President Obama is creating jobs – just not in the United States. In fact, the President is outsourcing plenty of jobs, shipping taxpayer money overseas to foreign-owned energy companies. While the U.S. government is running record deficits and the national debt nears $16 trillion, the Export-Import (Ex-Im) Bank is shipping more cash overseas in loans to foreign-owned companies.
How did the president become the Outsourcer-in-Chief?
Recently, the administration authorized a $1.2 billion loan guarantee to Mexico’s state-owned oil company, Pemex. The loan guarantee supports Pemex’s plans to place risky wells at depths over 8,000 feet just south of the maritime border with the United States.
Just two years after the BP Deepwater Horizon disaster, the Obama administration is entrusting the Gulf of Mexico to Pemex – a company with no experience drilling at such extreme depths and with a track-record that includes the second largest Gulf spill in history. You can’t make this stuff up.
But, this isn’t the first time that the Ex-Im Bank guaranteed loans to Pemex. In fact, Pemex is the Ex-Im Bank’s top borrower, raking in $10.6 billion in loans since 1998.
And, unfortunately, Pemex is more like the rule, rather than the exception. Take another state-backed oil enterprise, Brazil’s Petrobras, for example. Here the connection is even stranger, with the U.S. government loaning Petrobras up to $10 billion to fund oil projects off Brazil’s coast.
In return for the $10 billion, the U.S. gets a whole lot of nothing. As a state-backed company, Petrobras is required to purchase a large majority of its equipment from Brazil-based suppliers. And that local content policy is only expected to grow more stringent. In 1998, when the policy began, it “only” required Petrobras to purchase 40 percent of its equipment locally. Now, that is 65 percent. There’s no telling where Brazil’s President Rousseff might send it.
Let’s dredge deeper into the rabbit hole. In 2011, Petrobras developed plans to invest $225 billion on projects through 2015. The catch – the projects are mostly in Brazil. Spending on projects in the U.S. are a drop in the bucket, averaging less than $1 billion annually from 2007 through 2012.
But, Petrobras does employ over 300 workers in the U.S., bringing the Ex-Im Bank’s loan to $33 million per employee. It doesn’t take an education from Columbia and Harvard to realize this doesn’t add up.