The Obama administration is patting itself on the back for decreased oil imports. They declare, “We’re relying less on imported oil for a number of reasons, not least that production is up here in the United States.”
But what they don’t mention is that oil imports are down in significant part because consumption is down considerably because of the Great Recession.
Think of the 12.8 million unemployed Americans who no longer need to drive to work. Think of all of the airplane trips that haven’t occurred because American families can’t afford vacations anymore. Think of all the moving vans that haven’t been filled, because Americans can’t sell their houses.
Production is up slightly, but quite moderately compared to the levels of the 1990s. That’s why Obama’s team is bragging, “In fact, America is producing more oil today than at any time in the last eight years.” The production of 2003-2004 isn’t really the highest bar to clear.
It is good news that domestic production is increasing, but that is occurring in spite of Obama’s policies, not because of them. They’ve slowed the approval of gas and oil exploration permits to a crawl, haven’t demonstrated that they will support fracking in the long term, still murmur about mandating CO2 emission rules through the EPA, and halted the Keystone Pipeline. The United States has not built a new oil refinery since 1976. There is an effort to build a new one in South Dakota, but Obama’s green allies have held up the process in court for years. It will take four years to build and the hope is that construction can begin by 2013.
At least Obama can take credit for getting our dependence on foreign oil moving in the right direction, right? No, actually, the reduction started in 2006: “U.S. dependence on imported oil has dramatically declined since peaking in 2005.”
So yesterday in New Hampshire, Obama’s plan to deal with high gas prices is to take away tax incentives for oil companies, tax provisions that permit them to deduct a portion of sales to cover capital investment, expense certain drilling and development costs, income tax credits for the costs of “qualified enhanced-oil-recovery” methods. In other words, all of these tax incentives make it easier and cheaper for oil companies to do their jobs – drill and refine oil. Obama wants to make activities like “drilling and development” more expensive… as a response to high gas prices.
It’s amazing he wasn’t booed off the stage yesterday.