The Obama administration’s obsession with “green energy” is pushing us toward a needless and costly trade war with China over solar panels — at a time when the US oil- and gas-boom offers a huge opportunity to vastly improve Sino-American relations.
The big stink is over whether China is “dumping” solar panels on the US market. US panel makers claim China’s lower prices are driving them out of business (despite hundreds of millions in Obama-era solar subsidies). Last month, they got the Commerce Department to impose a tariff on Chinese panels.
The amount is negligible, not even 5 percent — but the dispute will escalate if Beijing responds to the slap. And it may spread to far more economically-sensitive areas.
After all, almost no one in this country would be buying solar panels without today’s massive federal tax subsidies and incentives — nor would the Chinese be making them. Unlike the Obama team, they understand that oil and gas are still the essential fuels of economic growth.
As the world’s No. 2 economy, China, needs oil and lots of it — some 10 million barrels a day. Until now it’s been heavily dependent on oil from the Middle East, especially from Iran. That supply has left Beijing vulnerable to the ups and down of Middle East geopolitics, including the recent Hormuz Straits blockade scare.
Nor do its other energy options look much better. Trying to tap offshore reserves in the South China Sea has roiled relations with Asian neighbors. Another neighbor, Russia, is the world’s biggest oil producer — but it’s hard to see Beijing allowing its ancient rival to control its flow of energy. (Moscow has already shown it’s unafraid to shut off the oil and gas tap in order to intimidate the Europeans.)
But then there’s North America, where combined Canadian, American and Mexican oil production could approach 26.6 million barrels a day by 2020 — more than Russia, Saudi Arabia and Iran put together.
The explosion in US production alone has not only cut our oil imports from 60 percent in 2005 to 49 percent last year, but also put us in the position of becoming a net exporter of natural gas. At the core of that growth are the fracking technologies that are turning oil and gas shale land into an economic bonanza from Canada and Texas to Pennsylvania and North Dakota.
Fracking could do the same for China: Its shale oil and gas reserves might be the largest in the world — an unbelievable 1.275 quadrillion cubic feet, says the US Energy Information Administration. But to tap that huge supply, China would naturally want to work with the Americans who are the world’s leaders in that technology — and in making it environmentally safe.
In fact, China has already started. China Petrochemical or Sinopec recently partnered with Devon Energy for a $2.5 billion stake in explorations in various US sites, while Petrochina has bought a 40 percent stake in Athabasca Oil Sands Corp. Sinopec is also competing with Chinese offshore drilling giant Cnooc Ltd. for a stake in a leading US shale-gas-services company, FTS International.
Some might find this kind of Chinese carpetbagging worrisome. But a smart president would see that exporting gas to China while helping Beijing open its vast shale reserves would not only boost our own economy, but help smooth the way for Beijing to build its energy future on cooperation with the democracies of the West, rather than Iran, Syria and other dictatorships of the East.
Such a president might be coming in November. For now, as we’ve seen with the veto of the XL Pipeline, we’re stuck with a chief executive more concerned about counting solar panels than dealing with this nation’s energy reality.
Arthur Herman is an American Enterprise Institute visiting scholar. His new book, “Freedom’s Forge: How American Business Produced Victory in World War II,” hits stores next month.