Keystone Pipeline Delay Compounds America’s Energy Decline Print
By Troy Senik
Thursday, December 08 2011
In Obama’s energy policy, we see his entire philosophy of government in microcosm.

The core economic fallacy of modern liberalism is the belief that government is superior to the private sector in directing markets.
This was the undoing of the stimulus package, which was predicated on the belief that nearly $800 billion centrally distributed from Washington would do more to steer the economy toward growth than that same $800 billion in the hands of private individuals.
This is the fatal conceit of ObamaCare, which reasons that the ailment at the heart of the health care industry’s dysfunction is a deficit of central planning rather than a deficit of individual choice.
And it’s the root cause of the Obama Administration’s quixotic energy policy, which pours trillions of dollars into non-viable alternative energy sources with no consumer demand while suppressing the development of proven fuel sources like oil.
Despite the market’s rejections, Barack Obama has repeatedly asserted throughout his presidency the belief that a combination of moral suasion and billions of dollars in taxpayer money could alter the realities of energy economics and make “clean energy the profitable kind of energy.” That’s a pipe dream.
The calculation as to what makes energy profitable in the real world is simple enough to be deduced by even your average Harvard Law Review president. The fuel source must be available on a steady basis (as opposed to sources like wind, which are only available when the weather complies), must be affordable and must be available at an industrial scale. This is a difficult combination to achieve and, indeed, only a few fuel sources have crossed this threshold – namely oil, coal and natural gas.
Rather than allowing alternative fuels to endure the market competition that would galvanize them to emulate the success of conventional fuels, the White House has chosen to subsidize them at a breathtaking pace. The results have been unmitigated failures for the industry, for consumers and for taxpayers.
2009’s “Cash for Clunkers” program – which subsidized consumers who traded in old cars for new, more fuel-efficient models (at a cost to the taxpayers of $24,000 per vehicle) – did nothing but expedite vehicle purchases that would have been made anyway, causing a sales bust after its short-lived boom and a subsequent price increase of about $2,000 for the average used vehicle.
The feds rolled out a $7,500 per vehicle tax credit for Chevy’s electric car, the Volt, only to see sales come in at an anemic 8,000 for 2011 (making Chevy’s projection of 45,000 Volts sold in 2012 an unintentional joke). What few Volts are on the road now face the prospect of a recall amidst revelations that the vehicle can unexpectedly catch fire if it suffers damage to its cooling system.
The very height of the administration’s folly was the $535 million in federal loan guarantees given to Solyndra, a California solar power company. That company is now bankrupt. Its more than 1,000 employees have been laid off. And the taxpayer has been left footing the bill.
Even if some of these projects had been successes, a more sober administration would recognize that they still couldn’t mitigate the need for abundant conventional energy at affordable prices. Yet because of its ideological hostility to energy companies that actually provide products consumers want and need, the Obama Administration has cut in the opposite direction.
It used the BP oil spill as an excuse to virtually shut down oil production in the Gulf of Mexico, idling nearly 80,000 workers and leading offshore rigs to flee to locations perceived as more hospitable to business than the U.S. – a list that included volatile regimes like the Republic of Congo. The president, whose ego is impregnable to shame, then had the moxy to tell an audience in newly oil-rich Brazil, “We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers.”
The president can’t seem to muster the same enthusiasm for putting Americans to work, however. At least that’s the logical conclusion one draws from his administration’s decision to delay approval of the Keystone XL oil pipeline, a new project that would deliver 700,000 barrels of Canadian crude oil to the Gulf of Mexico every day and create more than 20,000 jobs. Last month, the State Department announced that it is halting approval of the project until at least 2013 (a date conveniently after Obama’s reelection bid) while it explores the prospect of creating “an alternate route” for the pipeline. As the company’s representatives made clear in the wake of the announcement, that delay could cause the development to be scrapped entirely.
So ideologically committed is the president to the plan’s failure that he even threatened earlier this week to veto his prized continuation of the payroll tax cut should approval of the Keystone project be attached to it. Apparently, a policy that saves the average worker less than $40 per paycheck is sacred, while a $7 billion development project that would create jobs, lower energy prices and come at no charge to the taxpayers is an unacceptable apostasy.
In Obama’s energy policy, we see his entire philosophy of government in microcosm. Initiatives generated by the private sector are regarded with inherent skepticism and the abiding suspicion that someone somewhere is being exploited. But if a plan comes from government, includes an exorbitant price tag and subsidizes something that has repeatedly failed in commercial markets, it’s intrinsically virtuous.
Economists tell us that you always get more of what you subsidize. Perhaps that’s why failure has become one of America’s biggest growth industries.