Most of the world’s oil production is controlled by state-run and/or state-owned enterprises. National oil company production policy is dictated by oil ministers of various OPEC and non-OPEC oil producers, with only the U.S. producers at a disadvantage in a not-so-free market. It is time for our government to recognize the vital national security role our oil industry plays, step up, and protect it thru various subsidies. Let’s not just sit idly by and watch it be destroyed by marginal allies and complete enemies.
During good times for U.S. oil producers, there are many in Congress who accuse the industry of price gouging and demand that “windfall’ profits be taxed. But today the U.S. oil industry is under severe attack from Saudi Arabia. Only in recent years have we attained a large measure of self-reliance and we should not ignore the benefits. We no longer indirectly fund terrorism and are not subject to the economic or political whims of OPEC.
We needlessly subsidize corn, alpaca, and many other agricultural and ranching endeavors. We bailed out banks, only to allow the “too big to fail” to get even larger. It is time we subsidize our oil industry. We cannot allow it to be crippled, ultimately costing us hundreds of thousands of well-paying jobs and reducing the country to being a big oil importer once again – fighting wars to protect our interests and sending billions of dollars to our enemies.
There are a number of things the US government should do:
- Immediately fill the Strategic Petroleum Reserve (SPR) – it will remove some excess supply from the oil market and protect our country’s future.
- Pay oil producers to NOT produce oil, and keep their wells maintained so they can quickly produce when demand is greater than supply – just as the government pays farmers to not produce.
- Provide loan guarantees to marginal US oil producers so that the industry can outlast the Saudis. Saudi Arabia is running huge fiscal budget deficits that they cannot maintain. They would likely give up their attack if they saw the U.S. defending our oil industry.
- The Dept of Energy should buy drilled but uncompleted wells (DUCs), using them as additional source of supply for the Strategic Petroleum Reserve.
Any companies partaking in these provisions would repay US taxpayers thru a special tax when profits return, which they undoubtedly will.
The U.S. should have a real energy policy, protecting our oil and natural gas interests. Subsidizing wind, solar and other renewables is fine, but they are decades from becoming economic and replacing fossil fuels. We have written many times on the benefits of using natural gas in autos – natural gas is so clean that you can cook with it inside your home with windows closed; it is certainly a great alternative.
In sum, we must acknowledge the vital role that the US oil & gas industry plays and take action to protect it from attack. It is pure foolishness and politics that prevents the government from taking prudent action. They need to take action before it is too late.