Obama’s Energy Policy: His Biggest Failures
One of the best parts about my job is that I get to meet a lot of really smart people.
Well, earlier this week I met with an energy expert who opened my eyes to some of the biggest failures of Barack Obama’s energy policy, as well as the severe negative impact they’ve had on the country and the economy.
His name is Karim Rahemtulla, and he’s the Investment Director for a publication called Oil & Energy Daily.
Karim is one of the sharpest energy experts in the world, so I was eager to pick his brain about things like the Keystone XL pipeline and the egregious handouts to green energy companies that ultimately fail (looking at you, Solyndra).
Well, the discussion was so informative that I invited Karim out to lunch for a second interview that I could share with you.
Here’s what he had to say about Obama and the future of America…
Floyd: Let’s get right to it. Now Karim, one of the most surprising things you told me when we last met was that approving the Keystone XL pipeline wouldn’t lower gas prices? Why is that?
Karim: Right. Holding up the Keystone XL pipeline is bad policy, but not for the reason everybody seems to think. There’s this perception out there that this pipeline would bring a flood of Canadian oil to the United States, and so gas prices would fall, as a result.
But that’s not true.
First, because 99% of Canada’s oil exports already go to the United States. So we really wouldn’t be getting much more. And secondly, because the modest increase in supply – we’re talking about 700,000 to 850,000 barrels per day (bpd), here – wouldn’t be enough to affect global prices
That’s the key thing to remember. Oil prices account for about 70% of the price of gas – and oil prices are generally dictated by supply and demand.
For instance, benchmark oil prices are currently above $100 a barrel. So whether Canada pipes its oil down to the Gulf Coast, or ships it somewhere else, is inconsequential. The supply is already priced into the market.
Additionally, the Canadian oil sands crude is thicker and harder to refine. That means it’s more expensive for refiners, compared to the West Texas Intermediate crude we get from places like Texas.
So, no, Keystone wouldn’t lower gas prices.
Of course, that doesn’t mean it shouldn’t be approved.
Finishing the Keystone pipeline could add as many as 20,000 jobs. The 850,000 bpd of oil it would bring would substitute for oil we’re getting from places like Venezuela. And as far as the environmental impact is concerned, Canada is going to produce the oil no matter what.
Someone’s going to buy it. Might as well be us.
Plus, Canada has invested more than $100 billion in its oil sands over the last decade. Oil production now accounts for 75,000 jobs nationwide, and that number is projected to grow substantially over the next 20 years.
They’re going to be pretty pissed if we don’t do this…
Floyd: Has this been Obama’s biggest misstep in terms of energy policy then?
Karim: No, not by a long shot. The worst thing he’s done is hold up natural gas exports.
Fracking has created an enormous glut of natural gas in the United States. So much, in fact, that the price has fallen from more than $12 per million Btu a couple years ago to less than $3.50.
But that’s just in the United States.
Natural gas still sells for as much as $13 per million Btu in Europe and Asia. We could export this stuff, make 10 times as much selling it abroad, generate export revenue and add more jobs, all while alleviating the glut that’s choking U.S. energy companies.
Floyd: So why haven’t we done that?
Because both Obama and Congress are afraid that exporting natural gas will cause prices to rise. And especially Obama, who with his “saintly” social conscience, couldn’t bear even a slight increase in heating prices.
But here’s the thing: Prices wouldn’t rise!
A report commissioned by the Energy Department last year proved that wouldn’t be the case. To the contrary, the report found that natural gas exports would have a positive effect on the U.S. economy.
That’s the Energy Department’s own investigation. And yet, liquefied natural gas (LNG) export projects are still awaiting its approval.
Again, building these export facilities would bring jobs, tax dollars and a huge amount of export revenue to a country that routinely posts trade deficits, and whose economy is struggling.
This is something Canada, Australia and Qatar are already doing, mind you. Ten, count them, ten multi-billion-dollar LNG export facilities have already received permission to ship the fuel from Canada. And we’ve only approved one.
Floyd: It must be pretty tough to make money in your line of work then? Energy investing, I mean…
Karim: Well, it ain’t the halcyon Bush days, I’ll tell you that.
Still, it can be done. You just have to know how the president thinks.
For example, with LNG, the company that owns the only export facility that’s actually been approved by the Energy Department… I recommended that in a special report we released back in December. The stock’s up about 60% since then. [Editor’s Note: You can get a free copy of the report here.]
In fact, every single one of the stocks in that report is up – some by as much as 10% or 20%.
So I don’t like Obama, but I still make money off the guy.
I’ll give you another example. We just recommended another stock for our paid service, Oil & Energy Confidential.
It transports liquefied petroleum gas (LPG). That’s a condensed liquid form of propane and butane – as opposed to LNG, which is just natural gas in a liquid state.
See, the U.S. can’t export LNG or oil right now, but it can export propane and butane. And we have a huge supply of those, too, since they’re by-products of shale oil and gas production.
I expect that stock to double in value. So we’ll see…
Like I said, it’s just taking advantage of the policy. Obama’s not going to look after you, you have to look after yourself.
Your eyes on the Hill,