Every time gas prices climb, the more conservative among us begin peppering their rhetoric with calls for a “real energy policy.” For example, Boehner’s bizarre “BAH!” speech from yesterday. The word “real” is a loaded term and in this case “real” actually translates to “domestic fossil fuel-driven.”
Economist and noted bow tie model Peter Morici recently expounded on this point and his article is a guide for identifying the buzzwords and disingenuous tropes involved in the energy debate. He conveniently places most of the misleading talking points in the opening paragraph.
When Barack Obama assumed the presidency, gas prices were less than $2 a gallon. He proceeded to shut down deep-water drilling in the Gulf, tightened other federal restrictions on petroleum development, and vetoed the Keystone Pipeline. Now, even with Americans driving not a lot more than three years ago and global growth slowing, gas is nearing $4 a gallon.
First, the oil crowd always cites a mythical past where cheap gasoline flowed like wine, and we could all have playful gasoline fights like the gang from Zoolander, but it involves cherry picking — in January 2009, the price of gas was low, but only because it had just bottomed out from a massive crash over the preceding three months. In fact, the price of gasoline before the financial collapse fluctuated around $3.10, which is less than today, but much closer to today’s prices than Morici suggests to the audience with his selective data set.
Why did oil drop precipitously in the Fall of 2008? Did we begin drilling or something? No, the price fell because the financial industry collapsed. Despite Speaker Boehner condescendingly invoking Economics 101 and saying that gas prices are a matter of “supply and demand,” the energy market is much more complex and a substantial component of the price is driven by speculation by the financial industry. In January 2009, the financial collapse freed Americans from the interference of the oil speculation trade.
Moreover, this completely ignores gains in fuel efficiency. My back of the envelope figurin’ reveals that, as of today, the average American is paying less than a penny more per mile for gas than they were when gas was $3.10/gallon. That’s another part of the solution for gas prices, but, SPOILER ALERT, Morici is going to ignore that.
Second, Obama did shut down deep-water drilling in the Gulf. There was a reason though…does anyone remember it? The $560 million ecological disaster might have played into that decision. And, despite the implication that the administration is blocking Gulf drilling, he has in fact opened up more than ever, with 75% of the resources open to private bidding. Those resources aren’t being exploited yet, but they are now available, which addresses Morici’s argument.
Obama has restricted access to some federal lands, but this places Morici and his allies in a bind. With domestic oil production at an 8 year high, they cannot argue that Obama’s policies have curtailed domestic production — even if they can argue that Obama hasn’t been responsible for all of that increase. It is a Pyhrric victory for the Right.
Finally, Obama did not “veto” the Keystone pipeline. The Republican governor of Nebraska blocked the planned route and left Obama with no choice but to reject the existing application because he couldn’t approve it over the objections of Nebraska. Conservatives try to pin this on Obama by arguing that he could have granted a “conditional approval,” but that would be absurd. In what possible world do you begin construction of a multimillion dollar project without a plan for where it will go.
Morici uses this mix of bit-sized half-truths and outright lies to call for more drilling. But Morici does not address the logistical issues, including the years it will take for domestic production to ramp up to replace foreign sources. Drilling will not lower your price at the pump — but it may lower your price in 5 years. And that’s where we are. With domestic oil production at an 8 year high and a massive expansion in Gulf drilling underway, to argue that the President needs to “do more” is either a willful failure to recognize the time lag involved in the realization of the President’s policies or just a bid for a blatant cash grab by oil companies.
If we want to alleviate prices at the pump over the short-term need a release from the Strategic Petroleum Reserve, and then over the long-term we need to get serious about cracking down on oil speculation, and continue both our current exploration efforts and our development of green energy, which can reduce the amount of oil needed for uses other than gasoline.