This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published February 29, 2012 on The American Spectator website.
In a speech that the Gingrich campaign has begun broadcasting around the country, and which is posted at Newt.org, Gingrich presents a unique new vision for a booming American economy. I think you will find it pathbreaking. It is so compelling that it drew Obama into a transcontinental debate with the former Speaker, the first exchange that Obama has decisively lost since he appeared on the national stage.
Gingrich began the explanation of his vision like this:
What if we had a program that enabled the American people to develop so much new energy that we were, in fact, no longer reliant on Saudi Arabia, Iraq, Iran. We didn’t care what the Iranians did in the Strait of Hormuz because we were safe in national security terms.
What if that new energy program created well over a million new jobs, high-paying jobs, jobs that put Americans back to work and kept the money here at home that we had been sending overseas, giving us a dramatic improvement in our balance of payments, strengthening the dollar and giving us a chance to live much freer and more independently?
What if that very idea also meant that we’d also have dramatic increases in federal revenue… without a tax increase but that, in fact, the federal government would have literally an entire new stream of money?
And finally, what if that big new idea meant that you personally were better off because you are buying gasoline for $2.50 a gallon, not for $3.89 or $4 or what some people project by the summer could be could be $5 or more?
How is that possible, you ask? Well, that is what is exciting, and that is one of the reasons I am running for President.
Gingrich begins demonstrating the new vision by pointing to the Bakken geologic formation in North Dakota, which turns out to hold far, far more oil than the U.S. Geological Survey used to think, 25 times as much in fact, or 2,400 percent more. That Bakken breakthrough exists today “because it is on private land, and liberals weren’t able to block us from developing it,” Gingrich explains.
The result is that the official unemployment rate in North Dakota is 3.5 percent, with nearly 20,000 jobs paying $60,000 to $80,000 a year remaining unfilled for lack of sufficiently skilled applicants. Revenue from the booming growth is gushing into the North Dakota state government so fast that after seven consecutive tax cuts, the state enjoys a rainy day fund of several billion dollars, even though the entire state budget is only $2 billion.
Gingrich then projects, “If North Dakota has that much energy, how much do we think we have everywhere else? Turns out, we may have more oil in the United States today, given new science and technology, than we have actually pumped worldwide since 1870. We may, in fact, by one estimate have three times as much oil in the United States as there is in Saudi Arabia.” Or as there ever was in Saudi Arabia.
Then there is a parallel revolution in natural gas. We have long known there was a lot of natural gas in shale, but we did not know how to get it out. As recently as 2000, people thought we had seven years of natural gas supply left in the United States. Investors began committing big funds to building facilities for importation of liquefied natural gas from the Middle East.
But then entrepreneurs began applying to shale rock formations the horizontal drilling techniques that had been developed for deep water ocean drilling, where the most had to be gotten out of one hole by drilling in every direction. Combine that with the long-time technique of fracking, breaking up the shale rock with steam, water and sand (supposedly so scary to “environmentalists”), and the net result, Gingrich elaborates, is that
[W]e now have in shale tremendous amounts of natural gas that is recoverable. In one short decade, we went from 7 years of supply to over a hundred years of supply because science and technology had improved so much. Furthermore, instead of us importing liquefied natural gas from the Middle East, there is now serious talk that we’re going to build facilities in Houston… to ship liquefied natural gas to China.
But this is all just the beginning, because, as Gingrich adds, “in places like the Marcellus Shale in Western Pennsylvania, in eastern Ohio, cutting down along the Appalachians, all the way out to Dallas, Texas, there is formation after formation after formation.”
What that means is what I reported last year in my book, America’s Ticking Bankruptcy Bomb. America has the resources to be the world’s number one oil producer, number one natural gas producer, number one coal producer, number one nuclear energy producer, even the number one alternative energy producer. The reason you never heard about this before, as Gingrich explains, is that “the politicians in Washington, the old-time establishment, the elite news media, the bureaucrats, don’t have a clue what’s possible, or in some cases, they have a clue and they are opposed to it.”
“And the result is not just money for big oil,” Gingrich continues, “but people who own the property, farmers.” Gingrich recounts a conversation with Louisiana Governor Bobby Jindal, “who just had run into a farmer who suddenly discovered that he had natural gas on his farm and he had been given an amazingly big check by the natural gas company.” That same story is being replicated, or will be, from Texas to Tennessee across the Appalachians throughout Pennsylvania, to long impoverished upstate New York (if the liberals get out of the way there).
