longoil

Energy Investments Under Obama: Eye on Barclays Carbon ETN

I don't think we'll see energy independence with Obama's presidency. His energy policy is very fragmented and full of pander to special interest groups (i.e. Coal, Corn Ethanol, UAW, etc.). A complete energy policy would include: finding new reserves (until the 40-50 yr transition to renewables is complete), conservation and alternative energy. So far Obama's policy barely addresses any of these categories and his energy plan is full of sub-optimal proposals:

1) Gap-and-trade of emissions solves nothing and how do you police
compliance? Enforcement will cost more than the benefits derived.

2) The SPR has enough oil to supply the US for 40 days. Do you think it is wise to drain it to lower gasoline prices a few cents briefly and then be exposed to oil shortages like 1973 and 1979?

3) Raise CAFE standards 4% per year. A good idea, but remember it was
Clinton and Gore (Mr. Climate change) that introduced the light truck exemption clause that made CAFE impotent in the first place to buy UAW votes. Obama owes UAW and I would be surprised if he makes good on this promise.
4) Windfall taxes for oil companies. Oil exploration and production is very capital intensive. Why would oil companies invest in new infrastructure to find new reserves if they will be penalized for making a profit on a risky ventures ? By introducing windfall taxes, oil companies will cut back on exploration and production and gasoline prices will rise significantly like they did in 1980.
5) His pandering to UAW includes opening up the NAFTA agreement with Canada. What he fails to see is that Canada has the upper hand this time around. If his negotiations include cutting Canadian jobs, Canada can turn around and kill the energy clause which guarantees that 60% of Canada's oil and gas production output is sold to the USA. Canada has plenty of other suitors like China and India that would gladly step in and buy from the 60% allotment. This would leave USA being even more susceptible and at the mercy of nations hostile to the USA (Venezuela, Saudi Arabia, Russia, etc.)

I hope I am wrong, but with oil prices hovering at the $60 mark complacency has returned and energy independence is on the back burner. It will only take center stage when it is too late and oil has surpassed the $200 mark.