A new frontier for the world energy market is atop the world where thawing sea ice (a positive externality in this case) has opened up the possibility of major energy and other mineral production. The U.S., Canada, Russia, Denmark (via Greenland), and Norway have stakes in the Arctic domain:

Estimated potential resources are substantial (see below). The challenge is to turn potential resources in proven and probable reserves of both oil and gas.

New Developments: One Bad, One Good

Unforeseen events can have an enormous impact on the development of new markets and on public policy. Two such events occurred in April 2010.…

Today, the House Energy and Commerce Subcommittee on Energy and Environment will hold a hearing on the Blowout Prevention Act of 2010. A draft of the legislation and other pertinent documents are available on the Subcommittee’s Web site.

Although the draft legislation and hearing documents address serious problems brought to light by the Committee’s ongoing investigations, the Blowout Prevention Act would throw the baby out with the bath water.

To restate the obvious, although oil spills are bad, oil is good. Without oil, there would be no modern commerce and no mechanized agriculture. Life for most people would be “nasty, brutish, and short,” and many of us would not even be alive. Another obvious point — British Petroleum (BP) is to blame for the worst environmental disaster in U.S.…

As a Democract, I have asked myself how it is that the current administration could be so consistently wrong on energy policy. There was a time in the days of Bob Kerr, Lyndon Johnson, Sam Rayburn, and Bennett Johnson that energy policy was bipartisan. In fact, those Democratic wheel horses from the great Southwest made sure that the policy–particularly as regarded oil and gas– was somewhat rational.

Carter Was Pro-Drilling Compared to Obama

The last Democratic President to acknowledge the need for exploration was Jimmy Carter, under whom I served as Deputy Assistant Secretary for Oil and Gas. Carter pushed both an offshore 5-year leasing plan and production from the Naval Petroleum Reserves. I know–I was in charge of both.

So despite the Windfall Profits Tax and much hyperbolic rhetoric, President Carter had a foot, or at least a few toes, in the pro-production camp.…

“Key senators are weighing a request from Big Oil to levy a carbon fee on the industry rather than wrap it into a sweeping cap-and-trade system that covers most of the U.S. economy.

If accepted, the approach — supported by ConocoPhillips, BP America and Exxon Mobil Corp. — could rearrange the politics of the Senate climate debate and potentially open up votes that may not be there otherwise.”

– Darren Samuelsohn, “Senate Trio Hopes to Hit Pay Dirt with Carbon Fee on Transportation Fuels,”  Environment & Energy Daily, March 3, 2010, (subs. required)

History matters. And the record suggests that small, wedge taxes are a dangerous thing.

Consider one of the most interesting examples of political capitalism in the history of the U.S. oil and gas industry. The story concerns the first state motor fuel tax, passed in Oregon in 1919 at, you guessed it, $0.01 per gallon.…