Wealth & Poverty Review Energy Independence Would Insulate the U.S. from Middle East Unrest


What has suddenly become obvious is the extent to which President Barack Obama’s imprudent policy-making decisions have compounded problems with unintended and unacceptable consequences. Now that Iraqi and Libyan oil may be at risk of going off-line as a result of terrorist control, Obama’s recent decision to block construction of the Keystone XL pipeline, which would transport a million barrels of oil per day from friendly Alberta, Canada to the United States, seems astonishingly shortsighted.
Environmental activists committed to blocking the Keystone pipeline hoped that their obstructionism would force Canadian oil companies to keep the oil sands crude in the ground. Canada decided years ago to invest in costly high-tech capital equipment to excavate and process their remarkable Athabasca oil sands resource — the success of which elevated Canada’s stature in the world, making it No. 3 in proven and recoverable oil reserves exceeded only by Saudi Arabia and Venezuela.
Missing from top news stories last week was the report that the Canadian government was going ahead with a Keystone pipeline alternative. The new pipeline will not go south into the U.S. but rather west, transporting some 525,000 barrels of oil per day from the Alberta oil sands to the Canadian west coast. It will be offloaded onto more than 200 tankers per year and shipped across the Pacific to China. Ironically, that will likely result in more environmental harm per barrel than would have resulted from Keystone pipeline oil throughput, given the lower standards of China’s refineries and its history of disregard for the environment. Meanwhile, the U.S. remains dependent on oil imports from hostile OPEC suppliers like Venezuela.
Two months ago, Russian aggression and blackmail of Ukraine — which is now being actualized by Vladimir Putin cutting off the flow of natural gas — should have been a wake-up call in the U.S. to go forward with Keystone, extend the oil and natural gas fracking revolution, and accelerate the construction of liquefied natural gas (LNG) export terminals. With growing terrorist control in the Middle East and an expansionist Russia, we need to take steps beyond Keystone and LNG exports and open up public lands in the western states and in Alaska to oil exploration and development.
U.S. energy supplies should not be at risk to an unstable Middle East when the U.S. Bureau of Land Management reports that more than 70 percent of American shale oil “lays on federal land in Colorado, Utah, and Wyoming … an estimated 1.23 trillion barrels of oil — more than 50 times the nation’s proven conventional oil reserves.” Similar to what followed from aborted responses to the crossing of red lines in Syria and terror assaults in Benghazi, Libya, the U.S. failure to get serious and go forward with energy independence — which includes the Keystone pipeline, LNG exports and oil recovery from public lands — has harmful consequences. It reinforces the perception that the U.S. is not only indecisive and weak on foreign policy, but that it can’t make the hard political decisions to protect vital national interests.
These three energy independence initiatives are all highly regulated capital intensive projects that take years to come on line. Given today’s unprecedented terrorist threats across multiple states of the Middle East, not to mention growing Iranian influence in Venezuela, the U.S. needs an energy insurance policy. Putting aside re-engagement of our military in Iraq or elsewhere, Obama could take steps to reassure the American people and signal the world that the U.S. is serious about energy independence.
Originally published at The Florida Times-Union
Image: Wikimedia Commons

Scott S. Powell

Senior Fellow, Center on Wealth and Poverty
Scott Powell has enjoyed a career split between theory and practice with over 25 years of experience as an entrepreneur and rainmaker in several industries. He joins the Discovery Institute after having been a fellow at Stanford’s Hoover Institution for six years and serving as a managing partner at a consulting firm, RemingtonRand. His research and writing has resulted in over 250 published articles on economics, business and regulation. Scott Powell graduated from the University of Chicago with honors (B.A. and M.A.) and received his Ph.D. in political and economic theory from Boston University in 1987, writing his dissertation on the determinants of entrepreneurial activity and economic growth.