Lower Gas Prices? Obama Says No We Can’t

Four years ago Candidate Obama preened before mobs of addled admirers as they chanted “yes we can!”  Now President Obama says “we” can’t drill “our” way to lower gas prices.  So then the voters should take charge and get “we” out of the way so oil explorers, drillers, pipeline operators and refiners can do their work.

Obama Began his Big February Energy Speech by trying to make it appear that the obvious argument against his record of steadily increasing gas prices was actually the argument in favor of his restrictive energy policy:

Just like last year, gas prices are climbing across the country.  This time, it’s happening even earlier.  And when gas prices go up, it hurts everybody — everybody who owns a car, everybody who owns a business.  It means you’ve got to stretch a paycheck even further…

What should the government response to this situation be?  Does it mean the President and Congress should act to remove government imposed barriers to drilling and producing more oil, adding supply, which would put downward pressure on prices?  Not according to Obama. He said

You know we can’t just drill our way to lower gas prices…You can bet that since it’s an election year, [Republicans are] already dusting off their 3-point plan for $2 gas.  And I’ll save you the suspense.  Step one is to drill and step two is to drill. And then step three is to keep drilling.  (Laughter.)  We heard the same line in 2007 when I was running for President.  We hear the same thing every year.  We’ve heard the same thing for 30 years.

We hear the same thing every year not because it’s wrong, but because it’s simple common sense.  The law of supply and demand has not been repealed.  Since the price of oil is the main driver of gas prices, a larger oil supply will put downward pressure on gas prices.

If we’re going to take control of our energy future and can start avoiding these annual gas price spikes that happen every year — when the economy starts getting better, world demand starts increasing, turmoil in the Middle East or some other parts of the world — if we’re going to avoid being at the mercy of these world events, we’ve got to have a sustained, all-of-the-above strategy that develops every available source of American energy.  Yes, oil and gas, but also wind and solar and nuclear and biofuels, and more. (Applause.)

History of crude oil drilling in USThe last time we heard the slogan “all of the above” it was from Obama’s adversaries, demanding that in addition to using its power to subsidize and mandate solar, wind, biofuels, etc. the government also remove its bureaucratic barriers that prevent drilling.  Apparently Obama’s propagandists believe it clever for him to act as if it were his idea.

…under my administration, America is producing more oil today than at any time in the last eight years.

This assertion was contrived to put across the perception that under Obama’s stewardship oil production is soaring.  The chart provides some context.  Yes, production is up a bit from the bottom in 2008, but it’s still 37% below the 1985 level.  Since then US population has increased by 29% and gasoline consumption has increased by 28%.

But Even this small increase in oil production is in spite of Obama’s efforts to restrict production.  It comes from public land drilling permits approved during the Bush Administration and from new technologies deployed on private lands that are not as vulnerable to bureaucratic constraints.  Obama gets no credit.

It should be obvious, even to Obama/Democrat partisans, that if the government had not blocked them over the past three decades, and oil companies were permitted to produce as much as they were willing and able to produce, there would be a much larger domestic supply of oil and gasoline at the pump would be cheaper.

Over the last three years my administration has approved dozens of new pipelines, including from Canada.

Obama personally intervened to veto the most significant pipeline application, submitted by Keystone XL to deliver millions of barrels of Canadian crude oil to America’s gulf coast refineries.

All told we plan to make available more than 75 percent of our potential offshore oil and gas resources from Alaska to the Gulf of Mexico.

We’re supposed to perceive the administration as setting lofty goals and taking action.  But the prefix “we plan” makes the rest of the sentence meaningless.  And, we don’t know if the oil under land where drilling is banned is counted as a resource, or how resources are tallied.  Estimating the amount of oil below a given location is a complex undertaking and there are various methods and standards.

Even when drilling sites are technically “available” nothing happens until a driller successfully navigates the government’s daunting series of bureaucratic hurdles to get permission first to explore, then to drill.  The Obama administration has slowed that process to a crawl.

President Obama knows a spike in gas prices can cost him votes.  But in his heart he wants conventional energy prices to rise so his so-called “green energy” schemes will be more cost competitive.  His own Secretary of Energy famously said that in order to make the cost of “alternative” energy more competitive, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,”  or $8 – $10 per gallon.  If prices continue to rise as energy industry sources predict we can expect Obama to give more speeches but not to change any of his policies.

17 Comments so far

  1. AzTex on February 25th, 2012

    We can’t drill our way out of high gas prices because it takes too long to develop new oil wells and the oil companies take too much profit off the top. The future is not in dirty oil that pollutes the air and makes our children sick. The future is in renewables, right where Obama has focused investments.

