In an economy with elevated unemployment, chronic under-employment, feeble GDP growth, and federal deficits as far as consumers can see, there is little stimulus to thank except for the Federal Reserve’s quantitative easing and the turnaround in US oil and gas production, driven by fracking. US crude production is up 2 million barrels per day from its trough in 2007. Natural gas production has risen through the roof while prices are at basement levels. This production success is an economy booster for the long haul and a strong force in job creation.
The hike in production improves our balance of payments, makes some US-based chemical industries viable again, keeps car and truck fuels affordable for US families, and lets us avoid resorting to imports from unstable or occasionally hostile countries such as Russia, Iran, and Nigeria. The bad news is that this economic progress will halt if the EPA and White House get their way.
The Keystone pipeline would bring crude oil from northern Canada into the US Midwest and Gulf, where existing US refining capacity can be used. The State Department continues its multi-year study of the Keystone pipeline, but President Obama said he would not approve Keystone unless it is free of any negative impact on the climate – a strange standard since many basic consumer essentials exert a negative impact on climate, like working for a living, growing the food we eat and building the homes we live in.
Meanwhile the EPA is crafting regulations in secret to avoid public comment. EPA set the “social cost of carbon” at $41/ton, about double the price it set in 2010. Higher prices let federal agencies set higher fines, fees and hurdles for licensing any carbon-related energy project. The Supreme Court will look at EPA behavior, but only in a very narrow sense, and the outcome will not hinder its regulatory juggernaut.
Since the US releases about 5 billion tons of carbon each year, the EPA has invented a $205 billion boondoggle to slow down the economy and feed the ever-so-stylish carbon trading charlatans. The EPA has almost shut down the US coal industry and now they are preparing regulations to slow down fracking – the genie that unleashed economic progress through the stimulus of our oil and gas production.
Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research