Just prior to the election, battery-maker A123 Systems filed for bankruptcy. As the recipient of $249 million in federal money, the Massachusetts-based company represents just the latest in a long line of troubled taxpayer-enabled green ventures – some 34 companies and $7.5 billion to date.
How little different this is from Houston-based Enron’s forays into wind and solar in the 1990s, which even with federal subsidies were never profitable.
Failed bets on politically correct, market-incorrect energies are part of the trillion-dollar federal deficits that shake America’s living rooms. Yet President Obama seems determined to continue throwing good money after bad, setting up companies and their workers for failure. Meanwhile, resources are taken from the private sector where consumer-supported jobs originate.
Such is just part of the president’s grander, misdirected energy policy, one that is at odds with the big three energies of oil, gas and coal.
Consider, for example, the president’s take on the cause and cure for high gasoline prices. A CNN poll earlier this year found a three-fold increase in the number of Americans viewing high motor fuel prices as the nation’s most significant economic issue. The national average has abated to $3.42 per gallon, and gasoline prices in California have recently dropped below $4 per gallon. Still, stagnant oil production on federal lands compared to state and private lands is a missed opportunity for producers and consumers alike.
So what does the president say? That renewable energy is “the only way we’ll break this cycle of high gas prices.”
The truth is that the big forces pushing up gas prices can’t be solved with wind, solar and ethanol. Global demand for crude oil is high, and the supply is hampered by political instability in oil-rich places such as the Middle East and North Africa. And U.S. policymakers have weakened the dollar.
Then there’s the president’s take on taxes. Obama constantly hammers “big oil” for supposedly not paying its “fair share,” and he claims these companies are benefiting from billions of dollars in taxpayer giveaways.
But the fact is that the three biggest oil companies – Chevron, ExxonMobil and ConocoPhillips – all pay tax rates above 40 percent. Compare that to other major American corporations. Apple only pays 9 percent. GE, thanks in part to its windpower unit, pays just 7 percent.
Then there’s the claim from the White House that oil companies are leasing thousands of acres of land but leaving them idle.
To make its case against expanded drilling, the administration misleadingly defines “idle” to include such things as seismic testing on the land and preparing rigs to drill.
True, at this stage companies aren’t physically pulling resources from the ground. But the land certainly isn’t idle. Oil and natural gas developers are just taking necessary first steps before actual drilling and, hopefully, production occurs.
Compare this to genuine idleness when federal policies have unnecessarily delayed drilling permits. And don’t forget the Keystone XL pipeline, which remains one White House decision away from overcoming idleness.
Obama’s effort to paint green-tech as the future of American energy is predictably backfiring. While heavily subsidized wind and solar companies continue to flail, the traditional energy sector is flourishing as it develops more environmentally friendly ways of doing business.
Indeed, the U.S. Energy Information Administration projects that by 2035, oil and natural gas alone will supply about 55 percent of America’s energy needs, compared to less than 11 percent from government-dependent wind, solar and ethanol.
And if federal budget reforms eliminate energy subsidies, expect this market-share differential to become much more pronounced.
With inauguration for his second term just around the corner, President Obama should rethink his failing energy policy for one premised on free markets, consumer sovereignty and deficit-reduction.
One can hope for change, right?
(Robert L. Bradley is CEO and founder of the Institute for Energy Research and author of seven books on energy.)