Earlier this year, President Obama's told us, “we can't just drill our way to lower gas prices.” In one sense, he is correct: If he is re-elected, his administration will not allow oil companies to do the drilling that would reduce the price of gasoline. In that case, “we can’t” means “we won’t let you.”
Absent political interference, of course we can drill our way to lower prices. We’ve already done it with natural gas. The price of natural gas is lower now than it has been in years because drilling has increased the supply so dramatically. Could the same thing happen with oil and gasoline prices? Absolutely.
Over a year ago, I published an article titled, “The Global Energy Superpower,” in which I included links showing the vast extent of U.S. reserves of fossil fuels. It turns out that the United States is not only “the Saudi Arabia of coal,” as has been accepted for decades, but in light of recent developments, we have a chance to be the Saudi Arabia of natural gas and even the Saudi Arabia of oil.
That was the assessment a year-and-a-half ago, since then, the Congressional Research Service has tabulated the totals and acknowledges that the United States currently has the largest known fossil fuel reserves in terms of total oil equivalent—almost three times as much as Saudi Arabia—and it seems that every month the news gets better. The reserves continue to swell.
The benefits to our country of allowing our superabundant energy resources to be developed are manifold. Let me try to explain them in terms that show why Democrats, as well as Republicans, should abandon Obama’s anti-drilling policies:
1) Increased oil production will benefit all Americans economically, but especially those with lower incomes—the ones who have taken the brunt of the pain from high fuel prices in recent years. Team Obama and others on the left who oppose domestic oil production like to claim that they care about “the little guy.” Well, prove it. Let the experts tap into our immense petroleum reserves, increase supplies, and push oil prices lower.
2) The more oil we produce domestically, whether for domestic consumption or for export, the more we will reduce the merchandise trade deficit. For years, politicians on the left and right have bemoaned our enormous trade deficit. In some years, imports of oil have accounted for more than half of that deficit, so one way to take a hammer to the trade deficit would be to crank up domestic production.
3) Cranking up domestic oil production would crank down the unemployment rate. After years of unemployment rates above 8 percent and masses of workers dropping out of the labor market, a boom in the oil patch would add large numbers of desperately needed, high-paying jobs. The true friends of American workers would be whatever president and Congress would reverse the current policy of suppressing job creation in the energy industry.
4) Starting to provide for our own energy needs would show more respect for other countries and win more respect for us. It has been pathetic that the president of the United States has traveled to Saudi Arabia and implored them to increase their production while we have refused to increase our own. Liberals are uncomfortable with American exceptionalism, but isn’t it a form of exceptionalism when we expect the rest of the world to produce our energy for us?
5) Increasing domestic oil production would enhance national security. The more energy we produce at home, the less vulnerable we are to disruptions in politically unstable oil-exporting countries. By increasing supply and lowering the price of oil, less money would go into the treasuries of such problematical regimes as the House of Saud—the principal funder of intolerant Wahabbism—and Venezuela’s Chavez.
6) The increased domestic economic activity would generate significant revenues to the government. It makes me uncomfortable to say this, because my primary goal is to shrink government, not to find ways to divert more wealth to government control. Still, as the lesser of two evils, my own preferred way of balancing the budget would be through reductions in federal spending, but the additional tax revenues resulting from increased domestic energy production would shrink the deficit in a way that would be far less damaging than raising existing tax rates.
Obama likes to rail about the allegedly “obscene” profits of oil companies. Actually, there are dozens of industries (sometimes more than 100) that earn higher profit margins than oil’s 7 or 8 percent. Doesn’t Obama realize that by restricting the supply, he has raised the price and probably the profits of Big Oil? If he really wants to hack away at oil profits, he should turn them loose and let them produce oil to their hearts’ content. Under the resulting competitive pressures, prices would fall, consumers would rejoice, and oil company profits would be squeezed.
Superabundant fossil fuels have the potential to help snap us out of our economic doldrums and invigorate the economy. What we need is a change of energy policy. It’s time to reject Team Obama’s central planning. The Obama policy has been to impede, restrict, harass and attack producers of fossil fuels, while heavily subsidizing uneconomical renewable energies. Let the United States be “open for business” to energy companies to compete with each other and let market prices determine the economic winners and losers. In that way, our energy woes would be alleviated.
Editor's note: This column originally appeared on Forbes.com.