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Washington Sleeps As Oil Prices Stir

June 18, 2009

Washington Sleeps As Oil Prices Stir

IBD: 12 June 09

Energy: Will oil hit $250 a barrel? The Russians think so, as crude prices climb to an eight-month high. Meantime, House Republicans advance a plan to help the administration keep a domestic energy promise.

The cost of July deliveries of crude bounced over $73 Thursday as the American Petroleum Institute reported shrinking U.S. inventories as the dollar weakens against the euro.

Alexei Miller, chairman of the Russian energy giant Gazprom, is repeating his prediction of a year ago that oil may eventually reach the $250 mark. That may be wishful thinking on his part, seeing how the Russian economy and military are dependent on oil revenues.

But one thing is certain ā€” a recovering global economy is going to need ever more energy, and it can’t wait for switch grass. A wobbly U.S. economy overburdened by current and future debt is likely to face ever-rising energy prices.

House Republicans hope to lower those prices and make a change in our listless domestic energy policy with the American Energy Act. The measure provides incentives for increased oil and gas production on public and private lands and authorizes drilling in a tiny portion of the frozen tundra of the Arctic National Wildlife Refuge.

Rather than planting trees in a Third World backwater, the plan’s “carbon offsets” involve building 100 new nuclear power plants over the next 20 years.

With 31 announced reactor applications already in the pipeline, this is a doable goal. It will lower domestic energy prices and clean the air more effectively than an administration cap-and-tax plan that would cause electricity prices to “necessarily skyrocket.”

Reprocessing of spent fuel rods, already done by France and other countries, makes nuclear power a renewable resource, one that emits no greenhouse gases. The administration gives nuclear energy lip service while stopping a storage depository for these rods in Yucca Mountain, Nev.

The House GOP is actually trying to help President Obama keep a promise. “In the short term,” he said in April, “as we transition to renewable energy we can and should increase our domestic production of oil … We still need more oil, and we still need more gas.” The House GOP wants to help him do just that.

But in a classic case of the doubletalk we’ve all become familiar with, the administration is moving in exactly the opposite direction. Its cap-and-trade plan punishes those who produce and use domestic energy. It has proposed eliminating all tax incentives to produce oil and gas, and has slapped a 13% excise tax on all energy coming from the Gulf of Mexico.

Interior Secretary Ken Salazar has canceled 77 oil and gas leases that were assigned to Utah. He stopped plans to lease oil shale rights in five Western states estimated to hold between 1 trillion and 2 trillion (with a “t”) barrels of recoverable oil. The Obama administration has decided not to issue leases for gas well drilling on the Roan Plateau in Colorado.

Exploration in the Chukchi Sea off Alaska has been impeded by such developments as the listing of the yellow-billed loon as an endangered species.

Science magazine reports that the U.S. Geological Survey now finds it holds more than anyone thought ā€” 1.6 trillion cubic feet of undiscovered gas, or 30% of the world’s supply and 83 billion barrels of undiscovered oil, 4% of the global conventional resources.

We are being denied this by a bunch of loons.

“It’s a very nonsensical position we’re in right now,” Alaska Gov. Sarah Palin told IBD in an interview. “(We) ask the Saudis to ramp up production of crude oil so that hungry markets in America can be fed, (and) your sister state in Alaska has those resources.”

The really sad part is that in a nation starved for energy and jobs, we continue to keep our heads in the sand and our energy in the ground.

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