Energy a Non-issue in Presidential Race

April 1, 2008
The government is doing nothing and the presidential candidates are mostly mum on the subject of a comprehensive energy policy.
Don Stowes
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The government is doing nothing and the presidential candidates are mostly mum on the subject of a comprehensive energy policy. This has got to change.

Houston held a “Presidential Summit” devoted to energy issues in late February and one candidate, Hillary Rodham Clinton, showed up. Barack Obama and John McCain were both no-shows, so there was not much discussion – just a speech by Sen. Clinton.

This indicates how low a priority energy is in this presidential race. It is essentially a non-issue. Except for a few platitudes being thrown around about alternative fuels, the candidates aren’t addressing the topic and clearly have no policy ready to send to Congress when one of them takes office next January.

Meanwhile, some politicians are calling for a re-implementation of the windfall profits tax. One would assume this is to punish the US oil companies for being successful. Just how this would help our country, I’m not sure. The retail price to the consumer would undoubtedly increase to offset the tax.

The larger and more successful integrated companies (those with refining and marketing assets) would pass along their increased costs, and the less successful smaller producers would suffer. This is no way to encourage more domestic drilling and exploration, which would make us somewhat less dependent on foreign sources of oil.

Fortunately for consumers, American oil companies are not standing still. Exxon Mobil Corp. just announced it plans to invest more than $125 billion in capital spending over the next five years to deliver major projects to help meet growing world energy demand.

Similarly, Chesapeake Energy on Mar. 24 said it would increase its capital expenditure budget for 2008 and 2009 in order to increase drilling and leasing activity on several important new plays.

Houston-based Apache Corp. has been one of the most successful independent producers in the United States. The company recently doubled its share price in less than three years, adding about $19 billion in shareholder value. Roughly 2,800 Apache employees will share in this achievement, with more than 90% of the incentives being paid to non-executive employees. Apache’s success not only has a trickle-down effect on its workforce but serves to boost the overall economy. These employees shop and buy consumer goods, including housing, new cars, groceries, etc.

Legendary oilman T. Boone Pickens, recently interviewed on CNBC, said the US faces a potential financial disaster if our energy policy is not reformed. He believes we have to “get on the alternative energy bandwagon,” but he also says we need to encourage US producers to seek additional domestic sources of oil and gas, such as the East and West Coasts and in Alaska.

The idea of a windfall profits tax is “ridiculous,” says Pickens. “You’ve got to keep the money in the industry.”