Outcome of Obama Vacation Sends Americans Mixed Signals on Crippling Energy Costs at Home
Jack Reed|MWFH’s Contributor
President Obama’s vacation in Brazil this week has left little doubts that the trip was something more than just enjoying the sights of Rio. His main motive behind this trip was to let the Brazilian government know that he strongly supported Petrobras (Brazil’s government owned oil company) and its offshore oil drilling activities.
Obama has imposed a 7 year offshore drilling ban on the Atlantic and Pacific coasts and even promised a $2 billion loan to Brazil for developing a massive underwater drilling project. The banned area even covers much of the Gulf of Mexico and Alaska.
Stifling energy production here in US, Obama said at a CEO summit in Brazil, “We want to help you with the 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”. This clearly shows that he is strongly opposed to drilling in the US and prefers his country to depend on foreign oil.
This can actually have the effect of hampering America’s economy. To add insult to injury, Obama is supporting the economic growth of another country. The ban has put a bridle on America’s ability to produce more oil and gas in a situation where energy prices continue to rise. According to the federal government, the anti-drilling policy would result in the drop of 220,000 barrels per day in 2011 with a further production drop predicted in 2012.
Perhaps Obama’s sincere plans to replace the fuel sources for the adoption of renewable energy will come off as an excuse for most of the Americans. He has also said that stopping America to drill for oil would prevent incidents like the BP oil spill from taking place again in future.
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Obama’s anti-drilling policy has driven strong emotions with most of the US citizens saying that he is purposefully ensuring that “money leaves the US”. But this can also be seen in a positive stance that it would be cheaper to import Brazilian oil than it would be to drill in the home country, at the same time ensuring no danger from oil leaks. Thus, it might make sense to deal with Brazil to get cheaper oil.
The downside, however, weighs heavy. Americans should not support Obama’s energy policies as it will result in more dependence on foreign oil and also pave the way to higher energy costs. This has also caused the Gulf States to lose thousands of jobs in the oil drilling industry.
The long term effect would see an increase in the US trade deficit. “Obama should first be helping his own country” is how the popular vote goes. According to energy analysts, borrowing money to lend money to Brazil when the nation is reeling under massive debt does not make sense.
Perhaps, Obama would have to pay dearly for fulfilling his promise made way back in 2009 to help the Brazil oil industry. It is high time that the American government should come up with a renewed Energy Policy that ensures an adequate and inexpensive supply of energy to address the nation’s future needs.
Author-bio: Jack Reed is a financial writer with Oak View Law Group, a firm dealing with debt settlement texas. He writes on a variety of financial topics with a special focus on debt and related issues.