  2. Gram on February 25th, 2012

    AzTex

    They always say that. Cant drill because it will take too long. If liberals had allowed drilling instead of always saying it would take too long there would be plenty of oil today

  3. Glenn Teeder on February 25th, 2012

    You’re an idiot. Profit doesn’t come off the top. It’s the last thing that is paid after everyone else, especially after the greedy government gets its share.

  4. […] Lower Gas Prices? Obama Says No We Can’t […]

  5. Chuck Davis on February 26th, 2012

    Good article but I think that everybody understands by now that Keystone XL was designed to raise prices in the US, not lower them. The midwest is enjoying the lowest gas prices in the country right now, and Keystone XL would change that. Obama killed Keystone XL as a sweetheart deal to keep gas prices low for his cronies in Chicago:

    http://conservativefactcheck.com/content/articles/15

    he is putting the interests of his friends in Chicago over the interests of the Canadian oil industry, sacrificing thousands of temporary jobs and risking a diplomatic crisis with Canada, just so he can prevent a $0.10 – $0.20 per gallon increase in the price of gas. Shameful.

  6. Drew on February 27th, 2012

    As was correctly pointed out by Boomer, the current rate of production was set, into mot ion by policies during the Bush administration. Further, you will often hear rates of growth cited without the notion that the rate is a rebound off of a trough level acknowledged.

    I read the EIA report every year. They have predicted that the amount of energy derived from wind and solar power power will double in a decade. Pretty powerful stuff, eh? Except it’s going to double from 2% to 4%. A pittance. For those commenters relatively new to this cite welcome, and be warned that the intersection between reason, fact and insight and AzTex is the null set. This has been a public service message.

  7. Drew on February 27th, 2012

    I’m also a bit surprised that Obama has taken to advocating algae as a fuel source. You’d have thought that the dangers of avoiding swamp monsters during its collection would run afoul of OSHA regulations.

    Pretty risky strategy if you ask me.

  8. AzTex on February 27th, 2012

    Gas was a lot higher than this under Bush. Did you guys care then? Or is this only because it’s Obama.

    Fact is this happens every year and there’s nothing the President can do immediately to lower prices immediately. And don’t tell me about the Keystone pipeline that would bring us tar sands sludge, the most environmentally hostile type of oil.

  9. Drew on February 27th, 2012

    As I noted earlier. Facts and AzTex form the null set. Notice that in 8 years in office the price under Bush exceeded current prices for only a brief period.

    http://zfacts.com/p/35.html

    More importantly, is there anyone here who believes AzTex wasn’t bleating like an old woman at high gas prices and ” Bush and his oil cronies and Halliburton?”.

    But AzTex is of no count, being about as bright as a freshly picked turnip. But what about our media? They all fell into line, with thinly veiled ” some claim” that oil prices…….during the Bush years.

    Now? It appears God himself couldn’t affect them. The media are so transparently phoneys and dishonest it would make Pravda blush. We have no journalists anymore. Just Obama sycophants and cheerleaders, although Andrea Mitchell or Eleanor Clift in a cheerleader suit does give one pause as to where the barf bag is.

  10. FlaKeyBum on February 28th, 2012

    Speculators are also a big part of the problem, profiting by bidding up the price on paper, with no connection to supply. Demand is down yet the price is up. Markets often fail. Supply and demand isn’t a “law.” It works only when speculators and wall street paper shufflers are kept away.

    Attacking Obama on gas prices is pure politics. No substance to it at all.

  11. Drew on February 28th, 2012

    Nice try, Flake. But no cigar and no understanding. Supply and demand are alive and well. Speculators are long time players in commodity markets. They simply sit disproportionately on one side or another of the supply demand balance at times.

    Perhaps you’d like to explain to us how Obama explicitly made it a campaign plank that he wanted kill the coal industry, and how his Secy Chu wants drive up gas prices to make green alternatives economically viable……….but attacking Obama has no substance. I think it’s pretty clear who has no substance here.

  12. FlaKeyBum on February 29th, 2012

    Green energy is the future. The planet is running out of oil. Obama and his administration are wisely positioning US to be at the leading edge of the new, renewable energy technologies.

    Only the Luddite Republicans think “drill baby drill” is a viable policy that will lower prices and provide us with the energy we’ll need in the near future when all the oil is gone.

  13. Ralphy on February 29th, 2012

    Flakeybum (do you really call yourself that and think other people will take you seriously?)

