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  • Morning Bell: Economy Needs Natural Resource Development Now

    Last night the Senate passed a $700 billion rescue for the credit crunch that is beginning to hurt small businesses. The House is set to vote tomorrow on the package and the new FDIC fixes, which will likely win enough votes for final passage. But the plan is hardly a silver bullet fix for the U.S. economy. Although there are many regulatory and tax fixes that should be tackled to reform our financial sector, other sectors of our economy are also in desperate need of a regulatory overhaul. Considering her deep background on the issue, hopefully in tonight’s vice presidential debate Sarah Palin will make a strong economic case for developing our natural resources.

    At a time of soaring budget deficits, the most obvious benefit of choosing to develop our natural resources is the substantial and positive effect it would have on taxpayers’ bottom line. According to Energy Information Administration (EIA) estimates, 18.7 billion barrels currently are off limits in the Outer Continental Shelf and another 10.3 billion barrels in ANWR. A 2007 study by the University of California estimated  leases and royalties from ANWR would generate $251 billion in government and state revenue — and that was assuming a barrel of oil cost $53. Oil opened at $98 a barrel today. A rough back-of-the-envelope calculation shows the royalty and lease payments from oil companies that are allowed to develop our ANWR and Outer Continental Shelf resources could net taxpayers almost a trillion dollars. And that doesn’t include revenues from the 77 trillion cubic feet of natural gas in the Outer Continental Shelf.

    On top of the benefits to our nation’s fiscal health, developing natural resources would also be a boon to the economy in two other ways: First, it would reduce the amount we spend on imported oil. Second, it would lower the price of petroleum. The two would work together to reduce energy expenditures and the trade deficit while expanding economic activity. According to Heritage senior policy analyst David Kreutzer:

    Increasing domestic production by 1 million barrels per day would reduce imported petroleum costs by $123 billion, generate an additional $7.7 billion in economic activity, and cost $25.6 billion in additional oil production costs. The net gain to the economy would be $105 billion. The impact on employment would be an increase of 128,000 jobs.

    Applying the same analysis to a 2 million-barrel-per-day increase in domestic petroleum production yields net economic gains to the economy of 270,000 jobs and $164 billion.

    As gas prices soared over the summer and the public became educated on the issue, conservatives scored a major victory when officials dropped the federal ban on resource production in the Outer Continental Shelf. But much more work needs to be done.

    Thirty years of terrible environmental policy still stands between American consumers and their own natural resources. The laws that allow fringe environmental groups to hold up development of natural resources need to be repealed or rewritten so the market can work as quickly as possible. The Alaska Oil Pipeline took two years, two months and four days from the first shovel of dirt until completion. This engineering marvel covers 800 miles, crosses three mountain ranges and traverses 800 rivers and streams. That feat simply could not be replicated in today’s legal environment. American engineers can deliver energy to market quickly. We just need the political will to get the environmental left out of the way.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    7 Responses to Morning Bell: Economy Needs Natural Resource Development Now

    1. Norbert (Bud) Fay, W says:

      There will be a guest column in the Norwich CT Bulletin Newspaper on October 4th that I wrote.

      Essentially says; We should have taken the following actions.

      1. President,Congressional Leadership,Presidential Candidates, should have issued a bipartisan statement, "The Government of

      the United States will take whatever steps that are necessary to assure the flow of credit within the financial community. It will take us 60 days to establish what will need to be done specifically. In the interim we will pass a bill allocating $700 Billion set aside for this purpose". Investigations are underway with the charge of determining whether there was any operational, or oversight malfeasance, and if so to prosecute those responsible to recover funds paid out."

      "This will give us the time necessary to make sure that whatever acions we take are taken with the full knowledge of the people of this country who's money are at stake.

      In the interim we call for the resignation of the Banking Committe's Chairmen of the House and Senate from these positions."

      Had we done this, the majority of the people in this country would have supported it., We would have the "time" to see what affect free market forces would have, and we would not have "frozen" the credit market,who are waiting for a "hand-out" of this problem from the government.

      There is "NO" plausible reason to believe that our government can buy up somewhere around 50%

      of the mortgages that exist,and manage "work-outs", recovering our money. Government has no track record of success managing much of anything efficiently and with any accountability for the outcome.

