Obama turns his back on the US economy’s biggest success story
The shale gas (and oil) revolution has had a dramatic effect on the American economy. Suddenly, energy prices are greatly reduced — and competitiveness suddenly increased. Manufacturing that was “off-shored” years ago is being “on-shored” again. There is an industrial renaissance going on. There is huge prosperity in areas where shale gas operations are taking place — like North Dakota, for example.
The effect on America’s balance of payments is huge and positive. From being a major oil importer, America will become self-sufficient in oil and gas within five to ten years, according to Deloitte. And the prospects are for this oil and gas bonanza to last for decades.
Of course oil and gas are finite, and may run out sooner or later. But “Peak Oil” is a false summit. Hill-walkers are familiar with that view of the top of the hill, which as you approach it turns out to be just another ridge a long way from the summit. So it is with Peak Oil. Just as with charcoal centuries ago, oil will finally run out. But as with charcoal, it will not leave us without power — it will be replaced with newer and better energy technologies.
But now, President Obama, as he enters the “Lame Duck” stage of his Presidency, has thrown a spanner in the works. He seems to be looking for “legacy issues” for which history will remember him. The rapprochement with Cuba. The nuclear Treaty with Iran. Maybe even Obamacare (though some might not be proud of a European-style socialised medicine model). But his last and biggest throw of the dice is (he thinks) to save the planet. Ahead of the Paris Climate Summit, he has announced draconian new targets for emissions. Incidentally, The Global Warming Policy Foundation has issued its findings here online , showing Obama’s key issues and challenges surrounding his climate plan.
Previously he had endorsed shale gas as “a bridging technology on the way to a carbon-free future”. Now, it seems, he wants to ignore the bridge, and simply leap across the divide. His plans will devastate the US coal industry. And they will be vigorously opposed both by the industry, and by Republicans who can see the huge damage his plans will cause. There will be legal challenges. Some Republican Governors have already repudiated the proposals, as have Republican Presidential hopefuls. And this new Obama plan cannot become law until after his Presidency — so if the Republicans win the White House, this Obama legacy plan is dead in the water.
Maybe the ghost of Harold Wilson could give President Obama some good advice about “picking winners” (and “the white heat of the technological revolution”). In 2009, Obama’s administration, with his blessing, gave over half a billion dollars of funding to a cutting-edge solar power company, Solyndra, which was going to transform the solar energy business. In 2011, it went belly-up. In Harold Wilson’s day, governments proved rather inept at picking winners. So did the Obama administration in 2009.
Lesson for Obama: the markets are probably better than bureaucrats at selecting viable technologies.