There is no question that it is becoming increasingly more difficult for the President to remain loyal to the radical environmentalist lobby while at the same time trying to placate the cries of a country desperately looking for a glimmer of hope on the jobs front. Just within the last week, Barack Obama issued a stay on the EPA’s draft Ozone National Ambient Air Quality Standard and his action was met with expected howls from those on the left, protesting with apoplectic seizures as their green president had seemingly betrayed them. Apparently the environmental crusders on the left continue to pay little heed to the calamitous jobs numbers with news the very day of President Obama’s order that no (zero) jobs were created in the month of August. Moreover, as we continue the countdown to the November 2012 election, it is becoming increasingly clear to Obama that the campaign srategy slogan is hardly likely to be “It’s the environment, stupid!”
Now aside from recently issued regulations and the pending implementation of other business-confidence killing restrictions of the EPA, there are a number of other areas where the President it being pulled in different directions. Just a couple of weeks ago, the State Department gave its approval of the Keystone XL Pipeline that would run 1,661 miles from Hardisty, Alberta to Port Arthur, Texas. The project is expected to provide 20,000 direct jobs plus other ancillary employment opportunities, and in addition, generate $5.2 billion in property tax revenue. Furthermore, the pipeline would reduce our reliance on foreign sources of energy supplies by the amount of 830,000 barrels/day. Again, much to the dismay of the passive resistance Vietnam-era wannabees who demonstrated in front of the White House prior to the ruling, the administration erred on the side of job creation and the economy. The final chapter is not yet written for this TransCanada pipeline extension, but it now looks increasingly likely that this 3-year odyssey through the bowels of the offices of federal scrutiny is coming to an end.
And yes, what about that post-Macondo well drilling moratorium in the Gulf of Mexico that stymied drilling activity, resulted in the layoffs of tens of thousands of oil service workers and the redeployment of a number of offshore oil rigs to other international locations? Well, the moratorium was lifted in October of 2010, roughly 6 months after the accident. However, listening to U.S. oil company executives, the approval of 2400 page permits to drill in the deepwater of Gulf of Mexico is still an excruciatingly tedious and glacial process with only a modest semblance of improvement in the pace of approvals. We must also note, however, that despite the recent improvement in permitting activity, the U.S. is likely to lose roughly 400,000 barrels per day of oil production growth that would have helped to provide an incremental buffer to the loss of the 1.6 million barrels per day of Libyan production that spiked oil prices this year.
Finally, and perhaps most importantly, one needs to focus on the extraordinary growth that is taking place in the area of unconventional shale oil and shale gas drilling in the U.S. There is no sensationalism when one calls what is going on in places like the Bakken Shale (North Dakota), the Eagle Ford Shale (West Texas) and the Marcellus Shale (West Virginia and Pennsylvania) a revolution. It has all been made possible by the tremendous advances made in oil service technologies which includes hydraulic fracturing and horizontal drilling techniques. Companies such as Schlumberger, Halliburton and Baker Hughes, among others, are the new technology companies that are making these tremendous advances possible and they will continue to forge new ground, making the process ever more efficient and less resource intensive in the months and years to come.
Now of course we all know that much attention has been given to the environmental concerns related to hydraulic fracturing. These include issues of water disposal, methane and fracing chemical infiltration into the water aquifer and air pollution. The covens of green activists have been especially outspoken here but have had limited success in banning unconventional gas drilling activity (New York is in the process of lifting their moratorium). This is largely due to the fact that despite propagandized films such as ‘Gasland,’ the facts are not bearing out the risks that environmentalists claim to exist. Independent studies such as the well-documented Duke University analysis come up well short of finding evidence that points to hydraulic fracturing as a proven risk to the water aquifer in terms of methane or chemical infiltration. Meanwhile, the industry and the country continue to reap the benefits of this new era of domestic natural gas and oil produiction. Oil industry related jobs have helped to drive low single digit unemployment rates in North Dakota, parts of northern Pennsylvania and West Texas. The industry’s success has offered one of the few bright spots in an otherwise languishing national economy.
So what’s a president to do? I suggest he stay out of the way and tell Mrs. Jackson at the EPA and the environmental lobby to do the same.