    Green energy has not yet been developed. Its not yet cost effective. It’s not yet reliable. It’s still only a liberal wet dream.

    Here in California where I live the liberal state government mandated that every electirc company get 25% of it’s power from “green.” So Obama’s buddies are making lots of money building solar panel “farms” subsidized by you and all the rest of us. I work in the industry and know what I’m talking about. Every electric bill in this state will skyrocket. California is already in a vegetative state. No jobs, no investment, no opportunity except for illegals and actors. One of the biggest refineries in the state is closing down because of new regulations from the stupid liberals in the state government. Gas here will soon be $7 or more.

    I hope you live here too so you can pay for liberal electricity and gasoline as well as having your tax money redistributed to Obama’s cronies.

    Idiot.

  14. SenateStaff on February 29th, 2012

    Too bad these commenters are so ignorant of basic business principles. New technologies are always more expensive and always decline in price. Throughout our history the government has been the way all the people work together to help vital new technologies get started. The railroads were given government help in the mid 1800s. Government enabled the Internet to get started.

    Government is not evil and helping the energy technologies of the future to break into the market will soon be seen as brilliant.

    China and other countries are pouring all they can into renewable, non fossil fuel energy.

    Repubicans know all this but they choose to play politics because they hope that ignorant red staters will vote for them out of fear of the future and wish for the past. If they were patriots they would join with this visionary President to propel America into the 21st century.

  15. Drew on February 29th, 2012

    Shorter SenateStaff: crony capitalism is good.

  16. Fred on March 1st, 2012

    At least the liberals have come out from behind the green curtain – no more pretending that they actually seek lower energy prices for the working class. The problem here is two-fold:
    1. Higher energy prices hurt most of all the very people they pretend to champion – the poor. Does the President or Energy Secretary Chu or any other of the progressive elite actually care what the price of fuel is? Of course not – they will always be able to afford it. In the meantime, the single mom across town can’t afford to get back and forth to work. And BTW, do liberals actually think that same mom can afford to go out and buy a new Prius or Leaf – LOL!
    2. There is a fundamental misunderstanding of how the real world of economics works. By artificially inflating the cost of energy (by various means), dollars that that would go into investments in other parts of the economy (say, through a retirement account) are slowed so that the economy as a whole suffers, now and in the future.
    The saddest part in my opinion is that “green energy” will happen, but it will happen when the economics of the enterprise are driven there by free market principles. By trying to force the issue you only create economic disruption (not only now but in the future) and needless suffering by all but the wealthy class.
    Don’t progressives ever find it strange that the people least likely to agree with them on matters of economics are people who have actually been responsible for meeting a payroll (which requires wealth creation) and the people most likely to agree with them are people who are most removed from that responsibility (government workers, Hollywood actors, union activists)?
    I understand the theory; higher gas prices = faster shift to green energy sources. So far, so good – except when the government starts picking the winners and loser in that equation based mostly on ideological principles, not economic ones.

  17. Fred on March 2nd, 2012

    Sorry SenateStaff. You’re argument is tautological. By definition all successful technologies are, well, successful! That’s seems obvious enough, right? The issue at hand deals with ALL technologies throughout history. The vast majority fail while a few succeed. This is just a simple historical fact. So, you cannot know for sure which technologies will succeed and which will fail in their beginning phases. The problem is that government, regardless of whatever good motivations it may have, does not possess a crystal ball. And you can argue that government, being made up largely of lawyers and not business people, are among the LEAST likely to be able to predict the level of success of any new technology.

    If you want to insist that government be given credit for something, you might chose the area of microelectronics. Modern microelectronics have their genesis in the space race of the 50’s and 60’s. At the time, US rocket boosters were no match for the Soviets so the US was forced to build smaller and lighter payloads. You see the connection. But this doesn’t help your case because the entire reason for funding the effort wasn’t because the governement foresaw decades down the road and picked a winner for the country – it was simply the fact that there were political and military reasons for developing the technology whether it ever amounted to anything in the civilian marketplace or not. So what you conveniently fail to do is mention the vast number of technologies that were failures.

    The latest (and perfect) example is Solyndra. Leaving aside serious questions involving sweetheart deals, etc., Solyndra’s technology was obsolete even before the new factory was complete.

    No one is holding the government responsible for Solyndra being a failure, but the government had no business whatsoever investing 500 million dollars of taxpayer money in a venture private capitalists wouldn’t touch without the loan guarantee. Stop making the very simple mistake of thinking that just because a venture has the word “green” assiociated with it, it must be good!