The Great Deconstruction: Competing Visions of the Future

During the Great Recession, America’s wealth has diminished while indebtedness has increased. This is simply a matter of fact. How the United States will marshal its resources and deploy its wealth in the future is a matter of great public debate. Previous installments of the Great Deconstruction series have explored the debate over the growing size of government and the impact the Tea Party movement may have on a possible smaller role for future government.

The current administration has its own vision of how to address the coming period of deconstruction. John P. Holdren, Director of the White House Office of Science and Technology, shied away from using the term “de-development” that he endorsed in past writing. When asked by CNSNews how he would “de-develop” the United States, Holdren said he would use the “free market economy” to implement “stopping the kinds of activities that are destroying the environment and replacing them with activities that would produce both prosperity and environmental equality”.

But this stated new appreciation for market forces likely does not mean he has shifted from his belief that resources “must be diverted” from advanced countries to the underdeveloped countries. An example of how Holdren’s vision of the future may be implemented as policy in the United States can be found in this administration’s actions towards energy and in particular, oil drilling. The BP oil well, Deep Horizon, has been officially capped yet the federal ban on all drilling in the Gulf remains in place. The administration estimates the ban cost just 8,000 – 12,000 jobs but Baton Rouge-based Louisiana Mid-Continent Oil and Gas Association believes that the moratorium may put as many as 46,000 rig workers out of work. If all workers on deep water rigs were laid off during the suspension, the moratorium would lead to the loss of 23,247 jobs.

In contrast, the same Administration approved $2 billion in loan guarantees from the US Import Export Bank to Brazil’s state owned oil giant, Petrobas, to open the giant Tupi oilfields in the Santos Basin fields near Rio de Janeiro. The oil recovered from the Tupi fields will not go to the US and US taxpayers, but it will make Brazil richer and energy independent

Critically much of what the Administration has proposed follows the contours of “de-development”. This can be seen in a host of initiatives that would hit Americans economically from the “cap and trade” scheme, support for solar and wind energy, as well the attempt to regulate greenhouse emissions through the EPA.

Oddly the Administration has not put much priority on nuclear power, which is arguably the most effective way to reduce greenhouse gases. Despite announcing an $8 billion loan program for nuclear power plant construction, there is only one nuclear power plant under construction in the US, compared to 50 worldwide. Jeff Immelt, CEO of General Electric, joked that the nuclear industry’s most important output these days is press releases. Nuclear power remains banned in many states. Just 6 states are able to generate more than 40% of their electricity from nuclear power.

The drive to de-develop America begins with control of energy. This includes actions to restrict access to our natural resources. The United States has 31 billion barrels of oil reserves on-shore in the lower 48 and Alaska. Off-shore oil reserves include 60 billion barrels along the coastal US and 26 billion barrels in off shore Alaska. Yet almost all of these reserves remain untouchable. Drilling in ANWAR is still banned and due to the BP oil leak in the Gulf, a drilling ban remains in place on the only coastal resource previously open for drilling.

The US oil reserves are a pittance compared to our reserves of oil shale deposits. Estimates put oil shale reserves at 1.5 – 2.0 trillion barrels or five times that of Saudi Arabia. “The technical groundwork may be in place for a fundamental shift in oil shale economics,” the Rand Corporation recently declared. “Advances in thermally conductive in-situ conversion may enable shale-derived oil to be competitive with crude oil at prices below $40 per barrel. If this becomes the case, oil shale development may soon occupy a very prominent position in the national energy agenda.” Shell utilized a process called “in situ” mining, which heats the shale while it’s still in the ground, to the point where the oil leaches from the rock. The process eliminates the need to mine the shale to get to the oil. The Administration has shown little sign of encouraging the development of these resources, particularly in the areas controlled by the federal government.

US policy towards the coal industry is no more favorable. U.S. coal production decreased in 2009, dropping by 8.5 percent to a level of 1,072.8 million short tons. The decline in coal production in 2009 was the largest percent decline since 1958 and the largest tonnage decline since 1949.

In sharp contrast, the administration openly promotes green technologies like wind and solar. Unfortunately, these sources provide just 1% of our energy requirements.

De-development, the Obama Administration’s version of deconstruction, is very different from a growing political movement aimed at reducing the nation’s debt and current spending. The Great Deconstruction will not come from a government policy of reducing energy consumption to bring America into a more correct distribution and use of the world’s resources. Rather, it will come from the people demanding a smaller bureaucracy, more efficient government and government employees actually willing to do the job they are paid to do.

The election in November offers the most profound choice for the future of America that we have seen in decades. One choice espouses government control of our natural resources, motivated by the strategy of “de-development” and expensive, rationed energy. The other choice seeks deconstruction of unsustainable and dysfunctional bureaucracies and intends to choke off the money supply from Congress and defund these programs.

**************************

Robert J Cristiano PhD is the Real Estate Professional in Residence at Chapman University in Orange, CA and Head of Real Estate for the international investment firm, L88 Investments LLC. He has been a successful real estate developer in Newport Beach California for twenty-nine years.

Other works in The Great Deconstruction series for New Geography
Deconstruction: The Fate of America? – March 2010
The Great Deconstruction – First in a New Series - April 11, 2010
An Awakening: The Beginning of the Great Deconstruction – June 12, 2010
The Great Deconstruction :An American History Post 2010 – June 1, 2010
A Tsunami Approaches - Beginning of the Great Deconstruction - August 2010
The Tea Party and the Great Deconstruction – September 2010