida continues in Washington and the state Legislature, several international companies are getting started on projects that could bring oil rigs within 60 miles of the Keys by year’s end.

Companies from nations like Norway, Spain, India, China, Russia and Brazil have signed exploration agreements with Cuba and the Bahamas that could mean drilling south of Key West this year, and 120 miles east of the Keys in the Cay Sal area of the Bahamas in fewer than two years.

“Wouldn’t it be ironic if the Russians could drill closer to our shores than American oil and gas companies? The losers would be the American consumers who are cut off from the trillions of dollars in government revenue and thousands of new jobs that could be created if more of America’s oil and natural gas resources could be developed,” Katie Matusic, media relations manager for the oil industry lobbying group American Petroleum Institute, wrote in an e-mail.

Russian oil rigs just 45 miles from Florida?

New York – Remember the Cuba Missile Crisis and the threat of Russian nukes 90 miles from Key West? Now, there is the possibility of Russian oil rigs even closer, drilling in Cuban waters off the Gulf of Mexico.

Last week, the Cuban government announced it had signed contracts with Russia, allowing Russia to hunt for oil and natural gas in the Gulf of Mexico, perhaps as close as 45 miles from US shores.

The US oil and gas industry is hoping the Cuban drilling causes the US to rethink its own policy in drilling in the eastern gulf of Mexico, an area the USGS estimates has 3.06 billion barrels of oil and over 11 trillion cubic feet of natural gas.

Last July former president Bush lifted the executive moratorium on drilling on the Outer Continental Shelf. The Congress, which usually renewed the moratorium each year, let it expire.

But, in February, Interior Secretary Ken Salazar, announced he was extending until Sept. 21 the period for public comment on a proposed five-year plan for drilling offshore.

Proponents of drilling maintain it would provide the Obama administration with a dramatic influx of $2.2 trillion in new revenue from royalties and taxes on profits. They estimate it would add 1 million new jobs as companies build new oil rigs and roughnecks get hired in Florida for the new rigs.

If you think we need to reduce our dependence on fossil fuels – and I do – then that’s one thing. Adopt policies that encourage this. But don’t adopt schizophrenic policies that result in us treating foreign producers better than we do our own domestic industry. The result could be that we will end up buying oil produced in the Gulf of Mexico from Russia, creating jobs for them and advancing their economy – at the expense of our own. And that is simply asinine.