Obama just completed his 2014 State of the Union address, and the speech was full of things that he would like to do, and like to see, but the plans showed little appreciation for the actual behavior of markets or economics. It was a wish-list, as was last year’s SOTU address. The lame duck president was flat, and seemed to lack his usual flair. He mentioned his great accomplishments: lowest unemployment in five years, more oil production, and that he helped to cut the deficit by 1/2.
The economy and small business
The president talked of a “breakthrough year for America,” and attempted to frame Congress as the sticking point for changing regulations and tax breaks. The president wants tax loopholes closed (apparently, because they are only available to certain people and not everyone who takes advantage of them – the exact reason was left unclear). The president points to the growing economy, and cites the levels of the burgeoning Dow Jones, on the heels of months and months of quantitative easing. He also calls on Congress to undo cuts enacted last year, which affect things like education.
The issues with business and the economy, were contradicting activities. The president wants minimum wage raised, and he called on state governors to do it. Obama told them not to wait on Congress to act — this allows him to paint Congress as lazy or uncaring about the plight of minimum wage workers, as they move toward 2014 elections, while at the same time allowing state governors in tight races to pick up support.
Increasing the minimum wage would somehow lead to more money for consumers to spend, but Obama never mentioned the effect on the employers. While calling for businesses to pay their employees more, he neglected to mention the oncoming, but currently delayed, employer mandate for Obamacare. He also called on energy to continue to become cleaner, and mentions that may force families to make difficult choices.
President Obama says his energy policy is working – never mind that there is a propane shortage, coal and power producers are complaining, and gasoline is much higher than when he first took office. He calls on Congress to end tax cuts on fossil fuel companies (saying that they “don’t need them”). Carbon output is down in the U.S. more than in any other country (but he does not mention why – perhaps his regulations on the coal industry or the recession?)
He calls on Joe Biden and Congress to act to fund new job training programs. There are jobs that cannot find workers, and he wants to train these new workers. Starting new apprenticeships and increasing on-the-job training are the main ways he wants to fill these jobs. Again, he accused Congress of acting callously, and he called on them to restore unemployment benefits to the unemployed workers who have previously exhausted the 99 weeks of benefits.
Further, Obama stated that he does not resent people who make more than others, but was no where close to saying that they have earned it, or that they should not have to pay more in taxes to fund his domestic policy wishlist. Along with not resenting others’ salaries, he says he wants women to earn just as much as men do, and he restates the fallacious claim that they earn $0.77 for every $1.00 that a man earns – despite the fact his own staff underpaid women. “When women succeed, America succeeds, ” he tells us.
Surprisingly, he did mention Obamacare, but called it by its legislative name, “The Affordable Care Act,” perhaps because of its massive unpopularity. He told mothers to get their children to sign up, and for children to get their parents signed up, in what was the most disturbing and desperate part of the speech. He tells us that over nine million Americans have already signed up for the ACA, and he illustrated how it worked for a single patient who needed emergency surgery (although he neglected to share her deductible or how much her final bill was). Obama challenged Republicans to come up with a plan of their own, leaving a door open to have his own signature program finally buried and forgotten.
All in all, this year’s State of the Union address was incredibly similar to last year’s address. Obama issued the same promises, he engaged in the same rhetoric, and the same fundamental misunderstanding of the economy and labor market was evident, too. We are five years into the Obama presidency, and tonight, he illustrated that he still has not learned much. For his promise for a “year of action,” he has some major inertia to overcome.
The most benefiting answer for “when should we drill?”, although completely unworkable, would have been “ten years ago”. Since that has been made continuously unfeasible by various politicians and special interest groups, now is as good a time as any to begin (any armchair economist will tell you that as something becomes more scarce, its price will rise, as will demand for the resource). “Where”, you may wonder? Well, anywhere that the U.S. Geological Survey even suspects that might be a pocket of oil. There is so much federal land that sits either idle or having received a protected status, will not be tapped, even as oil and gasoline prices continue to soar upward.