      Philadelphia put in place a law that requires foreclosures to go through a compulsory "work-out" negotiation. Surprise 80% of their foreclosures have been worked out! If we end up owning the mortgage inventory of Fannie Freddie and others, a simple solution would be to enlist the aid of States and their Towns ande Citys so that "work-out negotiations are conducted by people and financial institutionsthat have a "local" prescence and have some need to "make things work for their home turf".

    2. mark , Houston says:

      Good afternoon Mr.Fay , You are right in that the resignations of the banking committe's chairman would be a small step in the right direction , HOWEVER , how can you be in support of this SOCIALIST action in washington ? This bill has been created and is being pushed down our throats by the very people who caused the problem in the first place , the only rescue plan is the one that will save their behinds . Many in the capitol have stated that now is not the time to affix blame to anyone , WHY NOT . why is it that Nancy Pelosi's membership in the D.S.A (the demosratic SOCIALIST of America)has not been called out ? Many of her inner circle are members as well . This is FACT. Why is it that Mr. Obama's two top advisers (you know the ones that RAN fannie may and freddie mac and have given Mr. obama MILLIONS)have not been called to task ? I 'll tell you why , they ,the liberal's , are now in complete control of the government . they are now pressing their SOCIALIST views on capitol hill . These are treacherouse actions and should be delt with . AMERICA , IT'S TIME TO TAKE OUR COUNTRY BACK !. I'll leave with a quote from one of Mel Gibson's movies that should explain things "why should we trade one tyrant three thousand miles away for three thousand tyrants a mile away".

    3. dw best says:

      surprise?looks to me like the drug adiccts are running the pharmicies,(dem congress)

    4. Michael J O'Bri says:

      Sir Winston Churchill once opined "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries". We are seeing this come home to roost with the intervention of Government in the mortgage market with bail outs and housing bills, such as mortgage forgiveness for the sub primers. It is evident that we have not learned our lesson. It was Fannie and Freddie that got us here by their insatiable hunger for sub prime mortgages, and the relaxing of underwriting standards, all in the benevolent attempt of providing affordable housing to the poor. The government could not properly manage that socialist program and indeed it got away from them. Now the taxpayer now must ante up. Not stopping to fix a problem, the government wants the taxpayer to put up an additional $1.5 trillion and the government will oversee the free markets restoration to health. The socialist and anti capitalist in the Democratic Party have been very efficient in quietly driving this country to a socialists state.

      The $700 bn bail out bill will not be successful in providing more liquidity to the credit markets. Credit markets pricing work on risks. Banks do not trust each other to repay after the failure of Bear Sterns, Lehman Bros., and AIG. Moreover, risks models will be seeking borrowers with stellar credit worthiness; those that conform to the basic five Cs of credit. As such, credit will be available, but to those that meet strict criteria, and pricing will be costly because of demand and supply factors. The government can only make a bad situation much worst. Basic market forces will prevail. Meanwhile, the democrats will have again been successful in achieving one of their life long goals, income redistribution.

    5. Ahmad Annan says:

      Today, the BBC-Arabic focused on the bail-out plan hosting some arabic experts who considered the plan as a socialistic solution being damned by the traditional US Capitalism, and therefore became rejected by the Congress.

      What the BBC arabic Experts don't understand is the fact; that economic Freedom is tied to the Political Track. Progressivism emerged historically after the 1929 Crisis, and boomed in the thirties. But as soon as political Stability became achieved, Progressivism became less popular. So the proposed Plan is not a socilaism, but a temporary Way-out action.

    6. Pingback: » What to do now?

    7. Dave, laguna niguel, says:

      As usual the politicians will do what is right for them and the country be damned! That is exactly what got us into this mess and the crooks who made the most money, or should we say stole the most taxpayer money go unnamed in the press, unnamed in the media so it will continue unabated, at least as long as the real crooks continue to be democrats. Not that Bush is innocent, it happened on his watch so he is as much to blame. For the life of me I can not understand how Barney Frank keeps his job! he is a ringleader/orchestrator in this financial mess we are in, and he even praises Chris Dodd who made what, a hundred million off of us?! And they want US to bail out their mess?! NO FREAKIN WAY!!! And to make matters worse, this corrupt and completely inept congress sits on their collective hands and does NOTHING about restoring energy production in this country which is the fastest way to get our economy going again! I say shoot the whacko environmentalists AND their whacko attorneys and lets get this country moving again! I am just trying to make a point…these people are holding a gun to the heads of us ALL!! This is yours and your kids' FUTURE at stake here!

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