Energy prices and policies: Obama vs. Santorum

Filed under: Contributed Column,Opinion,Print | Tags:

After big victories in Colorado and Minnesota on Feb. 7, Rick Santorum took a big jump in the race to become the Republican presidential nominee. Suddenly, the presumed GOP frontrunner Mitt Romney had another top competitor in this volatile contest.

In fact, over the subsequent two weeks after Santorum’s Feb. 7 wins, every national poll on the Republican race put Santorum ahead of Romney. Keep in mind that just two months earlier, Santorum was polling at an insignificant 4 percent.

Santorum, of course, has been billed as the social conservative in the race. And while he most certainly is a strong advocate of traditional values, Santorum arguably ranks as the most free enterprise candidate among the top contenders left in the race.

Consider the energy issue.

From early October to mid-late February, oil prices increased by nearly 40 percent. Over that same time, the average price for a gallon of regular gasoline was up by roughly 15 cents a gallon. Compared to a year earlier, the price of gas was higher by about 38 cents, and up by a dollar versus two years earlier.

Much of recent rise in oil prices can be tied to Iran. While the world’s fifth largest oil producer, Iran also happens to be controlled by radical Islamists who pursue nuclear weapons, support terrorists, and oppose the very existence of Israel. As tensions have risen, the question has been whether or not Israel will react militarily to the Iranian nuclear threat, and what would the consequences be of either action or inaction.

This latest installment in ongoing troubles and concerns in the Middle East should not only raise questions about U.S. national security and foreign policy, but also about our domestic energy agenda.

Under President Obama, we’ve had energy and regulatory policies that are overtly hostile to carbon-based domestic energy production. That agenda has included, for example, proposed tax increases on oil and gas firms (and therefore, on energy consumers); rejection of the Keystone XL pipeline project that would transport Canadian sands crude oil to refineries on the Gulf Coast; limits and delays on offshore drilling; and EPA efforts to regulate greenhouse gas emissions, which would drive up energy costs and diminish U.S. competitiveness.

Regarding the EPA, on February 10, API Director of Regulatory and Scientific Affairs Howard Feldman warned that new EPA air regulations would amount to a “veritable tsunami” that could “put some refineries out of business, diminish U.S. fuel manufacturing capacity, and increase our reliance on imported fuels.”

For good measure, President Obama has pushed subsidies for non-economic forms of energy, such as wind and solar.

In a real sense, Santorum’s proposals are the anti-Obama energy agenda. In general, Santorum’s emphasis is on reducing government costs and obstacles; getting the government out of the business of picking energy winners and losers; and letting the private sector work to supply the energy needs of consumers and businesses.

His plan has six key components. First, Santorum would remove current drilling prohibitions. In late January, he declared, “As President, I will remove bans on drilling — both onshore and offshore. This will immediately increase supply, create jobs, and bring revenues to federal and state governments.”

Second would be promoting drilling techniques for domestic production. Advancements in drilling technologies have opened up huge natural gas reserves to production in states like North Dakota, Ohio, West Virginia, Pennsylvania and New York. Indeed, the biggest threat to these domestic energy sources is misguided, costly government regulations or prohibitions.

Third, Santorum would eliminate all government energy subsidies and tax credits. And fourth, he would get the Department of Energy out of the business of doling out dollars on alternative energy efforts that are not commercially viable. These measures are directed at getting politics out of the energy equation. As Santorum wrote: “It is not the government’s role to force these technologies into the marketplace.”

Fifth, Santorum calls for immediate approval of the Keystone XL pipeline. Beyond enhancing U.S. energy affordability and security, it must be noted that the pipeline itself would be a big economic plus. For example, the Canadian Energy Research Institute has estimated that the pipeline would boost U.S. employment from the 80,000 jobs supported by existing oil sands projects in 2010 to 179,000 jobs in 2035, and if all of the oil sands proposals move ahead in Canada, U.S.-related jobs would rise to 600,000 by 2035.

Sixth, Santorum would roll back a variety of costly energy-related regulations imposed or being proposed by the Obama administration. That would include the EPA’s greenhouse gas regulations. On the role of the EPA, Santorum has said he would “reduce the Environmental Protection Agency’s overreach by repealing its job-killing, bureaucratic regulations, and refocus its efforts on common-sense conservation goals such as preserving clean air and water.”

The Obama energy policy agenda has fought against markets and domestic energy producers, bowing to radical environmental groups that oppose all forms of carbon-based energy in a crusade against so-called manmade global warming. The Santorum energy alternative, in contrast, is rooted in sound economics that would expand opportunities, reduce costs, and provide incentives to boost production, which would work to lower energy costs for consumers and businesses.

Raymond J. Keating is the chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.