Obama’s Energy Dilemma: Back Energy-Fueled Growth or Please Green Lobby


Talk all you want about the fiscal cliff, but more important still will be how the Obama administration deals with a potential growth-inducing energy boom. With America about to join the ranks of major natural gas exporters and with the nation’s rising oil production reducing imports, the energy boom seems poised to both  boost our global competitiveness and drive economic growth well above today’s paltry levels.

This puts President Obama in a dilemma. To please his core green constituency, he can strangle the incipient energy-led boom in its cradle through dictates of federal regulators. On the other hand, he can choose to take credit for an economic expansion that could not only improve the lives of millions of middle- and working-class Americans, but also could assure Democratic political dominance for a decade or more.

Stronger economic growth remains the only way to solve our nation’s fundamental fiscal problems other than either huge tax hikes or crippling austerity. As economist Bret Swanson has pointed out, the best way to raise revenues and reduce expenditures, particularly for such things as welfare and unemployment, would be to increase overall growth from the current pathetic 2 percent rate to something closer to 3 or 4 percent.

Swanson suggests in a few simple charts (PDF) that a 4 percent growth rate would drive output to levels that would cover even our current projected spending levels. Even at 3 percent, the additional revenue would be enough, for example, to fill in Medicare’s looming $24.6 billion liability that is projected to 2050. The effects of higher growth are likely far greater than either any anticipated bonanza by raising taxes on the “rich” or enacting the most extreme austerity.

The energy revolution presents Obama with the clearest path to drive this critical boost to greater economic growth. New technologies for finding and tapping resources, such as fracking and other new technologies to tap older oil fields, could make America potentially the largest oil and gas producer by 2020, according to the International Energy Agency.

Equally important, an increasingly energy self-sufficient America would enjoy significantly greater independence from pressure from the often hoary influence of such unattractive regimes as Saudi Arabia, Venezuela, and Russia. Approval of the controversial Keystone pipeline from Canada to Texas would cement what would effectively be a North American energy community utterly independent of these trouble spots.

Those that have embraced the energy revolution have already created a gusher in energy jobs, which pay wages on average higher (roughly $100,000 annually )  than those paid by information, professional services, or manufacturing . The six fastest-growing jobs for 2010-11, according to Economic Modeling Specialists International, are related to oil and gas extraction. In total, nine of the top 11 fast-growing jobs in the nation over the past two years are tied in one way or another to oil and gas extraction.

Over the decade, the energy sector has created nearly 200,000 jobs in Texas, as well as 40,000 in Oklahoma, and more than 20,000 in Colorado. Growth on a percentage basis is even higher in North Dakota, which saw a 400 percent increase in these jobs, as well as Pennsylvania, where jobs increased by 20,000.

In contrast California, whose Monterey Formation alone is estimated to be four times larger than North Dakota’s Bakken reserve, has chosen, in its irrepressible quest for ever greater greenness, to sharply limit its fossil-fuel industry As a result, it has generated barely one-tenth the new fossil fuel jobs generated in archrival Texas. Not surprisingly, California and other green-oriented states have lagged behind in GDP and income growth while the energy states have for the most part enjoyed the strongest gains.

In addition, domestic energy growth directly spurs the construction of new, as well as the rehabilitation of old, industrial facilities. This already is occurring across a vast swath of America, from revived steel mills in Ohio and Pennsylvania to massive new petrochemical plants being planned along the Gulf Coast. Further development of energy resources, according to a study by Price Waterhouse Coopers, could create upwards of a million industrial jobs over the next few years.

For Obama, getting behind energy boom presents both enormous opportunities as well a serious political dilemma. In terms of cutting emissions, the rising use of natural gas has been a huge boon, allowing the U.S. to make greater cuts than any other major country over the past four years. Yet, the green lobby, once sympathetic to this relatively clean fuel, has turned decisively against any new gas development.

As a major component of Obama’s wide-ranging  coalition of grievance holders, environmentalists expect  to exercise greater influence in the second Obama term. Hollywood, now virtually an adjunct to the “progressive” coalition, will soon weigh in with Promised Land, a predictably anti-fracking movie, starring Matt Damon. Living up to Hollywood’s tradition of serving as what Lenin called “useful idiots”, the movie is financed in large part  by investors from the United Arab Emirates, whose profits would be threatened by the growth of American energy production.

The ideological stakes for the green movement are tremendous . Greatly expanded American fossil-fuel production violates the “peak oil” mantra that has underpinned environmental thinking for decades, and undermines some of the core rationale for subsidizing expensive renewables such as solar and wind.

Geography also may play a major role here. Outside of Colorado, the industrial Midwest and western Pennsylvania, where the shale boom is widely seen as boosting local economies, the vast majority of energy-producing states tilt strongly to the GOP. In contrast, Obama’s strongest support comes from green-oriented coastal residents whose familiarity with energy production starts and ends with turning on a light or switching on an Ipad.

Obama’s financial base—in contrast to that enjoyed by the Republicans—relies little on the energy industry. The president’s corporate support comes largely from the entertainment, media, and software industries. Many of Obama’s strongest business backers, particularly in Silicon Valley, have become entangled financially with “renewable energy” schemes, many of which can only survive with massive subsidies in the form of tax credits, loans, and surcharges on energy consumers.

