Corruption And Election Tricks Are Adding To The U.S.' Energy Troubles

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The Obama administration pulled off a rare trifecta this past week, demonstrating in three separate energy decisions how corruption and election manipulation are killing jobs and restricting the nation’s energy supply, but paying political dividends to our sitting president.

The first example of the administration putting its own political interests ahead of the interests of the nation occurred last Friday, when it announced that it would decline to make a decision on a proposed pipeline to carry oil from western Canada to refineries along the U.S. Gulf Coast. The Keystone XL pipeline would put Americans to work building the pipeline, would create additional jobs along the Gulf Coast where the oil would be refined.

Predictably, environmental activist groups argued against the pipeline, asserting that we should be weaning ourselves off of oil rather than taking steps to make it more available and affordable. They also argued that the production of this particular oil, recovered from oil sands, imposed more environmental damage than oil produced from conventional deposits. China has nevertheless made it clear that if the United States chooses not to purchase the oil, it will, so a U.S. decision not to purchase the oil will do nothing to alleviate oil sands production, even if environmental activist claims against the process are to be believed.

After reviewing the proposal for several months, the Obama administration was scheduled to announce a decision this fall. Instead, the Administration announced last Friday it would wait until after the 2012 elections to decide.

All the facts have been studied and a decision is ripe for the making. So the question is, why the delay? The reason is obvious; a decision on the pipeline might hurt the president’s reelection campaign. Approve the pipeline and anger the president’s liberal base when he most needs its support. Scuttle the pipeline and Republicans have more ammunition to support their claims that the Obama administration is restricting energy supplies and killing jobs.

A major consequence of the Administration playing political games with the timing of its pipeline decision is that Canada could well decide not to wait around indefinitely for a fickle president to determine whether his personal political career is advanced by approving the pipeline. China will take the oil today and will be more than happy to sign a long-term contract for it. Friendship aside, the smart economic move is to secure a buyer when one can, and friendship only goes so far when billions of dollars of sales are at stake – especially when friendship appears to be only a one-way street right now as Obama unnecessarily leaves the Canadians hanging.

Moreover, the president’s political gamesmanship is keeping domestic oil prices high, and killing jobs. Even if the president announces a year from now that he will approve the pipeline (and even if the Canadians are still waiting around for our decision a year from now), the president will have needlessly prolonged unemployment. If approving the pipeline is the right thing to do, there is no reason other than political self-interest not to give the approval now.

The second example of the Obama administration putting its own political interests ahead of the interests of the nation came to light yesterday, when it was revealed that the Administration pressured Solyndra executives to delay layoffs that were planned for October 2010 until after the November 2010 midterm elections.

Solyndra was preparing to make necessary job cuts in light of its difficulty generating revenue. Rather than allow the company to immediately make a decision that would maximize its chances to eventually balance its books, Obama administration officials used their leverage to push Solyndra to delay necessary cost-saving measures. Delaying necessary cost-saving measures would harm the financial viability of the taxpayer supported company but would avoid an embarrassing news story for the president and his political allies on the eve of an election.

Solyndra indeed held off announcing its job cuts. On the morning after the 2010 midterm elections, Solyndra announced it would lay off 190 workers and close one of its factories. The Obama Energy Department rewarded it by thereafter giving the floundering company millions more taxpayer dollars even though its ultimate fate was by then readily apparent.

Again, as was the case with the Administration’s Keystone XL pipeline decision, the only reason for it to delay was for the president to gain a transitory political advantage. If layoffs needed to be made and a factory needed to be closed to improve the prospects of Solyndra’s survival, delaying such necessary action merely placed the company further at risk of going bankrupt. Despite the fact that these were taxpayer dollars with which the Obama administration was playing politics, it indeed chose to pressure Solyndra to delay implementing action that would have improved the chances of its survival.

Solyndra gave in to the Administration’s pressure and predictably went bankrupt soon thereafter. Solyndra executives will be bailed out in bankruptcy court (especially with taxpayer funded federal loan guarantees backing them up) and the Administration successfully avoided an embarrassing news story on the eve of the 2010 midterm elections. The only losers were the remaining 300 million Americans left on the financial hook for such corrupt political gamesmanship.

The third example of the Obama administration putting its own political interests ahead of the interests of the nation also came to light this week with advance excerpts of a book written by Peter Schweizer exposing how the Administration is abusing federal energy loan programs to pay off political donors. According to Schweizer, over 80 percent of the billions of dollars distributed under the federal stimulus 1705 Loan Program “went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party. The grant and guaranteed-loan recipients were early backers of Obama before he ran for president, people who continued to give to his campaigns and exclusively to the Democratic Party in the years leading up to 2008.”

“Indeed, at least 10 members of Obama’s finance committee and more than a dozen of his campaign bundlers were big winners in getting your money,” Schweizer added. “At the same time, several politicians who supported Obama managed to strike gold by launching alternative-energy companies and obtaining grants.”

Under normal circumstances there would be a hefty political price to pay for deliberately obstructing an economically necessary pipeline merely for personal political gain, pressuring a company to make financial decisions that make the company more likely to take hundreds of millions of taxpayer dollars with it into bankruptcy, and using federal stimulus dollars to pay off political donors rather than maximize job creation. But government interfering with energy markets is now the rule rather than the exception, and where there is excess government power there is invariably government corruption. As our nation suffers an unnecessary and self-inflicted energy crisis, government corruption of the energy market has apparently become the “new normal.”