It means as well big money for our bankrupt federal government. As Gingrich reports, “One of the leading experts on North Dakota has suggested that we might well have over the next generation $18 trillion, not billion, $18 trillion in royalties… for the federal government with no tax increases.” Note, that is more than the national debt.
But that is not all. Gingrich adds, “If you had $500 billion a year that was not going overseas, that was paying royalties in the U.S., paying landowners, paying people to go out and develop the oil, paying the pipeline builders, you would suddenly have a booming economy right here at home.” What that means is that suddenly “We get a lot more jobs, people come off unemployment, food stamps, welfare, public housing, Medicaid. All that saves money. And they go to work taking care of their family and paying taxes. So government revenue goes up, government expenses go down…. Second, as we develop this, the companies are going to make more profit, so they are going to pay more taxes back.”
And the economy gets a further boost because “Every time prices go up, they are the equivalent of a tax on working Americans and retired Americans.” Similarly, every time gas prices go down, it is like a big tax cut boosting the economy, and lower energy prices are a big tax cut for energy intensive manufacturing in particular. Newt concludes, “Now $2.50 may sound like it is an impossible number, but that’s baloney. When I was Speaker of the House, we paid $1.13 on average during the four years. When Barack Obama became President, we paid $1.89 that week.”
Obama’s Pondscum Vision
President Obama felt compelled to respond to Newt and his campaign for $2.50 a gallon gas, in a speech in Miami February 23. Obama said regarding surging gas prices:
Now some politicians see this as a political opportunity…. You can bet that since it’s an election year, they’re already dusting off their 3-point plan for $2 gas. And I’ll save you the suspense. Step one is to drill and step
two is to drill. And then step 3 is to keep drilling. We heard the same line in 2007 when I was running for President. We hear the same thing every year. We’ve heard the same thing for 30 years.
Well, the American people aren’t stupid. They know that’s not a plan, especially since we are already drilling. You know there are no quick fixes to this problem. You know we can’t just drill our way to lower gas prices. If we’re going to take control of our energy future and start avoiding these annual gas price spikes that happen every year — when the economy starts getting better, world demand starts increasing, turmoil in the Middle East or some other part of the world — if we’re going to avoid being at the mercy of these world events, we’ve got to have a sustained, all-of-the-above strategy that develops every available source of American energy.
And that’s why under my administration, America is producing more oil today than at any time in the last eight years…. Over the last 3 years, my administration has approved dozens of new pipelines, including from Canada. And we’ve opened millions of acres for oil and gas exploration. All told we plan to make available more than 75 percent of our potential offshore oil and gas resources from Alaska to the Gulf of Mexico.
But, exactly contrary to Gingrich’s vision explained above, Obama contends, “But here’s the thing — it’s not enough….The United States consumes more than a fifth of the world’s oil — more than 20% — just us. But we only have 2% of the world’s oil reserves. We consume 20; we’ve got 2….[A]nybody who tells you that we can drill our way out of this problem doesn’t know what they’re talking about, or just isn’t telling you the truth.”
So here is Obama’s big answer, contrary to Newt’s vision explained above:
We’re making new investments in the development of gasoline and diesel and jet fuel that’s actually made from a plant like substance — algae. You’ve got a bunch of algae out here, right? (Laughter). If we can figure out how to make energy out of that, we’ll be doing all right. Believe it or not, we could replace up to 17% of the oil we import for transportation with this fuel we can grow right here in the United States. Now, none of the steps that I’ve talked about today is going to be a silver bullet. It’s not going to bring down gas prices tomorrow. Remember, if anybody says they got a plan for that — what?
AUDIENCE: They’re lying.
Newt Slam Dunks Obama
Two days later, in San Francisco, Gingrich gave his reply to Obama’s Miami speech, slam dunking Obama, and his Obamabot audience. Gingrich said, “After I came out for a program to get to $2.50 a gallon gasoline, Obama decided he had to make a speech on energy. It is a very revealing speech. It is factually false, intellectually incoherent, deeply conflicted on policy and in some places just strange.”
Gingrich began by providing context.
In 2007, as a Senator, Obama was the only sponsor of a bill which would have eliminated an inventory of offshore oil reserves. This is part of the Left’s great problem today. They really believe in “Peak Energy.” They really believe that we’re going to run out. The government has to be in charge. Jimmy Carter was right. We ought to have gasoline rationing. We ought to make sure we don’t use all this up.
And the problem is they are wrong. Now, their fear is if they actually show us how much energy we have, we will actually want the energy. So they want us to not see the energy because then we can’t ask for it because we don’t have it. And so he literally introduced a bill that was in favor of ignorance. And it is fascinating because what North Dakota has done is that it has blown apart their worldview.”
