Is Obama Ideological – Or Incompetent – On Rising Energy Prices?

It is time to give President Obama credit for keeping a commitment.

This is, for this President, a pretty remarkable achievement.  I am not blaming him for the fact that the rise of the oceans has not slowed or that the planet has not begun to heal; only his true believers, i.e., the mainstream media, believed all that campaign rhetoric anyway.  On a more mundane level, President Obama promised to reduce the deficit in half by the end of this term; instead he has added more than $1 trillion to the nation’s debt each year he has been in office.  His Administration projected passing his $800 billion plus stimulus plan would keep unemployment below 8 percent; unemployment went above 8 percent in February of his first year and has yet to return.  The President promised repeatedly to change the tone in Washington and to unite Democrats and Republicans; he did succeed in convincing the House recently to unanimously reject his budget, but I don’t think that is what he meant.  The President campaigned against Hillary Clinton’s individual mandate and John McCain’s tax increases on certain health plans, and included both in Obamacare.  That would be the same Obamacare he promised would result in our premiums being reduced by $2,500.  He has promised every year in office to offer his own plan to reform entitlement programs, but a curious nation still waits.

Perhaps we should only give the President partial credit, since the commitment he has kept was not one he personally made.  His Energy Secretary, Steven Chu, infamously said even before the election in 2008, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.”  I should mention, since the President never fails to, that Secretary Chu is a Nobel Prize winner.  Sounds like Chu is getting advice from Al Gore, yet another Nobel Prize winner.  The President, who also has his own Nobel Prize, and Secretary Chu have done a remarkable job.  National average gasoline prices doubled since he took office, and, even more impressively, in 2011, the average annual prices of a barrel of oil and a gallon of gas were higher than at any time in the last 150 years.  As President Bush might say, “heck of a job.”

Even though then-Senator Obama was quick to blame President Bush for rising gasoline prices, he now complains current prices are not his fault.  For once, I think the President is being too modest, for clearly his actions have contributed to rising prices, reduced availability of domestically produced energy, and continued dependence on foreign countries.  I truly believe in an all of the above strategy, including oil and gas, nuclear power, wind and solar power, conservation, biofuels, other renewables, and clean coal, that leads to more affordable energy, an expanding manufacturing base, and an improved standard of living, whereas the President’s strategy seems to be based on a more European worldview of less consumption, higher energy prices, and more government regulation of our lives.  Trade in your SUV’s and suburban homes, and prepare to bathe less frequently!

The President has clearly been reading the polls and has promised in an election year to focus on the economy, make the creation of jobs his top priority, and work to reduce energy prices.  What can President Obama do to show this is not mere campaign rhetoric that will be quickly forgotten after the election?

First, the President should show through his actions that he understands the law of supply and demand.  While President Obama likes to take credit for higher domestic oil production, he fails to disclose these levels are based on decisions made before he took office and that much of this activity is taking place on private lands.  To put it simply, he was against domestic production before he was for it.  Despite a recent boost in activity, the average number of deep-water drilling permits approved monthly is down nearly 30% from the historical norm before the BP spill.  In 2011, lease sales for onshore drilling on federal lands reached an all-time low, since 1984, when discounting for leases sold in previous years.  Opening new fields means increased supply which means lower prices.  Certainly, our Ivy League educated President understands the importance of opening new fields, e.g., ANWR, and increasing supply; if not, he should demand a refund from Columbia for any tuition he paid towards economics courses.

Second, the Administration should stop sending a muddled message on fracking and instead provide predictability to companies making expensive multi-year investments that are opening up shale plays across the country and transforming the marketplace for natural gas.  This industry already supports more than 600,000 jobs, has helped reduce domestic natural gas prices by more than 75%, and caused companies to start the process of building multi-billion dollar terminals to export and not just import liquefied natural gas.  Falling natural gas prices mean more than a cheaper and cleaner heating and transportation fuel; natural gas is an important feedstock, and lower prices have already helped convince companies to invest billions of dollars and to create thousands of manufacturing jobs in America.

Third, President Obama should instruct his Cabinet to cease and desist all regulatory actions undermining safe, affordable domestic energy production.  For example, clearly suspending Tier 3 gasoline standards that are expected to increase gasoline prices by as much as 25 cents a gallon.

Fourth, President Obama should end the EPA’s hostile stance on domestically abundant clean coal energy.  Then-Senator Obama described flawed cap and trade proposals that would “bankrupt” anyone wanting to open a coal plant.  China now produces more than three times as much coal as we do, and is the world’s largest importer.  Shutting down coal plants in America, while China continues to burn every pound of coal it can get its hands on, does not reduce global emissions; it simply makes our electricity more expensive.

Fifth, the President should reverse his decision on the Keystone XL pipeline, linking our Gulf Coast refineries to production facilities in Canada and the booming Bakken oil fields of Montana and North Dakota.  This decision would create 20,000 construction jobs and 100,000 indirect jobs, and reassure our friends to the north that their future lies with us and not China.  After facing intense criticism, the President did relent and approve the portion of the pipeline from Cushing, Oklahoma to Texas.  He was against the pipeline, before he was for it.  This is certainly a step in the right direction, but someone needs to buy the President a map to show him how far Oklahoma is from Canada.  Perhaps he should request Columbia also refund his tuition paid towards any geography courses.

Sixth, President Obama should stop singling out one industry for tax increases in favor of crony capitalism that rewards countless Solyndras, and should instead advocate for a flatter tax code with lower rates and no loopholes.  Let the different energy companies compete in the marketplace.  He must understand higher taxes mean higher prices for American consumers.

Many Republicans criticize the President for his incompetence on rising energy prices, but I believe this to be unfair.  I think the President’s radical environmental ideology, not his Administration’s incompetence, is to blame for his failure to adopt a comprehensive energy policy that makes the rational choices that would lower energy prices.



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