Energy policy running on empty
STEVE HUNTLEY firstname.lastname@example.org April 25, 2011 6:06PM
Updated: September 24, 2012 6:25AM
To err is human; to forgive, divine, or so wrote the English poet Alexander Pope. The modern update on that is: Politics is unforgiving, so look for a scapegoat. Which is the approach President Obama has taken now that gasoline prices are a dollar a gallon more than a year ago and still climbing.
With the pump price north of $4 in Chicago and five bucks not out of the realm of probability, Obama is casting about for someone to blame. His first response was to order a Justice Department investigation into whether speculators and traders are engaging in dark plots to pick the driver’s pocket. Next, the president chose a typical target for Democrats in times of gas distress: the oil companies. They’re getting tax breaks at a time rising prices will ensure good profits, he noted.
None of this has anything to do with gas station grief. The drivers, no pun intended, of prices are rising demand around the globe, the weakening dollar, worry about the reliability of supplies because of Mideast turmoil, the administration’s clamp on new drilling and its lack of a rational energy policy.
Speculators and traders make investment decisions based on those realities. The facts point to higher prices. And U.S. oil firms control but a sliver of oil reserves. National oil companies, those owned by Iran, Saudi Arabia, Venezuela and other countries, hold 94 percent of the world’s petroleum reserves.
But oil companies, speculators and traders are loathed by much of what Howard Dean famously characterized as the Democratic wing of the Democratic Party. These left-wing ideologues are just as prone to conspiracy theories as the birthers. Politico recently reported on a 2006 poll by the University of Ohio that found half of Democrats believed the Bush administration either assisted the 9/11 attacks or took no action to stop them because it wanted war in the Middle East.
Though the 2012 presidential election is a year and a half away, Obama is in full campaign mode. He and his political advisers are nervous not just because of gas prices. They’re worried that Republicans, led by House Budget Chairman Paul Ryan (R-Wis.), have seized the high ground on issues about which the voters care — out-of-control spending, greater intrusion of the federal government in the economy and the failure of both to restore the economy and healthy job creation as liberals claimed they would.
It’s true that a president often has little dominion over escalating pump prices. Rising demand from global economic recovery is a good thing. Obama has no control over the Mideast uprisings. Saudi Arabia and other oil producers have an interest in keeping prices high to pay for reforms to appease restive populations and to finance military interventions like the Saudi one in Bahrain to put down protests there.
But it’s also true that Saudi Arabia, alienated by Obama abandoning former Egyptian President and Saudi ally Hosni Mubarak, feels no sympathetic urge to up production to help America. And it could be argued that swifter and more decisive U.S. military action in the early days of the Libyan uprising would have toppled Moammar Gadhafi and kept Libya’s oil in the pipeline.
The Federal Reserve’s easy monetary policies have weakened the dollar, the pricing currency for crude oil. While a weak dollar — now at its lowest point since the 2008 financial crisis — helps U.S. exports, it erodes a family’s economic well-being by fueling higher prices for commodities like oil and food.
The administration’s moratoriums, drilling cancellations and slow permitting process since last year’s BP spill mean offshore oil production will be down 13 percent from last year. Rather than focus on a policy that would use U.S. resources of oil, natural gas and coal to pioneer new fuel sources like alcohol in flex-fuel cars, Obama promotes pie-in-the-sky goals for solar and wind that are decades away. All the while gas prices keep climbing and Obama looks for someone to blame.