That is not as dumb a question as it sounds. Examine a few revealing past remarks from President Obama and the cabinet officials who are now in charge of the nation’s energy use and oil leases on federal lands. Then decide whether the current soaring gas prices are supposed to be good or bad.
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In 2008, Sen. Ken Salazar (D., Colo.) — now secretary of the interior, in charge of the leasing of federal oil lands — refused to vote for any new offshore drilling. In a Senate exchange with minority leader Mitch McConnell (R., Ky.), Salazar objected to allowing any drilling on America’s outer continental shelf — even if gas prices reached $10 a gallon. We can now see why the president appointed Salazar, inasmuch as Obama recently promised the Brazilians that he would be eager to buy their newfound offshore oil — while prohibiting similar exploration here at home.
From 2007 to 2008, Steven Chu, now secretary of energy, weighed in frequently on global warming and the desirable price of traditional energy. At one point Chu asserted, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Chu also lamented, “We have lots of fossil fuel; that’s really both good and bad news. We won’t run out of energy, but there’s enough carbon in the ground to really cook us.”
In other words, $10 a gallon for gas would be desirable, while an enormous amount of recoverable American oil, gas, coal, tar sands, and oil shale should be left untapped.
During the 2008 campaign, Obama himself had strange ideas about the prospect of expensive prices for fossil-fuel-generated energy: “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.” Candidate Obama also elaborated on the envisioned role of his administration in ensuring such high prices: “So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them.”
As for consumers’ plight in paying skyrocketing gas prices, the president, now and in the past, has sounded ambivalent. He recently told a questioner, “If you’re complaining about the price of gas and you’re only getting eight miles a gallon, you know, you might want to think about a trade-in.” Few large passenger vehicles today get only eight miles a gallon, and many squeezed Americans in recessionary times cannot so breezily think of “a trade-in.”
In 2008, Obama addressed consumer fears about climbing gas prices: “But we could save all the oil that they’re talking about getting off drilling, if everybody was just inflating their tires and getting regular tune-ups. You could actually save just as much.”
Note again the fantasy. Few of today’s cars have distributor points. New-generation spark plugs and computerized ignition usually ensure 75,000–100,000 miles without a so-called “tune-up.” There is no evidence that Americans’ tires are chronically underinflated, or if they were, that such negligence would waste more gasoline than all that could be recovered from new offshore oil drilling.
What explains the weird rhetoric from Obama and his administration? First, not long ago they considered high energy prices as not that bad. Government-sponsored mass transit and alternative-energy projects — from wind and solar to the federally subsidized Chevy Volt — pencil out only when gas gets expensive. And if you believe in man-made global warming, then the less coal, gas, or oil that Americans use, the better for the planet.
Second, a president who believes that modern cars get eight miles per gallon or need frequent tune-ups, and that proper tire inflation can substitute for drilling oil, has never run a business that hinged on having moderately priced gas to power a truck, tractor, or car fleet. In fact, most in the Obama administration came to Washington from either academia or prior state- and federal-government employment, where policy is theoretical, without grounding in real experience.
So much of this administration’s talk about energy sounds similar to a bull session in the faculty lounge, or what we would expect from lifelong bureaucrats and public functionaries who have never experienced long commutes or struggles in the harsher, profit-driven private workplace.
Now the global economy is recovering and energy use is climbing, as the U.S. dollar sinks. The oil-rich Middle East is in chaos. And more than 2 billion people in India and China are desperate for imported oil. The result is that American gas prices are astronomical, and the public is furious and starting to demand relief from the administration.
Its answer? Simple: Since reelection looms, the administration now insists that high energy prices are no longer good, but suddenly bad. And the evil oil companies are mostly to blame!
— Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and the author, most recently, of The Father of Us All: War and History, Ancient and Modern. You can reach him by e-mailing author@victorhanson.com.
"Now the global economy is recovering and energy use is climbing, as the U.S. dollar sinks. The oil-rich Middle East is in chaos. And more than 2 billion people in India and China are desperate for imported oil. The result is that American gas prices are astronomical, and the public is furious and starting to demand relief from the administration."
Two billion people in India and China are desperate for imported oil. Does that sould like market economics to you?
And people are starting to demand relief from "the administration"?
What, like there's such a vast quantity of untapped oil in the outer continental shelf that it's going to come close to satisftying the demand of TWO BILLION Indians and Chinese who thirty years ago used practically nothing?
MikeB you wouldn't know a market if it bit you in the ... ahem ... well you know. (Wouldn't want to get the NRO censors blowing up my post).
Is there increasing demand for oil world wide? Yes there is, China and India are desiring more of it all the time. But is there a lack of global supply at this time? Actually no - there is still a small glut of actual oil available, although the Libyian adventure has pulled some of that off the top. Why do you think Saudi is cutting back production? There is a lack of actual demand for more. As long as the middle east is a prime producing region of oil and is in strife, there will be a premium on the product. If we announced tomorrow a national strategy of tapping our energy resources in oil, coal, natural gas, as well as a nuclear push, the price of oil would start falling. We have more of it apparently than anyone else.
