While voting with its feet, the U.S. oil and gas industry can inject sense into a turbulent U.S. presidential race by reminding both leading candidates about the essential precursors of economic health. The reminder would help any country where officials have neglected what economists call factors of production: land, labor, and capital.
The occasion for this reminder is a comment by Sen. Al Gore (D-Tenn.) in last week's shouting match among vice-presidential contestants. The reminder, however, need not be partisan. Gore and his would-be boss, Arkansas Gov. Bill Clinton, just think they can reinvent economic law. Vice-President Dan Quayle and his patron have in some ways been trying to do so for 4 years, with consequences that relate directly to doubts about their reelection prospects.
'MILLIONS OF JOBS'
"Bill Clinton and I believe we can create millions of new jobs by leading the environmental revolution instead of dragging our feet and bringing up the rear," Gore professed in the Atlanta debate. "You know, Japan and Germany are both openly proclaiming to the world now that the biggest market in the history of world business is the market for new products and technologies that foster economic progress without environmental destruction."
Like so many of Gore's environmentalist utterances, this is difficult to square with observable reality. Environmental revolutions do not create jobs. Investments create jobs. And investments come from profits, which result from production, the factors of which are-by way of reminder-land, labor, and capital. An observed reality of the last decade is that the environmental revolution wants to take land out of the equation.
The problem is not that the U.S. is "bringing up the rear" in environmentalism but that it has locked away so much land and so many resources in deference to supposed "natural values." The Bush administration has hardly shrunk from the crusade, notwithstanding its creditable refusal to succumb to international pressures for a carbon tax. How many other leaders of energy-needy countries voluntarily withhold leasing of prospective oil and gas resources onshore and off?
U.S. oil companies show what happens when governments suppress factors of production. They are exporting jobs and capital to places where land has uses other than being pondered from a distance. And land isn't the only problem. Labor in the U.S. costs too much, largely because of excessive regulations and employers' soaring legal risks, many of them related to the environment.
Some displaced petroleum professionals and scientists will, indeed, find work as environmental consultants. Some may have ideas for those new products and technologies touted by Gore, who apparently thinks the consultants will work for makers of new products once makers of old products have been run out of business. But "millions of new jobs?" No way. These are just partial offsets to massive job losses.
OBLIVIOUS TO LABOR
New or old, products require inputs of land, labor, and capital. The environmental revolution in all its incarnations, from Gore's apocalyptic writings to President Bush's compromises, remains explicitly hostile to traditional uses of land as a factor of production. And its practitioners and, yes, compromisers remain self-righteously oblivious to the consequences for labor.
Oil companies have first-hand experience. From atop stacked rigs and idle refineries, they should be explaining their exodus to politicians who still don't understand why so many people, in so many industries, are out of work, angry, and anxious for change.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
