It appears that IER’s educational campaign has finally begun to change President Obama’s mind, for over the weekend he called for increased offshore drilling as a way to promote American energy security and bolster the nation’s economy. The only hitch is that Obama was talking about Brazilian offshore drilling. Needless to say, we applaud the president’s sensible recognition of the benefits of increased energy supplies, and only wish he would let American companies do the same with domestic resources.

Obama, Our Man in Brazil

Here is the relevant excerpt from Obama’s address last Saturday to the CEO Business Summit in Brasilia, Brazil:

[W]e want to partner with Brazil…on the issue of energy, which is why President Rousseff and I…agreed to launch a Strategic Energy Dialogue.  By some estimates, the oil you recently discovered off the shores of Brazil could amount to twice the reserves we have in the United States.  We want to work with you.  We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers.  At a time when we’ve been reminded how easily instability in other parts of the world can affect the price of oil, the United States could not be happier with the potential for a new, stable source of energy.

Not to leave his green energy fans in a panic, the president was quick to add:

Now, even as we focus on oil in the near term, we shouldn’t lose sight of the fact that the only long-term solution to the world’s dependence on fossil fuels is clean energy technology.  And that’s why the United States and Brazil are deepening our cooperation on biofuels — (applause) — and why we’re launching a U.S.-Brazil Green Economy Partnership, because we know that the development of clean energy is one of the best ways to create new jobs and industries in both our nations.

Oh the Irony

It’s difficult to add analysis to Obama’s remarks, so perhaps we should just repeat the juiciest quotes: “We want to help with technology and support to develop these oil reserves safely…The United States could not be happier with the potential for a new, stable source of energy.

The president is right: It is reassuring to know that there are massive deposits of oil off the coast of Brazil, which can continue to fuel the world economy. But by the same token, the president and his administration should be “happy” to see the development of American offshore reserves—you know, the ones for which drilling permits cannot be obtained. Conservative estimates put the reserves of the U.S. Outer Continental Shelf at 86 billion barrels of oil.

We should also note that the President is lowballing U.S. oil resources. Brazil’s offshore oil finds could amount to truly large oil reserves, but the U.S. currently has more than double Brazil’s proved oil reserves. And the U.S. has even more oil resources not counted as “proved oil reserves” because the administration is keeping them off limits. If we were able to access these other oil reserves, the U.S. would have oil reserves larger than Saudi Arabia’s.

Energy Policies About Special Interests, not Saving the Planet

Episodes such as this underscore the fact that the real reasons for the administration’s energy policies have nothing to do with saving the planet from global warming, or protecting the ocean from oil spills. At best, the president’s defenders could argue that it’s okay for Brazilians to risk their marine ecosystems so that Americans can drive big cars—but not surprisingly, the president didn’t mention any such judgment in his speech.

As the president and his speechwriters acknowledge, they understand full well that more abundant oil reserves are a good thing, fueling economic growth and productive job creation. There is simply no way around it: If the president “couldn’t be happier” with the development of offshore Brazilian oil reserves—and with Americans paying for this oil—then how in the world can he justify the permitorium on the development of American reserves?

The answer certainly can’t be “climate change,” since the gasoline would still be used in American automobiles (and since the atmospheric concentration of greenhouse gases is a global phenomenon, anyway).  The answer can’t even be, “We need to reduce American dependence on foreign oil,” since President Obama is specifically applauding our future imports of foreign oil.

No, the only way to make sense of any of this is to follow the money. Domestic energy policies have far more to do with rewarding political allies—such as renewable energy companies—than with the rhetoric of saving the earth or promoting energy independence.

President Not Even Consistent On Ethanol

Ironically, Brazilian ethanol producers have every right to be as outraged at Obama’s remarks as U.S. oil producers. For even as Obama touts his support for the development of the Brazilian biofuel industry, the federal government in December renewed the 54-cent per gallon tariff on Brazilian ethanol.

Now this might confuse some readers. Why wouldn’t a “clean energy” president—who says he is for lowering trade barriers with Brazil, and wants to develop their biofuel industry—immediately pledge to get rid of this inefficient restriction on international trade?

The answer, of course, is that the tariff isn’t the only intervention in the biofuel market. In addition, the U.S. federal government pays a 45-cent per gallon ethanol tax credit for refiners who mix the biofuel in with their product.

The conjunction of these two policies shows yet again that U.S. energy policy has nothing to do with saving the planet. If the goal really were to encourage American drivers to switch to ethanol (and if ethanol actually were more environmentally-friendly than oil), then the federal government wouldn’t put up obstacles to the (cheaper) sugarcane ethanol available from Brazil.

But since the real goal is to subsidize American farmers who sell corn for ethanol production, the policies make perfect sense: Put the tax credit in place to shovel a subsidy to ethanol production, and then put the tariff in place to ensure that the subsidy is funneled to American farmers, not Brazilians.


If we thought the president really meant it, we would be encouraged by his support for Brazilian offshore oil development. All we can say is that his arguments apply even more so to U.S. offshore drilling.

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