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Moneyball II: Obama Strikes Out on Energy Policy

Managing U.S. energy policy is somewhat similar to being a major league baseball general manager, working to build a stronger team and pitching staff on a very limited budget. Think of how Billy Bean would evaluate the sources of the country’s oil supply (the starting rotation), and the Strategic Petroleum Reserve (the closer), relied upon to finish the game when the team is in trouble. 

Experts say pitching is 90 percent of baseball. Thus a good general manager must build a solid pitching staff or his team cannot win. Similarly, the president’s policies must focus on secure and reliable sources of oil to meet U.S. energy needs and keep the economy moving – or America cannot win. 

A baseball ace is a talented, reliable “stopper” who wins big games and prevents team losses. In energy policy, domestic production is the nation’s “stopper.” It provides secure supply, creates jobs and economic growth, generates revenue for the league and the owners, and lines government coffers. For example, in 2011, ExxonMobil made $9.6 billion as profit for shareholders while investing $72 billion into the U.S. economy). 

The number two pitcher might be younger, but is equally reliable; for the U.S. that is the main supplier of our oil imports, Canada. This longtime, next-door ally provides oil to the U.S. reliably and efficiently, reducing price pressure at the pump. Canada is a strong, reliable, and cost-effective second in the rotation. 

The next two starters, while valuable to the team, are generally less able than the first two. Compare domestic and Canadian performance and supply to crude oil from Europe and South America, which must be shipped via tanker for refining. While generally steady, distance makes these supplies somewhat more risky and less reliable. 

Finally, there is Middle East oil (think David Wells). This huge resource has great potential to produce, but internal conflicts and disruptions make this a worrisome commodity that teams cannot rely on in difficult situations. 

As good as the pitching staff and the varied sources of supply may be, one must always seek to improve to become stronger. Therefore, a general manager – or president – should play Moneyball to strengthen the team (i.e., develop domestic resources and rely on Canada as much as possible). 

Our current “general manager” sees things differently. President Obama wants to get rid of proven performers who get better and better and to spend big on “promises” that may not pan out. He imposed a leasing moratorium on most of the Gulf of Mexico and slowed the restarted leasing process by months. He continues leasing moratoria on most government lands. He wants to slow use of proven technologies that add huge volumes of domestic oil and natural gas, and he seeks punitive new taxes and restrictions – only on American oil and natural gas companies.  He “delayed” approving the Keystone XL pipeline, rebuffing Canada. Meanwhile, China has invested billions in Canada, hoping for exclusive rights to some of the country’s resources.

Now, Iran is stirring up more energy supply turmoil in the Middle East, threatening to block 20 percent of worldwide oil trade in the Strait of Hormuz and bringing high prices to the gas pump. In these times of crisis, with less domestic and Canadian production available to American consumers and our economy, it’s time to look to our bullpen staff and closer. 

The Strategic Petroleum Reserve (SPR) was created in 1975 to deter and defend against supply interruptions (such as the 1973 Arab Oil Embargo that targeted the U.S. economy). The SPR was created for use in major emergencies (like a closer in a tight game that is threatening to slip away), but this president sees it differently. He is discussing SPR withdrawals to drive down gasoline prices as Iran threatens to close the strait, and while production and refinery upsets in other areas have cut into world supply. The facts should militate against political use of the SPR; that would be good management. Don’t count on it. 

This is no Billy Bean in the White House. The president wants to tap the SPR for the second time in a year – and there have been only two SPR drawdowns in the 33 years prior to his term. Using the SPR for personal political gain rather than for a national emergency is shameful. The country needs a better plan to meet national needs. By utilizing more domestic resources, building needed infrastructure to deliver resources throughout the country, and securing resources from Canada, we can better position the country for a winning energy policy.  We can, for the first time since presidents have talked about energy independence, actually increase and attain U.S. energy security. 

President Obama must begin to appreciate and cultivate the resources we have, or he may need his own reliever in November. 

Jack-RafuseDr. Jack Rafuse, a former energy advisor to President Richard Nixon, is principal of the Rafuse Organization, an energy, trade, and national security consultancy.

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