The Keystone of the Republicans’ 2012 Presidential Campaign

Incredibly, President Obama today denied the application for a permit to construct the Keystone XL Pipeline. Obama’s statement tried, rather pathetically, to blame his decision on the Republicans, who ostensibly rushed him into making up his mind prematurely. Of course, the Keystone application has been pending for more than three years–how impatient can the Republicans get?

We have written repeatedly about the economic benefits of the Keystone pipeline; for example here, where we quoted from a study by the Perryman Group which concluded that the pipeline would create an immediate 118,000 person years of employment via construction, while the long-term impact in the energy industry would be from 250,000 to 550,000 jobs. Not to mention cheaper energy prices, which will make all Americans richer, American products more competitive abroad, and will create, indirectly, still more jobs.

So what on earth is Barack Obama thinking? This item on the White House web site perhaps offers a clue. It is, to be blunt, almost unbelievably stupid:

[T]he idea, as some in Washington have tried to suggest, that building a pipeline is the ultimate answer to the question of American energy security and job creation is nothing more than a pipe dream. The truth is that just two of the Administration’s programs – the DOE Loan Guarantee Program and the EPA’s Mercury and Air Toxics Standards – will create more than 10 times the amount of jobs generated by the Keystone XL pipeline, which will only generate a few thousand temporary jobs.

This is astonishing. The DOE Loan Guarantee Program props up “alternative” energy schemes that are not efficient enough to survive in the free market. Solyndra is the poster child for this program, but a number of other such companies have also gone broke–the inevitable result, sooner or later, when you can’t compete. We have said it before, but I will say it again: you cannot create wealth by subsidizing the inefficient creation of energy. You can create jobs, in exactly the same sense as when you tax people who are doing productive work and use the money to pay others to dig holes and fill them up again. The net effect of such inefficiency is to destroy jobs, not to create them. This appears obvious, but I sincerely believe that Barack Obama is such a hopeless case that he does not understand it.

And what about the EPA’s mercury standards–how can they possibly create jobs? Presumably the White House means that lawyers, chemists and engineers will have to be hired to help power plants comply with the regulations. Unmentioned is the fact that closing down a large percentage of our coal-fired power plants–by far America’s largest source of electricity–will deprive countless workers of jobs (but not lawyers, etc., and so most likely not Democrats) and raise energy costs for everyone, which will not only make us all poorer, but will also indirectly destroy still more jobs.

The White House concludes:

In terms of reducing America’s dependence on oil, the Administration’s fuel economy standards alone will save more than twice the amount of oil the Keystone pipeline would deliver.

If we really wanted to reduce dependence on foreign oil, we could just ban the consumption of petroleum. Americans would be poor, cold and hungry, but hey–we would be independent of foreign oil! I think most Americans are smart enough to understand that it makes infinitely more sense to produce our own energy than to impoverish ourselves by refusing to consume that which is produced abroad.

Is Obama’s decision pure stupidity, or is there method to the administration’s madness? Actually, it is of a piece with a number of decisions by President Obama to cater to his party’s leftward fringe. Most notable is his decision to divide the American people by making the 2012 election all about class warfare. The conventional wisdom is that Obama’s team must consider his position to be weak, since he is concerned about shoring up his liberal base rather than appealing to the moderates who hold the balance of power in the election. To that, I would add that no one has ever been elected President of the United States by running as a leftist. Could Obama be the first? Maybe so, but I doubt it.

By blocking the Keystone pipeline and destroying as many as a half million American jobs, Barack Obama has handed the Republicans a club with which they should beat him, and Congressional Democrats, nonstop from now until November.

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