Bibi or Obama right about energy?

Bibi or Obama right about energy?

Abby Wisse Schachter
Abby Wisse Schachter

President Obama has said, “Israel doesn’t know what its own best interests are,” Jeffrey Goldberg reports.

With the president visiting Israel, the time seems right to assess Obama’s perception. Does the American have a better sense of what’s good for the Jewish state than even Israeli Prime Minister Benjamin Netanyahu?

When it comes to energy policy the answer is a resounding no. Moreover, comparing the two leaders’ energy records over the past few years reveals that Obama has it exactly backwards.

Until 2010, it was impossible to compare the two countries because Israel was an energy resource pauper. Everything changed with the discovery of the Leviathan oil field in December of that year. Located 80 miles off the Israeli port city of Haifa, Leviathan has estimated “gas reserves of 17 trillion cubic feet … which is equivalent to almost a year’s worth of European gas demand and enough to cover Israel’s gas needs for generations,” reports Reuters. The land-based pipeline market (mainly to Jordan and the Palestinians) is too small and politically fraught, so the Israelis have been focused on developing a plan for exporting liquefied natural gas from Leviathan to Europe and Asia, both of which have high demand.

But Israel didn’t have the know-how to extract or export the gas so partnerships between Israeli energy companies and some American and Australian outfits have resulted in a strategic plan to get the gas from under the sea to the customers who can pay for it. As then-Israeli Energy Minister Uzi Landau put it in 2012, “we intend to continue to encourage the entry of giant international corporations into Israel’s energy industry in order to realize the potential buried off the country’s shores.”

Israel is also developing a previously discovered gas field called Tamar for domestic use that should be “coming on stream in April 2013,” explains Simon Henderson of the Washington Institute. In Israel’s desert, private industry is also trying to solve the problem of extracting oil from shale formations miles below the earth. But this work is slow and costly and so the government is keeping its mitts off.

Israel has recently seen the development of green energy alternatives such as electric cars, as well. And like gas, alternative vehicles have come to market without either government subsidies or overly burdensome regulations.

But while the natural gas opportunity has yet to be fully implemented, innovative economic models for electric vehicles (EVs) have come to Israel and failed.

“One of the unexpected things to go wrong was that [celebrated EV company Better Place] didn’t get much help from Israel,” writes Marc Gunther at Yale’s Environment 360. “Israel — unlike the U.S. — provides no subsidies to EVs,” Gunther explains. Other factors that hurt Better Place’s model include local bureaucracy and high taxes that hindered the company’s efforts to drive down costs.

But compare that record to the American EV market and you see that plentiful federal subsidies do not make a bit of difference. President Obama has certainly been generous, offering rebates to EV buyers to offset the higher price tag and pumping billions of taxpayer money into the industry. To no avail, says Reuters, as “consumers continue to show little interest in electric vehicles.” In fact, Reuters reported, “the public’s lack of appetite for battery-powered cars persuaded the Obama administration … to back away from its aggressive goal to put 1 million electric cars on U.S. roads by 2015.”

And while the Obama administration has been hot for electric cars it has been cool to natural gas and oil. As John Hanger, former head of Pennsylvania’s Department of Environmental Protection and a Democratic candidate for governor explains, the Obama administration hasn’t exactly taken a “drill baby drill” attitude but neither is it at war with gas and oil. “The single biggest expansion [in demand] for gas has been electric power [because of] Obama’s war on coal,” Hanger explains. “The effect is benefiting gas but that doesn’t mean it was pro-gas in its intent,” Hanger admits.

That point is reinforced in a new bipartisan government report critiquing the administration for delays approving drilling on federal lands. According to the Congressional Research Service, “all of the increase (in oil and natural gas production) from FY2007 to FY2012 took place on non-federal lands, and the federal share of total U.S. crude oil production fell by about seven percentage points.” The report says that production of natural gas on federal land decreased from 5.5 trillion cubic feet to 3.7 trillion cubic feet. “In general,” report author Marc Humphries concludes, “the regulatory framework for developing resources on federal lands will likely remain more involved and time-consuming than that on private land.” Oil and gas production on private land is booming meanwhile, which explains Hanger’s happy-talk about production spikes during Obama’s tenure.

The administration has done nothing to expedite permits for liquefied natural gas export terminals due to political haggling over whether all this domestic cheap gas should be forced to stay home and also because gas exports are opposed by environmentalists who fear increased production will result.

The State Department continues to delay a decision about the Keystone XL pipeline and President Obama himself spoke negatively of the pipeline in meetings with House Republicans. Isn’t this the same man who said he was pursuing an “all of the above” energy strategy?

So while the Israeli government has been keeping its hands off energy opportunities and letting the market decide what will work, the Obama administration has been pumping taxpayer funds into an electric car sink hole and refusing to embrace the natural gas opportunity.

Clearly, Mr. Obama could stand a lesson from Mr. Netanyahu on why it is in the national interest to support all domestic energy opportunities and trust the free market to generate economic growth.  

(Abby W. Schachter, a Pittsburgh-based political columnist wrote “Energy Independence and its Enemies” for the June 2012 issue of Commentary.)