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In his last State of Union Address, President Obama noted that on his watch America has cut oil imports by more than 60 percent and that gasoline is under '2 bucks a gallon.' The president also suggested we have let 'big oil reap profits' while 'small business need more of a voice.'
It is worth connecting some dots on the energy record. Petroleum imports collapsed because of the astonishing boom in shale oil that occurred almost entirely on private and state lands and happened independently from, and in some cases despite, federal polices of this or even previous administrations. The subsequent collapse in oil prices has been a direct result of the biggest and fastest rise in oil output in a century, a consequence of new shale technologies that have been developed and deployed by the private sector without subsidies or special favors.
Meanwhile, in the current price collapse we are not seeing profits for 'big oil,' but instead huge financial losses. And more importantly it is worth noting that thousands of small and mid-sized firms are the ones responsible for 75 percent of U.S. oil and gas output, not 'big oil.' It is true that those small business 'need more of a voice' in America’s energy policy, especially now that price manipulation by OPEC has helped drive prices even lower.
As for the future, the president called for a 'moon shot' type of commitment to come up with new energy sources. But fueling society is not like putting a man or two on the moon. It’s like putting everybody on earth permanently on the moon. The former was a one-time engineering feat; the latter would take new science and miraculous technologies. If we want new forms of energy, we need to fund long-term basic research to come up with radically new science. That’s important, but it will take a long time. In the meantime we should double down on the new businesses and new technologies of the shale fields. After all, as the president said tonight: 'Why would we want to pass up the chance for American businesses to produce and sell the energy of the future?'
Mark P. Mills is a Senior Fellow at the Manhattan Institute and CEO of Digital Power Capital, a tech-centric capital advisory group.