Now what the markets also price in to oil is future demand vs supply, and there are a few theories on that - one is peak oil, that we are running out of oil. This actually has no basis in fact, as known reserves actually continue to grow. But it has its adherents out there in the financial community who believe it and price it that way. The other major impact is the value of the dollar, since oil is priced in dollars. And since many in the financial world think our currency is fast becoming worth the value of a piece of toilet paper, they are converting said dollars into what they see as a safer repository of wealth - gold, silver and OIL. If the dollar was taken off of oil, and a more stable currency took its place (of course finding one would be a stretch as all the central banks have very corrupted currencies right now) - the price of oil would drop significantly for most of the rest of the world, though for us it would continue to spike through the roof.
Be careful who you call a hypocrite. It is important to know what you are talking about lest a similarly nasty label comes back upon its user.
Oh - I should have noted that an additional reason the Saudis are pulling oil off the market is to mess with Obama, whose Middle East policy they are thoroughly p*ssed about, but that is just a momentary hissy fit. Love this intelligent use of American influence to have everyone loving us right now.
I figured I might as well pile on - there is very little this current administration is doing right except getting their most ardent wish - exceedingly high energy costs with all their economic dampening effects in tow. How is that going?
We could be energy sufficient with a few reasonable steps using proven technology. Increase drilling, encourage shale exploitation and build a small nuclear reactor in every city of 100k population. But these steps would disrupt the white house's plans to turn us into a socialist weenie paradise.
Changing America into a socialist weenie paradise is always the underlying motivation behind BHO's policies and actions.
Who said we need to replace ALL imports. We only get about 20 to 30% of our oil from the ME. Most of our imports come from Canada (eh) and Mexico.
Increase our production here, creating high paying American jobs that can't move overseas and revenues for your blessed government. Increase our imports from Norway and Canada. It's not too complex.
Finally, using the Kerrick process, coal can be converted to oil for about $45 a barrel (after the conversion plant is constructed, in line with refinery construction costs). We've got enough coal to supply all our energy for at least 100 years, under any scenario. Oh, that's right, I keep forgetting that coal, like conservatives, is EEEEEEEEEEEEEEEVIL!!!
1. Last time I checked, neither Canada nor Mexico had been admitted to the Union. Am I missing something here? You have a newfound uber-patriotism? You okay with shipping our dollars out to those countries just because they're next door?
2. Kerrick process? I knew there was a magic solution! So easy! Wanna buy a bridge?
Sorry about that. Working from memory since as I said before, not a lot of time. I don't get paid for posting here. I've got to earn it another way.
No, I don't have a problem paying money to other countries, who happen to be close allies, or even just neighbors, for valuable products and services. If they're not a supporter of our enemies, or our enemy, no problem whatsoever. And Americans would still benefit greatly from deploying our own resources.
That's unpatriotic?
So it seems, still, your answer is paying $2b to Brazil to deploy their resources, not use ours, and put a windmill or solar panels on my car.
No one sensible is arguing that the US could be oil self-sufficient, or could supply all the needs of India and China. Crude oil is a global market, but allowing US reserves to be developed and produced would increase world supplies and thereby reduce world prices -- not to mention that domestic oil development also generates lots of good jobs, economic activity, and taxes.
Just look at the difference the US shale boom in natural gas production has made. Only a few years ago, the US was looking at becoming an importer of LNG from the Middle East and other areas, with prices over $7 per mcf. Now, the US is poised to become a net exporter of gas, and prices seem set to stay closer to $4 far into the future.
MikeB: If you weren't so busy trying to defend everything this adminstration does, you might actually recognize the absurdidity of your argument.
Those 2B Chinese aren't buying cars. At present, their increased energy consumption is in the form of electricity. Which is coming from coal, which for the most part is coming from inside China.
Beyond that, your assumption that since the US alone can't handle the increased energy demand, we shouldn't even try is so absurd that only a liberal could ever believe it.
If demand is skyrocketing outside the US, and there is not enough supply to meet it, and oil is a global commodity (your admission), then what happens to price irrespective of where the oil ends up?
"2. We Americans don't want to be spending our money on foreign oil."
We Americans just want access to cheap oil. It matters not where it comes from and most incorrectly assume it comes from the Middle East. We have direct pipelines from Canada and shipping docks for Mexican oil. Oil that is nearest is oil that is cheapest.
"3. There isn't enough oil for our own needs here in America -- proven, unproven, imagined, whatever."
You must be a god because last I read, China is exploring off the coasts of Cuba, Russia is exploring in the Arctic, Brazil was congratulated by the President and rewarded with a multibillion loan to continue to explore off the coasts and everyone believes that Antarctica is a figurative gold mine when it comes to oil, but as for drilling there no one wants to touch it yet.
Libya provides just two percent of world production. Look what happened to prices when their supplies were threatened. Not cut off, just threatened.
Oil pricing is fairly inelastic, especially in the short term. Small changes in supply, either increases or decreases, have huge impacts.
1. You believe the Karrick process is relevant to this topic?
2. You're ok with sending money to foreign countries as long as they're close (in whatever sense you wish to define that adjective) allies?
You're entitled to your beliefs. I just don't agree with you. I want American wealth to stay in America, and I have a sneaking suspicion that, if the Karrick process were remotely feasible on a commercial scale, the Koch brothers would be doing it, or at least complaining about the federal regulations getting in the way.
