Obama energy policy to cost taxpayers
President Obama has targeted oil, natural gas and coal - all carbon fuels - for higher taxation, an energy expert told a Tulsa luncheon on the eve of the “cap and trade” vote last week in the U.S. House.
Bob Tippee, editor of the Oil & Gas Journal, told a meeting of the Energy Advocates that Obama wants to adopt the “California view.”
Obama’s policy would cost the oil and gas industry at least $50 billion a year.
“The idea to quit using oil and gas is driving policy.” Tippee said. “I was astonished when I saw their figures but I was more astonished when I saw their rationale.”
Tippee said Obama wants to narrow the gap between what the nation uses for transportation and electrical generation (coal, oil and gas with some nuclear) and the alternative, so-called green energy sources (wind, solar, hydroelectric, etc.).
To narrow that gap just 5 percent in the next 10 years, would cost American consumers at least $17.5 billion a year, Tippee said.
“We can spend a whole lot of money to get a little bit of energy,” he said. “I am afraid that is way we are headed.
Obama hopes to divert usage of oil, gas and coal by stripping away tax incentives and by greatly expanding government subsidies of alternative fuels.
For example, in 1981, when tax subsidies for oil and gas were their highest (in real dollars), the credit was 29 cents per thousand BTUs. In 2007, the government credit for ethanol (made mostly from corn) was $5.82 per thousand BTU.
In an actual comparison from 2007 figures, oil and gas has a subsidy of 57 cents per thousand BTU while ethanol was a $5.82.
“I don’t like what’s happening with ethanol,” Tippee said.
Tippee said the country may not be able to meet federal mandates for the use of ethanol because production hasn’t risen to expected levels.
Tippee said the erratic rise and fall of world oil prices is hard to predict.
“We have a wild gyration of the price of crude oil in the world,” said Tippee, whose magazine will publish a forecast in July. “No trend goes on forever. The price of oil got too low at the end of last year.”
World demand for oil has dropped as the worldwide recession eased usage. The oil supply has dropped in 2009 by 1.2 percent. Production by OPEC was constrained. The only bright spot was production of liquid natural gas, which rose 11 percent.
“There is a lot of oil in inventory,” Tippee said. “That is a sign of weakness in the market. OPEC has definitely pulled in production.”
Tippee said OPEC learned a lesson in 1998 when oil dropped to $10 a barrel but continued production.
“They are reading the signals better,” Tippee said. “They didn’t like the feel of $10 oil.”
America, which runs mostly on gasoline, has relied on Europe when supply ran low. Europe uses mostly diesel fuel, which has dropped in price this year.
“Gasoline market growth may have come to an end,” Tippee said. “Gasoline is more price sensitive than diesel. The price of diesel is down but that won’t last.”
Political instability in places like Venezuela add to the instability of the supply of diesel fuel, he said.
Obama’s new restrictions on hydraulic fracturing could have a negative impact on the energy industry, Tippee said.
Tippee said he, like most in the energy field, are concerned about pollution but the problem is not as bad as projected.
“I do know propaganda when I hear it,” Tippee said.
He said he would like scientific answers to the questions about global warming and climate change. “I think we were sold a bill of goods by the media, who like to gravitate to popular mythology,” Tippee said of global warming.
For more information about The Energy Advocates, go to www. energyadvocates.org.