The government is delaying critical energy infrastructure
America continues to battle serious energy supply issues despite having considerable reserves. Our discoveries of oil and gas in Colorado, the Bakken fields, and the Marcellus shale have been substantial.
That said, they have not reduced our need for importing foreign crude oil. We are currently importing over one million barrels a day from Saudi Arabia, a terrorist haven. We also import over 800,000 barrels a day from Venezuela.
Hugo Chavez, the president of Venezuela, made it clear that America is the enemy. Yet we continue to buy their crude oil, knowing that the proceeds may one day help these countries fund future terrorist attacks.
Oil embargoes have occurred in the past creating serious energy shortages and hardships across America. Some of us remember the Arab Oil Embargo that started in 1973. We had to spend hours in lineups for very expensive gasoline and were considered lucky if we were able to keep one of our cars fueled.
Some Americans were unable to afford heating oil for their homes. They shivered in their sweaters or went to live with relatives who had heat. While the embargo ended in 1974, the Organization of Oil Exporting Countries (OPEC) can turn off the spigot at any time. They could also divert a greater portion of their production to China, which is starving for oil to fuel their economic expansion.
Between the Saudis and Venezuelans we are trapped between a rock and a hard place. We need stable oil production and reliable delivery capabilities.
In an effort to reduce our dependency on oil from unfriendly nations, the Keystone pipeline project was initiated. Several segments of this pipeline are already in production moving crude oil from the tar sands of Alberta into parts of the United States. (http://www.transcanada.com/keystone_pipeline_map.html).
The remaining portions of the pipeline, when completed, will pump an additional 700,000 barrels a day to refineries in Texas. Building the pipeline would create 20,000 jobs. Once the pipeline is completed, over 1,000 permanent highly paid skilled craftsmen and technicians will be needed to operate and maintain it.
As this project crosses an international border, the approval of the State Department is necessary, but is being withheld. In a shocking political decision, the Obama Administration has decided that the entire environmental study must be reperformed. This will delay the start of the project until 2013 at the earliest.
More importantly, it permits the President to defer the decision until after the 2012 elections, enabling him to sidestep this issue until after he is reelected. To satisfy the environmentalists, the TransCanada Pipeline Corporation has offered to reroute the pipeline around ecologically sensitive areas in Nebraska.
This will make the pipeline approximately 40 miles longer but will enable it to bypass sensitive aquifers and habitats. The excessive delays and additional costs may result in TransCanada Pipeline canceling the project.
While it may be a good decision to hold up the project from a political standpoint, this unnecessary delay in approving the pipeline will cost the American public dearly. Until the pipeline is built, we will need to buy 700,000 barrels of oil each and every day from unfriendly countries that control the spigot.
In my opinion, there is no need to further enrich the sheiks in Saudi Arabia and the dictator in Venezuela. We need to complete this pipeline as soon as possible. Our economy depends on a steady stream of inexpensive energy to power our factories and our homes.
In a separate attempt to move oil to feed the Texas refineries and our economy, Enbridge Inc. and its partners want to build the Wrangler pipeline. When completed, this pipeline will transport approximately 800,000 barrels of oil daily.
The good news is that federal government approval is not required as the pipeline will not cross an international border. Instead it will use preexisting international pipelines to move the oil from Alberta to the United States. Unfortunately, environmentalists are vehemently opposing this project and could significantly delay or kill this project as well.
Without additional pipeline capacity, we will need to buy more oil overseas and transport it in huge super tankers. The environmentalists may actually be responsible for the next EXXON Valdez disaster as they shut down the pipeline projects and force oil companies to use ships to transport the oil we so desperately need.
I recognize that we need to use more alternative energy such as solar and wind power. Restricting the supply of oil and gas through a lack of pipelines is not the answer. It will artificially increase the cost of these fuels. Anyone who studied basic economics knows that if supply is artificially restricted, prices for the product will go up. This will make alternative energy more cost effective in the short term.
However there is a downside. Higher prices will serve as an incentive for oil companies to increase the supply of oil. The pipelines will eventually be built and an abundance of petroleum will flow through them. This will cause fuel prices to drop, resulting in reduced incentives to implement alternative fuel technologies.
Solyndra, the solar power manufacturer that recently collapsed despite $535 million in federal government money, is an example of what happens when the government intervenes into the free market economy. I understand that solar power has its place. Our house is powered by solar energy and we provide our surplus electricity to the power grid. That said, government intervention into the energy market can't create a sustained transition to alternative energy.
I believe that for the next 20 or 30 years, we will need increasing amounts of fossil fuels. Over that time frame, we can create cost effective alternatives. Let us drill for our own oil, in our own country. Let us transport it to market on safe, cost effective pipelines.
The Administration must get out of the way of the pipeline companies and refineries. It is time to let the free market prevail, unencumbered by political interference.
© 2011 Gordon Smith All Rights Reserved