DALLAS -The ongoing turmoil throughout the Middle East highlights the continuing and pervasive vulnerability of the U.S. economy to oil price instability, yet the Obama administration continues to thwart any efforts to increase domestic oil production, according to National Center for Policy Analysis (NCPA) Senior Fellow H. Sterling Burnett.
"We have billions of barrels of oil just waiting to be accessed, yet the Obama administration has thrown one roadblock after another to prevent new domestic production," Dr. Burnett said. "These actions have made it nearly impossible to tap new domestic reserves."
Overdependence on supplies of oil from what are now increasingly unstable regions of the world throw into stark relief the need to develop our own domestic reserves of oil, Burnett explained.
"Even after the Horizon oil blowout, offshore oil production is safer for the environment, and better for domestic job creation and energy security than increased imports," Burnett continued. "While it's true that full access to the U.S.'s existing reserves will not make us energy independent, it will make us less dependent and less vulnerable to foreign supply disruptions."
An additional 1 million to 2 million barrels a day in increased U.S. oil production would have an inordinate impact on oil prices beyond that expected from the additional amount of oil, because oil prices are driven, in part, by fear of uncertainty of future supply. Burnett points out:
- This risk premium would be reduced if the U.S. brought more oil to the market; since oil traders could count on the oil being delivered, they would not fear supply disruption from political turmoil or conflict.
- Since the oil production would be developed privately for profit, the U.S. oil would not be used as a political tool and profits would be reinvested in improved technology and new supply development rather than to pay off political constituencies while the capital equipment and production declines (as occurs in Venezuela and Mexico, for example).
The need to remove unwarranted roadblocks to increased domestic production would also improve the continuing recession and overall malaise in the U.S. economy, Burnett pointed out.
For more information about the need to tap domestic sources of oil, please also refer to http://www.ncpathinktank.org/pub/ba563
On another topic, Burnett on YouTube about his recent report on the growing U.S. dependence on China to supply the rare earth minerals used for nearly every green energy product.
Video: http://www.youtube.com/watch?v=x5hO0Mh5PIg
Report: http://www.ncpathinktank.org/pub/ba739
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H. Sterling Burnett, Ph.D., is one of the country's leading authorities on energy and environmental issues. He is the lead analyst of the National Center for Policy Analysis' (NCPA) E-Team. Burnett's area of expertise includes topics that affect every American, such as government environmental policy, offshore drilling, global warming, endangered species an public lands.