The Obama Administration is once again showcasing its inability to understand issues concerning American competitiveness in the global marketplace, as well as its hostility toward U.S. oil companies. The Securities and Exchange Commission (SEC), with the encouragement of the President and many of his Congressional allies, is finalizing a new regulation requiring domestic companies to make public all payments to foreign governments in pursuit of fossil resources.
Sounds harmless, right? Why would anyone oppose transparency? Nothing could be farther from the truth for those savvy to the workings of global energy development.
You would hope that the President or someone on his senior staff would understand these details and work to promote growth for U.S. companies at a time when jobs are scarce and our economic recovery is anything but assured. After all, the American oil sector is one of the few bright lights in domestic job creation. Allow me to explain why the consequences of the SEC regulation would be counterproductive.
American energy companies competing against foreign firms for the rights to develop resources must place bids with the governments where those resources exist. The governments in resource rich countries across the world receive numerous bids for projects to develop their various resources and then select the one which benefits them the most. Imagine the disadvantage American companies would face if they were required to reveal the dollar amounts on the bids they were placing.
Companies not under SEC jurisdiction (i.e. all non-American companies like China’s CNOOC and Venezuela’s Petróleos) could review the bids U.S. firms are placing and tweak their own offers to be slightly better. That is analogous to playing 5-card draw where all of your cards are dealt face up but your opponents’ cards aren’t. The end result means less business for U.S. companies.
The potential SEC regulation is dangerous in its disregard for an industry that’s so crucial to domestic job and revenue growth. If anything, we should be taking advantage of opportunities for American businesses to be more successful since that translates into increased into increased domestic investment, especially when you consider our $15 trillion and growing national debt. But the Obama Administration’s continued hostile approach toward the American energy industry is old news.
From the failure to provide a single permit for development of natural gas on public lands, desired tax increases on oil and gas companies, the rejection of a relatively straightforward Canadian pipeline project and the yearlong moratorium on offshore drilling, this President has tried nearly everything within his power to damage the American oil and gas sector.
The Administration claims to want jobs, but then pursues job destroying energy policies. The Administration claims it wants to increase exports and then delays construction of new natural gas plants needed to export the product. The Administration claims to want to reduce reliance on foreign oil, but doesn’t allow American firms to produce the resources we have domestically. This is nothing short of political schizophrenia.