Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
The bankruptcy of Ener1, a "green energy" firm that got a $118 million stimulus grant, has brought the Obama administration's commitment to sinking billions of dollars into alternative energy boondoggles back into the spotlight. Unfortunately, President Obama remains committed to continuing down this wasteful path, as his statements about energy in his recent State of the Union Address  made clear. While the president spent more time on the topic than any other policy area, he distorted the facts, misrepresented his plans, and ignored his record.
Obama announced that "tonight, I'm directing my Administration to open more than 75 percent of our potential offshore oil and gas resources." For those who favor energy production, this sounds great, but a close inspection reveals that this announcement was nothing new -- the sale should have been scheduled last year, and the only reason the administration is planning it now is that it is required under the Outer Continental Shelf Lands Act. In fact, he didn't direct his administration to do anything new -- he just recycled a plan actually released in November  2011 that actually kept closed key areas for future oil and gas exploration in Alaska, the Gulf of Mexico, and the Atlantic coastline.
The president claimed that, "over the last three years, we've opened millions of new acres for oil and gas exploration…. Right now, American oil production is the highest that it's been in eight years. That's right -- eight years." But that's no thanks to the federal government. In fact, oil production on federally owned lands has gone down  during Obama's first three years. The administration didn't hold a single offshore lease sale in all of 2010 and canceled sales off the coast of Alaska and Virginia this year. It's the oil boom in North Dakota on private lands that's kept domestic oil production from falling -- not the president's policies.
Obama continued, "The easiest way to save money is to waste less energy. So here's another proposal: Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings." But manufacturers already have huge incentives to reduce wasted energy. Airlines today, for example, use almost half  as much energy per passenger mile as they did in 1979 and 24 percent less than in 2000. No one needed to tell them to do that. Energy is only "waste" if it cost less to save it than to not. Forcing taxpayers to pick up the tab for manufacturers' energy costs isn't eliminating energy waste -- it's creating government waste.
Obama has already been burned by his poor energy investments, but that hasn't stopped him from promoting them in every speech. "In three years, our partnership with the private sector has already positioned America to be the world's leading manufacturer of high-tech batteries," he said in reference to stimulus grants to an electric car battery manufacturer. That manufacturer  was Ener1. Two days later, it filed for Chapter 11 bankruptcy.
The president insists that it's time to "double-down on a clean energy industry that's never been more promising. Pass clean energy tax credits and create these jobs." Double-down on a slew of bankrupt clean energy investments? In addition, Ener1, Evergreen Energy , and Amonix -- all of which received millions of taxpayer dollars -- have either gone bankrupt (as Enr1 and Evergreen have) or cut their workforce by two-thirds (as Amonix has ). And let's not forget Solyndra.
To be clear, the president does oppose some taxpayer-funded projects: "We have subsidized oil companies for a century. That's long enough. It's time to end the taxpayer giveaways to an industry that's rarely been more profitable." The oil industry does receive some subsidies -- which should be eliminated -- but they are orders of magnitude less than the clean energy industry. In fact, in 2010, according to the Energy Information Administration , clean energy and conservation programs received $22.4 billion in federal stimulus compared to $4.2 billion for coal, oil, and natural gas -- much of it designated for the environmentally motivated "clean coal" program.
The president made it clear that no Congress will stop his agenda. "So far, you haven't acted," he told Congress. "Well tonight, I will…. I'm proud to announce that the Department of Defense, the world's largest consumer of energy, will make one of the largest commitments to clean energy in history -- with the Navy purchasing enough capacity to power a quarter of a million homes a year." The role of the Defense Department isn't to promote the president's energy investments, it's to defend the United States. Forget energy independence -- our defense will now be weather dependent. If only we could get battleships that ran on spin.