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February 24, 2012

Obama's Oil Problem: Policies Have Consequences

February 24, 2012
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The lead story in last Sunday’s New York Times blared: High Gas Prices Give G.O.P. Issue to Attack Obama. With gasoline prices nearing $4 per gallon, double that when Obama took office, another negative economic issue is at the President’s doorstep.

Crude oil prices north of $100 per barrel explain the jump in pump prices, and political tension such as Iran’s threat to disrupt Middle Eastern oil flows partly explains the surge in crude prices. Still, the Obama’s Administration’s ideological opposition to fossil fuels, including the mainstay petroleum in the transportation market, leaves the President nowhere to hide.

Too many Administration actions have reduced domestic oil supply and sent bad signals to contribute to negative price trends. Providing affordable energy is a 24-7 job for America’s oil, gas, and electricity providers. Yet far too often politicians drive up energy prices by erecting artificial barriers, imposing mandates, and limiting the supply of energy.

Energy Schizophrenia

Marita Noon has chronicled Obama’s “fake fossil-fuel infatuation.” He does talk big in the service of popularity, such as claiming in the recent State of the Union how his administration is working to “open more than 75 percent of our potential offshore oil and gas resources,” and helping access “a supply of natural gas that can last America nearly one hundred years.” And just yesterday, campaigning Obama stated, “Under my administration, America is producing more oil today than at any time in the last eight years.” (“In spite of’ would have been more accurate than just “Under”.)

There are bones thrown to the industry, such as the Interior Department’s recent approval to Shell’s Arctic oil spill response plan to allow a possible start-up after years of delay. Still, the “exhaustive” process requires more approvals before drilling can begin this summer off the North Slope of Alaska.

Obama’s anti-oil agenda is not hard to find. There is the go-slow permitting process for Gulf of Mexico oil and gas drilling. Second, is the frontal rejection of a permit to allow construction of the Keystone XL pipeline from Canada’s Alberta province to Gulf Coast refineries. And third is proposed higher oil and gas taxes in Obama’s 2013 Budget.

Meanwhile, Obama champions special government favors for consumer-rejected but politically correct “green” energy.

Obama 2012 … Gore 2000

Expect campaigner Obama to denounce high oil prices–as if he is really the consumer’s friend at the gas pump. All he needs to do is to channel his (anti) energy soul mate Al Gore, who said during his presidential campaign in 2000: “I think we need to bring gasoline prices down.”

Gore explained:

I have made it clear in this campaign that I am not calling for any tax increase on gasoline, on oil, on natural gas, or anything else. I am calling for tax cuts to stimulate the production of new sources of domestic energy and new technologies to improve efficiency.[1]

Hidden was Gore’s real view, as stated in Earth in the Balance: “Higher taxes on fossil fuels. . . is one of the logical first steps in changing our policies in a manner consistent with a more responsible approach to the environment.” [2]

Anti-Oil Mentality

The real Obama does not quite have the same smoking gun in print with petroleum products as does Al Gore. But remember Candidate Obama’s frank statement about how under a greenhouse-gas cap-and-trade program “electricity rates would necessarily skyrocket“? Well, cap-and-trade would have applied to petroleum products, and gasoline prices would have skyrocketed too.

An anti-oil mentality resides deep inside the Obama Administration. The President’s chief science advisor, John Holdren, has long advocated higher prices to reflect “rising monetary costs for energy when its environmental and sociopolitical hazards are adequately internalized and insured against.” [3]  The year before Obama appointed him as Secretary of the U.S. Department of Energy Secretary, Stephen Chu told the Wall Street Journal, “we have to figure out how to boost the price of gasoline to the levels in Europe.” Add a couple of dollars to the current pump price to get to Chu’s goal.

“Environmental and sociopolitical hazards” is code for a variety of front-door taxes and back-door restrictions that the current Administration would like to have. But high pump prices and high electricity rates speak loudly, so expect continued rhetoric and “fake fossil-fuel infatuation” from an anti-oil Administration until the election.


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