Jeffrey Folks: Obama’s Oil and Gas Folly

Obama’s campaign speeches always seem to include a line about how he can take credit for increasing domestic oil and gas production.  As the official White House website has it, “domestic oil and gas production has increased every year President Obama has been in office.”

On Wednesday, however, his administration put into effect yet another new regulation making it harder for America’s oil and gas companies to increase production.  In fact, that regulation, as the head of the American Petroleum Institute recently wrote, would make American companies unable to compete with foreign competitors.

That may be exactly why the president supported it.

The new regulation, Section 1504 of the Dodd-Frank bill, would require American companies to release information detailing expenditures on foreign operations.  That proprietary information would immediately be available to foreign and domestic competitors alike, and would be used to undercut whatever advantages American companies have achieved as a result of their own hard work.  Section 1504’s “extractives transparency rules,” as interpreted by Obama’s activists at the SEC, force American companies to compete with one hand tied behind their back.  Competitors in Moscow and Beijing must be dancing for joy now that the rules have been finalized.  Obama has just handed them the keys to the world’s oil riches.

The problems with Section 1504 go beyond the “competitive disadvantage” to which it puts American energy companies.  When implemented, Section 1504 will also place American companies in conflict with foreign countries which prohibit the very same disclosures that 1504 mandates.  As a result, American companies might well be forced to cease operations in nations where they have already invested tens of billions of dollars in order to avoid running afoul of the law.

As one study pointed out, there are also serious security implications involved in implementing Section 1504.  American companies working in dangerous environments overseas may be placing their employees at risk if they fully disclose the locations, funding, and status of their operations.  The safety of American workers and their local employees overseas should be a paramount concern, but the SEC ruling does not appear to address this concern.

In addition to the risk of violence, Section 1504 exposes American companies to the risk of greater shareholder litigation.  Like all complex securities regulation, Section 1504 is a boon for trial lawyers, but not for American workers or consumers, who will end up paying the costs of litigation.

American Thinker

2 responses to “Jeffrey Folks: Obama’s Oil and Gas Folly

  1. What else can a green movement do when it’s Holy Grail of AWG has been shown to be a lie and the subsidies are going away so the true cost of “Green” can be seen? Drive the price of energy up, make those foolish non-believers pay for their sins. As far as claiming oil and gas production in the U.S.A. has increased every year since he took office, this is true, but the trend started years BEFORE he was elected by the misinformed masses.

  2. “Sections 1502 and 1504 of the Dodd-Frank Act represent the latest efforts by international regulators to address corruption and increase transparency among resource extraction companies. These laws have far reaching consequences and place greater pressure on SEC reporting issuers including U.S and foreign oil, natural gas and mining companies to conduct anti-bribery and corruption due diligence as part of their annual disclosure and SEC reporting requirements.”

    Personal opinion from Jeffrey Folks? I seem to see some difference in the two stories.

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