As Bloomberg reports, during 2009 U.S. natural gas output grew 3.7 percent to an estimated 624 billion cubic meters (bcm), while the Russian production dropped by 12 percent to an estimated 582 bcm. So much for Russian plans to become an energy juggernaut.
Russia is still a major player in global energy markets and aspires to leverage its resources to become a global energy superpower. It is the largest supplier of natural gas to the European Union and is using this dependence as a foreign policy tool to drive wedges between European capitals and between Europe and the United States. The Kremlin’s strategy seeks to increase dependence by locking in demand with energy importers, consolidating the oil and gas supply under Russian control by signing long-term contracts with Central Asian energy producers, and securing control of strategic energy infrastructure in Europe, Eurasia, and North Africa. Russia’s strategy also involves extending the Gazprom monopoly to create an OPEC-style gas cartel and increasing cooperation with OPEC.
Russia still outperforms Saudi Arabia – and any other country on the planet as the largest producer and exporter of oil and gas. But the Gazprom’s production decline is a cautionary tale of government mismanagement of natural resources, opacity and corruption. In the Heritage’s Index of Economic Freedom 2010 Russia came 143rd, behind Haiti, but ahead of Vietnam.
Russia possesses the world’s largest natural gas reserves. It has been the leading producer for most of the past 20 years and supplies one quarter of the European market. However, due to the global economic crunch, Europe’s gas prices and consumption declined, and the Russian GDP shrank by about 8.7 percent last year. Gazprom cut back output during the gas dispute with Ukraine.
The U.S. total natural gas production, vital for keeping up electricity output and keeping homes warm, has been boosted by production from onshore shale basins and off shore drilling in the Gulf of Mexico and elsewhere.
The American resurgence in gas production is a case study in the advantages of private enterprise over government monopoly. For decades, American gas output stagnated as conventional gas reserves were depleted. However, in the last four year, natural gas production jumped 10 percent. In the last decade, proved natural gas reserves jumped 45 percent in spite of the rising withdrawals. These phenomenal increases are due to the entrepreneurial application of directional drilling and hydro fracturing technology to shale gas reserves. Dynamic private enterprise applied to marginal resources trumped superior resources throttled by state monopoly.
Now, Russia, go match that.
With the nation’s unemployment rate creeping ever closer to 10%, it is not surprising that Americans continue to rank the economy as the most important issue facing the country right now. Recognizing the link between a troubled economy and energy prices, last year 1.4 million Americans signed the “Drill Here, Drill Now, Pay Less” petition demanding that the federal government enact policies that will lower our nation’s energy costs. And Congress responded by ending our nation’s quarter-century ban on oil and natural gas drilling off the Atlantic and Pacific coasts.
But this was just the first step Americans needed to take to free our energy from the myriad of bureaucratic restriction the enviro-left has placed between consumers and cheap energy. Before the development of our natural resources can begin, the Department of Interior must approve a five-year leasing plan detailing how federal sale of oil and gas leases in the offshore waters will take place. The case for developing our own natural resources is strong. An estimated 19 billion barrels of oil–nearly 30 years of current imports from Saudi Arabia–as well as substantial natural gas reserves are estimated to lie beneath these restricted areas. According to a 2008 Center for Data Analysis study, increasing domestic oil production by 1 million barrels per day would generate 128,000 jobs. At 2 million barrels per day, that figures jump to 270,000.
Unfortunately the Obama administration is allowing their “Green Job” fantasies to get in the way of cold hard facts and real American jobs. At an Interior Department field hearing this April in Atlantic City, Secretary Ken Salazar claimed ocean winds along the East Coast can generate 1 million megawatts of power, roughly the equivalent of 3,000 medium-sized coal-fired power plants, or nearly five times the number of coal plants now in the United States, according to the Energy Department. This is pure fiction. In 2007 the United States produced 23.48 quadrillion Btus of power from coal. Wind produced .319 quadrillion Btus. Salazar wants the American people to believe we can increase our wind power production by 7,300%. That is unrealistic.
Despite all the rhetoric you hear about the rest of the world abandoning fossil fuels to avoid global warming, their actions show where their real priorities are. Brazil, whose beautiful beaches rival or even surpass anything in California or Florida, recently discovered a huge underwater oil field and it is moving quickly to begin drilling. In Asia, China and Japan were able to put aside centuries of mistrust to come to an agreement on how to drill and share oil in waters in between their countries. Germany plans to build 27 coal-fired plants by 2020. Italy plans to increase its reliance on coal from 14% today to 33% in just five years. In all of Europe, 40 new major coal power plants are set to be built in the next five years. In 2006 alone, China completed enough coal power plants to match all of Britain’s capacity. India plans to boost coal production by 50% by 2012 and quadruple it by 2030.
The rest of the world gets it: in order to compete in today’s global economy countries must maximize the energy potential of all their natural resources. The Obama administration would be forcing American businesses to compete with one hand tied behind our back if they favor costly, inefficient, and unproven renewable energy to the exclusion of all other U.S. resources.
But there is something you can do about it. Any regulatory framework created by the Obama Interior Department can be fought in court. And Federal law requires the Obama Administration to solicit comments from the American people and substantively respond to them before any regulation can attain the force of law. One factor that courts must consider when a regulation is challenged is how the government addressed citizen comments on the proposed regulation. Last year, 30,000 of you submitted a comment through StopEPA.com to the Environmental Protection Agency asking it to not move forward with carbon dioxide regulations. This year, people are voicing their support for offshore drilling by going to FreeOurEnergy.com and submitting a comment. You can too. Now is not the time to turn back.
Let the Obama Administration know that you support domestic oil exploration. Then forward today’s Morning Bell to five of your friends. Visit FreeOurEnergy.com to make your voices heard. The deadline is Monday, September 21st at midnight. So hurry!
Quick Hits:
- President Obama’s mention of Sen. Max Baucus’ health care bill drew boos at Obama’s Organizing For America political campaign rally at the University of Maryland yesterday.
- Polish Prime Minister Donald Tusk confirmed yesterday that he declined to take a call from President Obama informing him of the decision to scrap planned missile-defense bases in his country.
- President Obama will appear on a record five TV networks on Sunday (excluding FOX News, but including Spanish-language network Univision) plus he will sit down with late-night host David Letterman on Monday.
- A visibly shaken Speaker Nancy Pelosi (D-CA) fought back tears yesterday as she compared current protesters against Obamacare to assassin Dan White who killed San Francisco Mayor George Moscone and city supervisor Harvey Milk in 1978.
- Continuing layoffs on Wall Street drove New York City’s unemployment rate to 10.3 percent in August, a 16-year high.