Yet the president has good political reasons not to undermine the energy boom tht can deliver on his promise to deliver high-wage jobs and prosperity to the beleaguered middle class and working classes. In the campaign, the president wisely and openly sublimated his inner green, even taking credit for the expansion of fossil-fuel production. As the campaign came to a close, as Walter Russell Mead observed, “the less we hear about green and the more we hear about brown, about oil and gas drilling.”

As in so many areas, Obama’s political judgments were on target. His “brown” shift helped deprive the GOP of a key issue in critical swing states such as Colorado, Ohio, and Pennsylvania. Seeming moderation on energy also helped keep Democratic Senate seats in such key producing states as West Virginia, North Dakota, and Montana. A sharp turn back to a hard green position, particularly a ban on fracking, would leave these and other energy-state Democratic miracle babies isolated and vulnerable .

Right now, the administration’s energy policy seems a bit muddled, as the Obama team emerges from the fog of the campaign wars. On the one hand, there are signs that the Bureau of Land Management may take upwards of 1.5 million acres of western lands off the table for energy production. Yet at the same time, the bureau has announced plans to open 20 million acres off the Gulf Coast for exploration.

One can understand Obama’s ambivalence on the issue. Embracing the energy boom, and the ensuing economic expansion, could create an economic bonanza while continuing to reduce carbon emissions. This can be further enhanced by backing efforts by natural-gas producers to expand more into the bus, heavy equipment and truck market. On the other hand, this tack will risk the ire of rent-seeking renewable-energy firms and greens,  as well as their media and Hollywood claques.

Rather than divide the country into green and brown camps, the Breakthrough Institute’s Ted Nordhaus and Michael Shellenberger suggest, the administration should seek “a rapprochement” between the natural gas industry and the environmental movement. Dirtier energy sources, notably coal, could be jettisoned while the country shifts, at least for the medium and short run, toward a greater reliance on cleaner gas energy.

Ultimately, the decision whether to embrace an energy-led growth strategy may well determine whether President Obama can improve middle-class prospects. In the coming months, he will need to choose between pleasing the green purists around him and generating a long boom that would elevate him to Mount Rushmore levels, and assure his party’s political dominion for a generation.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared at The Daily Beast.

Midwest drilling rig photo by Bigstock.

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Too bad AGW is a hoax

If Anthropogenic CO2 could really increase the temperature 4 C, that would be a great thing for food production, and habitable land area on Earth, and/or it would save us from the coming ice age which is overdue. The truth is AGW has never been anything but a eugenics scam, going back to founder of the Swedish Eugenics Society Aarhenius in 1896. Aarhenius was already debunked by Johns Hopkins physics professor R.W. Wood in 1908, but since most people don't know the first thing about radiative transfer, they were able to be brainwashed by the financiers and other bourgeois rent seekers who as 1%'ers have a psychological need in the modern urban world to feel intellectually superior to the 99%'ers. What the 1%'ers want to forget is that being intellectually superior to the 99% doesn't mean you can't be manipulated by the 1% of the 1%, or the 1% of the 1% of the 1%, that is actual leading physicists like me with a Ph.D. in radiative transfer in ionized gases and boundary plasma physics, which are the real threat to the selfish delusions of the 1% who resent the 99% and secretly want to see their destruction, blindly following the UN Agenda 21 program to eliminate 95% of the human race by the year 2100. All the ZPG hippie warmnumist greenos have done is destroy America's wealth over the past 40 years, while the rest of the World has caught up and is starting to surpass us in terms of the well being of their populations. Thanks to the warmunist greenos, America is rapidly heading for bankruptcy. But rather than admit their shame and guilt, they press on with their psychological death wish. Thank God reality is intruding on their pretentious delusions from all fronts. Just a few examples. The Earth has not been warming for 16 years according to the MET. Sea levels are not even rising the past couple of years, and melting arctic ice would not raise sea level anyway since ice is buoyant according to Archimedes principal, demonstrating the rank stupidity of most nominally educated people. The 10 micron backscatter from CO2 is already mostly saturated, so the greenhouse effect of CO2, which is only a few percent compared to water's 95%, will not increase with increasing CO2. Plants do better in enhanced CO2 up to 950 ppm, so in fact people should be paid to pump CO2 into the atmosphere, that is, rationally, we should have a negative carbon tax. Wind and solar PV are great and competitive technologies which would be already booming and set a limit on fossil prices of the criminal banksters like Goldman Sachs and the Obama administration were not yanking the alternative energy chain to destabilize the market every few years, so all in all, the Governments actions are totally evil as usual. Specifically it is the American Government under both parties that is the one going around the world nuking people, killing millions of Koreans, Vietnamese, Iraqis, Afghanis, Libyans, Serbians, and now Syrians, not any other country. I am 99.9999% certain that AGW is nothing but a scientific scam from day one, and that those profiting from this scam are all useful idiots who should be prosecuted at a new War Crimes trial in the little town of Nuremberg, Pennsylvania. I pray that it cools off randomly for a few years so that this will become obvious sooner rather than later, so that I can live to see the complicit and corrupt physics establishment of the United States purged for their silence in the face of this scam, so American science can restore its currently ruined reputation. Scientist are only human, and just like anyone else, will lie to themselves about the truth of the science to keep their jobs.

