by Matt Gauntt
A few days ago, Barack Obama suggested that our economic problems and the rising oil prices were due to a failure in leadership. While I’m not for a minute going to suggest that George Bush is the paragon of leadership, I think it’s important to note exactly where the “failure in leadership” in our nation’s energy policy resides.
In May 2001, President Bush received the National Energy Report that was produced by the National Energy Policy Development Group. A few aspects of this plan include drilling the Arctic National Wildlife Refuge (ANWR), increasing nuclear power production and streamlining the construction of new power transmission lines.
While some parts of this plan might be debatable (in my estimation – very, very few items), the plan did outline a comprehensive way of both controlling energy consumption and increasing energy production to alleviate our need for foreign oil.
So what happened? Great plan, but it didn’t succeed. Why?
On several occasions, Congress had votes on drilling in the ANWR. While the House has voted to allow for drilling, the Senate has blocked this action several times. Both Barack Obama and Hillary Clinton voted to block drilling in ANWR (unfortunately, so did our candidate, John McCain). Even though the majority of Alaskans support drilling in the ANWR, liberal environmentalists that have never even seen the location have spurred politicians to block drilling. Too busy drinking Chardonnay and eating Brie to look into the facts, they have piously stated that this sacred wildlife preserve should not be disturbed. Never mind the fact that the original legislation that created this area of wilderness contained language that instructed the Department of the Interior to conduct studies regarding oil exploration in the “1002” Area of the Preserve. Drilling in the ANWR would affect less than 2,000 out of 19 million acres in the Preserve.
So what have environmentalists and politicians such as Barack Obama recommended for energy? One source is “bio-fuels” such as ethanol. Currently, ethanol is typically made from corn. However, the net energy production from ethanol is embarrassingly small. The net energy (energy derived minus the energy it takes to produce it) varies from a negative to very little net increase.
Ethanol supporters, such as Obama might point to its benefits of reducing our dependency on foreign oil, etc. However, what is the price of this?
The production of ethanol requires a tremendous amount of crop production. Tying this rapidly increasing production to the elemental “law of supply and demand”, corn prices have skyrocketed from around $2 per bushel in 2006 to over $5 a bushel today. The impact of this has also been felt in other agricultural markets as farmers have switched from soybean and wheat production to the more lucrative corn production. Combined, this has led to a tremendous increase in food prices.
So what does all this have to do with the economy? The lack of production of energy and the rising costs of food have been the major factor in recently rising inflation concerns. US Inflation is now at the highest levels we’ve seen since 1981. Those of us, who are old enough to remember, know what this could mean – stagflation. Back in the 1970’s we had rising oil prices, an inept president in Jimmy Carter and spiraling inflation. Stagflation is when economic growth is stagnant (job loss and low wage increases), but inflation is rising. Thus, everything costs more, but you are still getting the same amount of money. This leads to runaway wage-price spirals.
All of this pandering to environmentalists is killing the US economy. We need to quit listening to special interest groups that are driving our energy and economic policy at the expense of regular Americans. Politicians like Barack Obama who pander to these groups and speak in platitudes instead of factually based policy are helping to drive our economy into the tank. Barack Obama and Hillary Clinton claim to speak for the downtrodden and the middle class. However, it is clear that their policies are placing a huge burden on the poor in the hopes of pleasing the Chardonnay class.
