Unleashing American Energy Production

Victor Davis Hanson explains the numerous advantages of drilling for domestic oil, something the Obama administration is unwilling to do:

The world was reinvented in the 1970s by soaring oil prices and massive transfers of national wealth. It could be again if the price of petroleum crashes — a real possibility given the amazing estimates about the new gas and oil reserves on the North American continent.

The Canadian tar sands, deepwater exploration in the Gulf of Mexico, horizontal drilling off the eastern and western American coastlines, fracking in once-untapped sites in North Dakota and new pipelines from Alaska and Canada could within a decade double North American gas and oil production.

Given that North America in general and the United States in particular might soon be completely autonomous in natural gas production and within a decade without much need of imported oil, life as we have known it for nearly the last half-century would change radically.

Take the Middle East. The U.S. currently devotes about $50 billion of its military budget to patrolling the Persian Gulf and stationing thousands of troops in the region.

But at a time of shrinking defense budgets, an oil-rich America might not need to protect Middle Eastern oil fields and lanes. U.S. foreign policy for once really could be predicated on the principle of supporting those nations that embrace constitutional government and human rights, without worry that offended dictators, theocrats and kings would turn off the spigots.

Curbing the voracious American appetite for imported oil could also help lower world petroleum prices for everyone. Poorer nations in Africa, Asia and Latin America would save billions of dollars on their imported-energy bills.

High-cost oil has warped the global system by rewarding luck and punishing accomplishment. Oil-poor countries that earned their wealth through hard work and innovation — China, Germany, India, Japan, South Korea and Taiwan, for example — should be rewarded with reduced imported-energy costs, while those that became rich by having someone else find and develop the oil beneath their feet might find their windfalls reduced.

Americans tend to admire the earned wealth of China and Japan more than the accidental riches of Saudi Arabia and Iran. Without high-priced oil, Hugo Chavez and Mahmoud Ahmadinejad are just neighborhood loudmouths rather than regional threats.

Unemployment here in the U.S. has not dipped below 5% since February 2008, during the last year of the Bush administration. But some estimates suggest that 3 million to 4 million jobs will follow from new gas and oil production alone.

That figure is aside from the greater employment that would accrue from reduced energy costs. Farmers, manufacturers and heavy industries could gain an edge on their overseas competitors, as everything from fertilizer and plastics to shipping and electrical power would become less expensive.

America is spending nearly a half-trillion dollars a year on imported oil — the greatest contributor to the massive annual U.S. trade deficit. We are also currently borrowing more than $1 trillion a year to finance chronic budget deficits, which in turn weaken the dollar and make oil imports even more expensive.

But without the drag of high-cost imported oil, the economy would grow more rapidly, and that could shrink both trade and budget deficits — lessening somewhat the need for spending cuts and new taxes.

Against all of this is the fear of environmentalists and the Obama administration that increasing oil production would increase the chance of an oil spill like the Deepwater Horizon accident and also postpone the day when we transition to green energy. In my view the advantages Hanson lists far outweigh the liabilities, and it's difficult to understand why the Obama administration does not think the same way.