Wednesday, September 7, 2011

What Obama could say in his speech that would really turn the economy around

Recent polling indicates that seventy-six percent (76%) of voters say the country is heading down the wrong track. Clearly, something needs to be done to turn the train around and head in a different direction.


First we need to know where we've been headed and then make a conscious decision to do a 180.


Three recent news stories—all under-reported—offer a snapshot of the wrong direction.


The Julia Field

Exxon is in a legal battle with the US government. The company has a new oil discovery in the Gulf of Mexico in what is called the Julia Field. Exxon reports an estimated one billion barrels of recoverable oil—worth potential royalties to the government of $10.95 billion. The discovery is believed to be the largest in the Gulf of Mexico. (Note: we are not out of oil; we keep finding more.)


In its exploration, Exxon is known for moving slowly and studying all the options before committing billions of dollars—using the best technology and science to utilize the shareholders' risk capital. This is good. Deep-water exploration is difficult and complex. It needs to be done right.


However, apparently, the process was so lengthy, it butted up against the end of the lease period. Exxon applied for a routine extension. It was denied. A series of appeals have taken place. Finally, the Interior Department's Office of Hearings and Appeals ruled against Exxon. Now, potential jobs and monies paid to the federal coffers are delayed.


The Julia Field debacle is reminiscent of a decision earlier this year that forced Shell to shelve Artic drilling plans after they spent nearly $4 billion in preparation to conduct exploratory drilling in Arctic waters. In dispute is what amounts to a clerical error that requires Shell to start over and puts off the creation of new jobs and revenue another year.


Black Arctic Gold

It has just been announced that Exxon Mobil Corp. has entered into a deal with Russia to develop Arctic oil resources. The company has agreed to invest $2.2 billion to explore a potential oil field in the Kara Sea and to spend $1 billion in exploration in the Black Sea. The ventures are politically risky, and there is no certainty that oil will be found. The deal includes Russia's state-controlled oil company, Rosneft, acquiring stakes in Exxon's US projects.


Exxon expects to spend tens of billions of dollars just to start producing, with a potential direct investment of $500 billion in Russian waters. With an estimated 90 billion barrels of recoverable oil in the Arctic, someone is going to go after it. Unfortunately, the revenues are going to Russia, not the US.


Bakkan Field

North Dakota is home to a series of newer US oil discoveries—known as the Bakkan Field. As a result, North Dakota enjoys the lowest unemployment rate in the country—3.3%. It is widely known that the energy industry creates jobs, and not just minimum wage jobs. A report released this week shows that the industry is ready to create 1 million jobs over the next seven years and a recent study by PricewaterhouseCoopers estimated that each direct job in the U.S. oil and gas industry supports more than three jobs elsewhere in the economy.


With the obvious economic success story of the Bakkan field, you'd think that President Obama and his advisors would be looking to what is working and trying to replicate that nationwide.


Instead, development is being thwarted, hassled, and punished.


In the case of the Julia Field, the Interior Department could work with Exxon, perhaps charge a fee to expedite a permit. Instead, Exxon has to file a lawsuit to receive the deserved return on its investment. What company would want to invest billions and then have to fight the government for the payback?


In the Arctic, companies want to explore, expand, and extract the resource. But, as Shell experienced, the agencies are looking for reasons to reject or revoke permits rather than working with companies. No wonder Exxon has chosen to do business with a risky Russia—at least they can do business.


In North Dakota, seven oil companies were recently charged with killing migratory birds. These are not endangered species—these birds can be hunted and killed. But if they die because they—of their own free will—landed in an oil waste pit, operators face a penalty of six months in prison and a $15,000 fine. Currently there is no proof that the companies did anything wrong, but 28 birds died at a few of the 6000 well sites—as a result, companies have been charged in federal court with killing birds—when a fine and a slap on the hand would probably be sufficient. (This, in contrast to the nearly half a million birds killed a year by administration-touted wind turbines—not to mention the deaths of thousands of agriculturally important bats.)


And the President wonders why companies are sitting on their money. A payroll tax holiday won't do it. Infrastructure spending is not a solution. Reversing one onerous, cost-increasing regulation will not turn the economy around.


These three little stories—all within the past few weeks, represent the overall attitude of this administration toward businesses that create jobs and revenue. Until the administration decides to work with, and not against, the job creators in the economy, growth will remain flat—or worse.


Thursday night before the joint session of Congress, President Obama could say, "I have heard you, loud and clear. My decision last week to dial back the EPA was just the first step. I have seen that agencies, bureaucrats who are under my control, have been overzealous. Tonight, I am here to announce a new attitude. As of this moment, I have instructed all departments to stop any action that has the potential to slow the economy and work with business, not against…"


Oh wait! I am dreaming. He'll never say that. But he did back off that one regulation. Surely that was not his idea. He did it because of public pressure, Yes, if re-elected, he'll probably tighten the regulatory screws. But we, the people, can continue to pour on the pressure—we can help steer the train back to the right direction. One thing politicians understand is re-election. Therein lies the power of the people.



Marita Noon is the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens' Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations' combined efforts serve as America's voice for energy. Marita's twentieth book, Energy Freedom, will be released in October.