longoil

The Honeymoon Is Over: Gauging the Market with an Obama Presidency

I don't think we'll see energy independence with Obama's presidency. He has too many political debts to repay now. 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.
2) How does swapping sweet crude with sour crude in the SPR solve anything?
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.
4) Windfall taxes for oil companies. This is brilliant, 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 venture ?
5) His pandering to UAW includes unions 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 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 (Venezuala, 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.