Have you ever heard of

Have you ever heard of paragraphs?
I'm also a physicist, but most of what you say is either untrue or doesn't make much scientific sense, e.g., (1) 8 yeara out of the last decade have been the warmest on record, (2) the projected sea level rise is due to the melting of the Greenland ice shelf, which is currently over land rather than the sea, plus the expansion of water due to warming, (3)what does the 10 micron backscatter from CO2 have to do with its greenhouse effect? (hope you know the principles behind that...), (4) increased CO2 concentrations may spur plant growth, but the change in temperatures have led to wholesale destruction or migration of entire species of plants, etc., etc. You might know something about the physics of radiative transfer in ionized gases, but not about atmospheric thermodynamics. Anybody who self-proclaims that he's a "leading physicist", and brags about being 99.9999% certain strikes me as a hollow barrel that makes a lot of noise but is really empty inside. The closest analogy for climate deniers such as you is the "Flat Earth Society".

So why not replace coal-fired electric generation with nuclear?

I have long felt that the United States could replace most of its coal-fired electric generation with that powered by new-generation nuclear reactors. Last time I checked, such reactors, once constructed, emit zero CO2.

But the very same environmentalist groups (and their supporters) that complain loudly about CO2 emissions from the burning of various forms of fossil fuel also object relentlessly to nuclear power (examples include the Sierra Club (here [revealingly, most of the Sierra Club positions are unchanged since the 1970's], NRDC (here) and Greenpeace (here)).

It would not be a good idea to go 100% nuclear, because such plants cannot always black start.

L.A, Times: Rise in renewable energy will require ...

Rise in renewable energy will require more use of fossil fuels - As the state attempts to reach the goal of producing one-third of its electricity from wind and solar sources by 2020, more reliable sources of traditional power will be needed as a backup.

The Delta Energy Center, a power plant about an hour outside San Francisco, was roaring at nearly full bore one day last month, its four gas and steam turbines churning out 880 megawatts of electricity to the California grid.

On the horizon, across an industrial shipping channel on the Sacramento-San Joaquin River Delta, scores of wind turbines stood dead still. The air was too calm to turn their blades — or many others across the state that day. Wind provided just 33 megawatts of power statewide in the midafternoon, less than 1% of the potential from wind farms capable of producing 4,000 megawatts of electricity.

As is true on many days in California when multibillion-dollar investments in wind and solar energy plants are thwarted by the weather, the void was filled by gas-fired plants like the Delta Energy Center.

Obama is Chicken or very mistaken, or both

IF climate is important, put a price on it. Ordinary economics will then adjust it quite nicely ...climate will not change beyond the point where the COST of the impact exceeds the REVENUE from it. Carbon tax works here so do some other options.

Also, the cost of climate needs to be compared, regardless of money or lives counted, to the same factors as consequences of say low energy food production in poverty, hunger, etc.

As to the politics, the views of the people in a constitutional democracy are NOT sovereign, the constitution is. And so are facts. One cannot provide quality life or a quality environment without effort, without cost, and the cost cannot exceed the available resources, it is just not possible.

More specifically, if one were to desire to accomplish some major improvement, at some point one might have to accommodate some of the opinions and interests of non-supporters and thereby infuriate quite a few supporters in order to actually accomplish that improvement.

Obamas is either afraid of his base, which would be chicken, or thinks they can get their way, other views or interests or reality itself being considered on no consequence, which would be mistaken.

or interests or reality

or interests or reality itself being considered on no consequence, which would be mistaken..
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Please Green Lobby?

I find your headline highly prejudicial. May I suggest "Obama’s Energy Dilemma: Slow Climate Change or Please Energy Lobby"?

Also note where growth income goes

Geography student

Fracking has a good future and will reduce CO2 emissions in the short term but now 97% of climate scientists are now extremely concerned about human induced climate change. In the long run the government should be funding research on reducing the cost per tonne of CO2 which is where the future growth in 10-30 years time will be. Whereas the Democrats strategy on this is very muddled, the Republicans denial of climate change science will just condemn the US to fall behind in new technology. For example, the only solution for low CO2 producing private vehicles is low CO2 electricity with battery power where the US now leads the world The only person really talking sense about this issue it Lomborg in his book and movie "Cool It". The world needs to switch to the lower CO2 production strategies such as fracking nature gas in the short term, while in the long term spending much more in basic research (not investing in private firms) in getting CO2 reduction costs down.

As far as increased growth lowering the deficit, it will greatly depend on who gets the increased income. In the last 35 years most of the income improvements from increased efficiency have gone to the top few percent of earners. If most of the benefits of increased productivity income go to the top few percent, who then use the money to expand their investments in China and elsewhere, US growth will still stagnate. Rather than increased taxes on the top few percent working out a strategy to make sure the bottom 98% get a share of increased productivity income. This has the potential to do the most good as these earners share will go disproportionately to local services and sales.