Gingrich was discussing here proposed legislation Senator Obama introduced to terminate the federal government’s inventory of offshore oil reserves.
Gingrich also recounted what Obama had said about his energy policy campaigning in 2008 to the San Francisco Chronicle editorial board:
Under my plan of cap and trade, electricity prices will necessarily skyrocket and power plants, natural gas, you name it, wherever the plants were, whatever the plants were, whatever the industry was, they would have to retrofit their operations and that will cost money and they will pass that money on to the consumers. So if someone wants to build a coal powered power plant, that will bankrupt them because they are going to be charged the huge amount for all that greenhouse gas that is being emitted.
Gingrich explains, “So it is really open. Higher prices are good. They are necessary. Companies will be bankrupt. This is the true Left.”
Gingrich also noted what Obama told a constituent worried about the impact of high gas prices on his family: “If you are complaining about the price of gas and only getting 8 miles to the gallon (laughter) you may have a big family, but it is probably not that big.” When he found out how many kids the guy had, Obama told him, “Well, you definitely need a hybrid.”
Gingrich added that in February 2009, Obama appointed as “anti-energy” Secretary Berkeley Professor Steven Chu, who had said that America needs the same gas prices as in Europe, which are $9 a gallon or more. “So when they tell you this [the high price of gas] is all an accident, baloney. This is a deliberate strategy of the Left to punish the American people into driving the vehicles” the left and Obama want them to drive.
Gingrich responded to Obama’s claim that we can’t just drill our way to lower gas prices saying, “Well, let me give the President a brief history lesson. In 1976 gasoline had reached $2.46 a gallon. By 1980, with Jimmy Carter’s failing economic policies, it had gotten to $3.30,” despite Carter’s heavy handed gas rationing. “The first Executive Order Ronald Reagan signed deregulated gasoline. The Left was panic stricken. The New York Times thought the prices would skyrocket. Within 6 months it collapsed. In fact, the collapsed oil price was a major factor in beating the Soviet Empire because it stripped them of hard currency. By 1988 it had dropped to $1.72″ — half the price of when Reagan was sworn in, the result of 8 years of drilling. The price of natural gas has also collapsed over the past couple of years in response to soaring drilling.
To Obama’s boast that America is producing more oil today than any time in the last 8 years, Gingrich noted that the North Dakota boom was on private land. He reported in his earlier speech that “Under President Obama because he is so anti-American energy, we have actually had a 40% reduction in development of oil offshore, and we have had a 40% reduction in the development of oil on federal lands.” In his San Francisco speech, Gingrich added: “So in the area he controls, production is down and the area that is hard at the free enterprise stuff where people get rich, production is up. So he is now claiming credit for the area he can’t control in order to have us think he is actually for what he opposes.”
Gingrich continued, “And let me give you an example of the depth of audacity” of Obama’s dishonesty.
“He says quote, ‘Over the last 3 years, my administration has approved dozens of new pipelines, including through Canada.’ Now, Mr. President, you know how limited your respect for the intelligence of the American people must be. How could you possibly veto the only major pipeline that matters from Canada, the Keystone Pipeline, and turn around and suggest to us that the fact that we have approved dozens of tiny ones — this is like saying, ‘My Navy has 11 ships, they’re all rowboats.’ I mean how do you deal with a President who is this fundamentally out of touch with being honest? It would be one thing if he said
, ‘Yes, I vetoed the Keystone Pipeline and here is why.’ But to come and say, ‘I have approved lots of pipelines, why are you mad at me?’ Well, because you did not approve the one that mattered. The Keystone Pipeline is worth 700,000 barrels a day when you use it…. This President is driving Canada into a partnership with China in order to build a pipeline due west to Vancouver to deliver the oil to China. It is a strategic disaster of the first order.”
While Obama tells us, “We plan to make available more than 75% of our potential offshore oil and gas resources,” Gingrich explained in response, “This is [Obama] letting you know he is a lawyer. He has carefully selected out a phrase, which is totally misleading and technically inaccurate…. He is now telling you that in the areas we currently know about that they want to make 75% available. What he didn’t tell you is under this definition, 85% of the offshore acreage” will still not be available because we don’t know anything about reserves in those areas. (Remember this is the guy who wanted to abolish the inventory of reserves.)
Gingrich added, “One more example that shows how fundamentally dishonest this President is. He says, quote, ‘We only have two percent of the world’s oil reserves.’ And what he is referring to is proven current reserves. But…in 1980, our proven reserves were 30 million barrels. Since then, because of advancing technology, because of changing prices, because of entrepreneurship, we have produced 75 billion barrels out of the 30 billion-barrel reserve, and we have more reserves today than we had in 1980.”
