Oil as Seed Corn

by Victor Davis Hanson

Although we are not experiencing a Katrina-like disaster and although there is not an oil embargo, the Obama administration is releasing a sizable amount of oil from the nation’s strategic oil reserve. It may be an understandable move, but like the sudden decision to cut back troops in Afghanistan, it seems eerily to correspond to sinking polls and reflects angst about the rapidly approaching election cycle. 

But the move also raises interesting questions: Obama campaigned and governed on the dictum that increased drilling and supplies had no real effect on prices, hence his advice to inflate tires and “tune up” cars in lieu of more off-shore leasing, and his reluctance to grant exploration rights for shale, tar sands, gas, and oil in the West, Alaska, and the continental shelf. Is that theory now inoperative — or does releasing stored oil have some magical effect that new oil from the ground does not? Is there any sense that we would not have to release stored oil if we would instead look for new sources?

Then there is the seed-corn argument. This administration has a bad habit of consuming and redistributing without producing. We are borrowing trillions that our children must pay back. We are regulating and chastising companies rather than praising them for production. And now we will burn oil that we won’t explore for and which someone earlier bought and stored? Who will make up the millions of barrels withdrawn from the reserve, in case we see a real global war or natural disaster?

And finally, the release reflects the entire confusion about “green energy” mentioned again in the president’s speech last night. When during the campaign the president promised ‘skyrocketing’ energy prices and that he would ‘bankrupt’ the coal companies, he was serious, in the sense that subsidized, insider green companies need high fossil fuel prices to become competitive. By claiming even clean-burning fossil fuels were “pollutants” by virtue of the heat released, Obama should welcome $4-a-gallon gas. Was not that the point, after all? Why would a green president want to burn more oil at just the moment that he had gotten his wish for escalating fossil fuel prices that will discourage their use and promote his ‘green initiative’? Is the oil release a “stimulus” to do what the prior failed “stimulus” was supposed to do? And how can that be?

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