The front page of USA Today claims: “President Obama’s attempt to use the Gulf of Mexico oil spill to help propel comprehensive energy legislation has failed.” Don’t believe it for a second. On Monday, the Obama administration reissued a ban on offshore oil drilling in the gulf after federal courts twice invalidated the first ban, calling it “arbitrary and capricious.” The new ban is, if anything, more restrictive than the first, thus guaranteeing even more job losses for the already devastated Gulf region. Meanwhile, Majority Leader Harry Reid (D-NV) is set to introduce a bill that will cap greenhouse gas emissions from power plants. Taken together, the President’s Cap and Ban approach to energy policy will accomplish exactly what he set out to do from the very first day he was sworn into office: decrease the amount of carbon the U.S. economy emits by drastically increasing the cost of energy.
The mechanism Sen. Reid will use to cap carbon emissions is Sen. Jeff Bingaman’s (D-NM) renewable electricity standard (RES) legislation (the American Clean Energy and Security Act), which caps carbon from power plants by forcing them to produce a growing percentage of the electricity they produce from government-approved renewable energy sources every year. This is essentially cap and trade but without the trade. If these new renewable energy sources were actually cost effective, there would be no need to mandate them. Cost-minimizing firms would adopt the technology on their own to stay competitive. But renewable energy is not cost-effective. It is significantly more expensive than traditional fuels. That explains the need for the government mandates — mandates that will raise everyone’s energy costs. The ultimate victim of these higher energy prices will be you the consumer and the American economy.
Taking the full cost of wind and other renewables into account, the Heritage Foundations Center for Data Analysis has found that an RES would: 1) raise electricity prices by 36 percent for households and 60 percent for industry; 2) cut national income (GDP) by $5.2 trillion between 2012 and 2035; 3) cut national income by $2,400 per year for a family of four; 4) reduce employment by more than 1,000,000 jobs; and 5) add more than $10,000 to a family of fours share of the national debt by 2035.
And that is just the “cap” half of President Obama’s Cap and Ban approach. The first Obama oil drilling ban already caused some oil rigs to leave U.S. waters entirely. The threat of a second moratorium effectively created a de facto oil drilling ban and, even if they lose in court, the Obama Interior Department can further the de facto moratorium through tough new safety regulations and by extending the time it takes to review drilling applications. Studies show that more than 200,000 jobs are tied to the offshore drilling industry and 35,000 workers are directly involved each day when the rigs are in use. The American Petroleum Institute forecasts that if the drilling ban continues, more than 120,000 jobs could be lost in the Gulf Coast and key resources abandoned or moved elsewhere.
Worse, CNN reports that shallow water drillers say the Obama administration has not issued any permits since April 20, effectively creating a stealth ban on all offshore drilling. Heritage analyst David Kreutzer has crunched the numbers and found that a full Obama administration ban on all offshore drilling would be absolutely devastating to the U.S. economy. Between now and 2035, an offshore drilling ban would: 1) reduce GDP by $5.5 trillion; 2) reduce job growth by more than 1 million jobs by 2015 and more than 1.5 million jobs by 2030; and 3) increase the total expenditures for imported oil by nearly $737 billion.
After listening to locals testify about the economic catastrophe President Obama’s energy policies are already creating in the Gulf, former Democratic Sen. Bob Graham said he was disturbed by a “disconnect between Washington and the Gulf region about the sense of urgency needed.” There certainly is a disconnect between Washington and the rest of America. At a time of 9.5 percent unemployment, now is not the time to be inflicting costly Cap and Ban energy policies on the U.S. economy.