Indeed, proven reserves can only exist in areas where drilling has been allowed and permitted. They don’t include anywhere near the 1.4 trillion barrels of potentially recoverable reserves in the United States, more than has been pumped worldwide since 1870, three times as much as in Saudi Arabia.
So now the President goes on to say, quote, “We are taking every possible action to develop safely a near hundred years supply of natural gas in this country.” That is fundamentally misleading. They have a task force of 8 different agencies trying to figure out how to block fracking, which is the method by which we get natural gas. They are methodically trying to undermine and cripple the natural gas industry, and it is stunningly dishonest for this President to pretend that he favors something that his administration is actively working to undermine.
Gingrich exposed Obama’s confusion regarding fracking, saying that Obama
lives in this fantasy world of government subsidies. He says, quote, “It was public research dollars that over the years helped develop the technologies that companies are right now using to extract oil and natural gas.” Just to set the record [straight], fracking began in Kansas in 1947 and it expands to Oklahoma in 1949. It’s done in Canada in the 1950s. And George Mitchell and the private sector are regarded as the pioneers in the development of “fracking.” This would be like suggesting that the Air Force invented the airplane and they don’t know who these two Wright Brothers are because, after all, they were private sector guys who were just bicycle mechanics, and how could they have invented the airplane when actually it must have been the Air Force because everything that was good is done by the government. That is the Obama mindset.
Finally, Gingrich addressed Obama’s pondscum strategy, saying:
Now, I am a scientific optimist. I have a friend at Texas A&M who is developing algae that eats municipal waste and then uses alcohol as a byproduct, and some point down the road, it will probably be useful. But this is like Solyndra. The President is for any fantasy that doesn’t work today as opposed to any practical thing that works today so as to take your money to prop up something which well might work — Solyndra might work in 30 years. Solyndra might even work in 10 years but it won’t work now, and it is being given venture capital by the Department of Energy…. But what are the odds that you’re going to ramp up to a commercial price gasoline from algae in the foreseeable future? Not very good. Now most of us live in the foreseeable future. What are the odds that if you actually allow people to drill and if you allow people to build refineries, you could get dramatically less expensive gas in the foreseeable future? Really, really high.
The last point I want to make about what he said, he says three or four times, “There are no silver bullets.” There is a pen. Big difference. The Presidential pen could today sign approval of the Keystone Pipeline. That is 700,000 barrels a day. The Presidential pen could today sign approval to go back to the Gulf of Mexico, and that is about 400,000 barrels a day. The Presidential pen could today approve areas of Alaska that we know have oil. That’s about a million, two hundred thousand barrels of oil a day. Three signatures we would have 2.3 million barrels of oil a day in the United States. So I should say we are not looking for silver bullets. We are looking for Presidential leadership.
At the end of his speech he says, quote, “We need to sustain all of the above strategy that develops every available source of American energy, yes, oil and gas, but also wind and solar and nuclear and biofuels and so on.” Well, this is exactly what John Boehner has been campaigning on for four years. I hope the House Republicans in the near future will move an all-of-the-above energy bill. And we will see whether or not [Obama] really means this, which by the way he didn’t, but it is a great line and it is exactly the Republican policy.
It is actually a poll-driven line by the President which, as Gingrich says, Obama transparently has no intention of following through on. It is just more Calculated Deception, to mislead the Bubbas.
This is a very revealing speech. You have an intellectual left winger who lives in a fantasy world in which he very cleverly uses language to say things that aren’t true that sound good because he knows that if he tells you what he really wants to do, you will defeat him in a landslide. One of our jobs, of course, is to make sure that the American people understand what he really wants to do.
Our choice is between energy independence and never again bowing to a Saudi King and $2.50 gasoline and about $18 trillion in royalties over the next generation; enough you could literally pay off the national debt just with the royalties for the federal government from development with no tax increase, and at least a million new jobs. That is our side. His side is a series of fantasies in which your tax money is thrown away on products that are not commercially feasible, while you pay higher and higher prices, and are coerced into smaller and smaller and smaller vehicles. These are the two futures we are going to campaign on this year.
Isn’t this the campaign that conservatives should want? Is there any doubt how that campaign would turn out? Conservatives need to recall after all the out of context misquotes or misunderstandings about what Gingrich has said in recent years, when he had political power, he governed as a Reaganite conservative, as someone who, in the words of Nancy Reagan, had the baton passed from Goldwater, to Reagan, to Gingrich.