Americans sit on massive amounts of natural resources, that, if we were to begin seriously exploring and utilizing, could have the ability to affect prices downward. With the current administration’s rhetoric about environmentalism and “green jobs”, the amount of oil domestically produced could help the country ween its way onto another energy source (which escapes me now, but I am sure the administration policy makers and yes-men will come up with something comparable to the gasoline engine in their last two years in office…)
Let’s start with everyone’s favorite oil patch – way up north, in Alaska, it’s the Alaskan National Wildlife Refuge. Yes, it’s that green tundra with a half-frozen stream above. Apparently, no companies are currently able to drill because doing so may affect the calving grounds of the Porcupine Caribou. According to the U.S. Energy Information Administration, there are at best 5.7 billion barrels of oil beneath the permafrost of ANWR. Gamblers think there may be as much as 16.0 billion barrels, waiting to be tapped.  Whether people realize it or not, drilling was actually approved in ANWR, in 1996, but then-president Bill Clinton vetoed the measure. That’s right, we could have been driving around in our cars, burning sweet Alaskan crude for four years now.
Another big potential oil field is down in the northern part of the Lower 48 – the Bakken Formation, stretching across Montana and North Dakota. The unrealized oil from this region is conservatively estimated to be around 3.6+ billion barrels.  The area had previously been identified as oil-rich, but U.S.G.S. estimates are know believed to have been too low. Add to that, North Dakota has enacted a tax break for drilling, and now the region is finally realizing its potential – in fact, the Bakken field in Montana has more than doubled previous Montanan oil production.
One last area, amongst many resource-rich regions in the Continental United States, is the Anadarko Basin, reaching from Colorado, into Oklahoma, Texas, and Kansas. This deposit is a little different. Instead of having the formerly mentioned regions’ massive oil reserves, the Anadarko Basin “only” has 495 million barrels of crude. But it contains some of the nation’s largest natural gas reserves – with 27 trillion cubic feet of the stuff! To put this in perspective, that amount of natural gas could sate Americans’ natural gas demand for over one million years(if current annual demand holds steady). Such a cheap and plentiful supply, and it’s only now really being explored and extracted. Using various processes, natural gas can actually be converted into a liquid fuel substitute. (Using something called the Fischer-Tropsch process, invented and used in World War II Germany, sounds promising)
When it’s all said and done, I think that there is really no reason for this country to be so beholden to despots and harm-doers (both here AND abroad). The Trans-Alaskan pipeline was supposed to endanger wildlife too, and yet now we find those same threatened caribou and other fauna, happily munch lichens and scrub underneath those heated pipes. Eastern Montana, western North Dakota, and north-of-the-Arctic-Circle-Alaska aren’t exactly bustling places, and the companies seeking to extract and cash in on the resources aren’t going to endanger their leases just to cut some corners for a quick buck – why risk billions to save a hundred thousand? Laws already in place are sufficient deterrents to environment-wrecking behavior. As for the Senate and President? Let the engineering and oil extracting companies do their jobs, whereever holds promise (as well as in the Gulf)!
1. “Potential Oil Production from Coastal Plain of Arctic National Wildlife Refuge: Updated Assessment.”U.S. Energy Information Administration. Energy Information Administration, 01 May 2000. Web. 6 Jun 2010 <http://www.eia.gov/pub/oil_gas/petroleum/analysis_publications/arctic_national_wildlife_refuge/html/execsummary.html>.
2. ” Assessment of Undiscovered Oil Resources in the Devonian-Mississippian Bakken Formation, Williston Basin Province, Montana and North Dakota, 2008.” National Assessment of Oil and Gas Fact Sheet. U.S. Geological Survey, April 2008. Web. 5 Jun 2011. <http://pubs.usgs.gov/fs/2008/3021/pdf/FS08-3021_508.pdf>.
3. ” Assessment of Undiscovered Oil and Gas Resources of the Anadarko Basin Province of Oklahoma, Kansas, Texas, and Colorado, 201.” National Assessment of Oil and Gas Fact Sheet. U.S. Geological Survey, January 2011. Web. 6 Jun 2011. <http://pubs.usgs.gov/fs/2008/3021/pdf/FS08-3021_508.pdf>.