Free Markets, Free People

gas prices


Obama is on the problem of high gas prices

Yes indeed, he’s focused like a laser beam. He has figured out how to proceed. You’ll be seeing relief soon. He’s … setting up a task force to look into speculation?!

Er, seems so.  Read this:

"I think the American people understand that we don’t have a silver bullet when it comes to gas prices. We’ve been talking about this for 30 years. The only way to stabilize gas prices is to reduce our dependency on fore oil and we just put out a report that over the last year or so, we’ve been able to reduce our dependence on foreign oil by a million barrels. That’s’ significant. In the meantime, cuz I know people are hurting right now and it feels like a tax out of their paychecks, what we’re doing is looking at every single area that can affect gas prices, from bottlenecks that are out there, we’ve set up a task force to look into speculation to make sure people are taking advantage of the situation on the global oil markets," President Obama told WKRC-TV.

Line by line:

I think the American people understand that we don’t have a silver bullet when it comes to gas prices. We’ve been talking about this for 30 years.

I think the American people understand something Barack Obama and the Democrats don’t understand – if we’d have been drilling everywhere for those 30 years instead of flapping our jaws about “silver bullets”, we’d be much better off today, in terms of oil supply and price, than we are now.

Oh, by the way, we’ve been talking about alternative energy for 30 years too and look where we are.

The only way to stabilize gas prices is to reduce our dependency on foreign oil and we just put out a report that over the last year or so, we’ve been able to reduce our dependence on foreign oil by a million barrels.

Well, two points.  One we’re in a deep recession, so oil consumption is down considerably because business and commerce are down significantly.  And two, another way to have an effect on oil prices is to what?  That’s right, increase supply.

That’s’ significant. In the meantime, cuz I know people are hurting right now and it feels like a tax out of their paychecks, what we’re doing is looking at every single area that can affect gas prices, from bottlenecks that are out there, we’ve set up a task force to look into speculation to make sure people are taking advantage of the situation on the global oil markets

Translation: I haven’t a clue so I’m setting up a task force which helps me kick the can down the road a bit.  And the task force will inevitably find that “speculators” are the problem (a hat tip to Nancy Pelosi for the idea), and I’ll be able to call for Congress to pass a law while I again try to pass the blame off to the 1%.

Now that’s leadership.

~McQ

Twitter: @McQandO


Rising gas prices can be directly attributed to Obama’s failed energy policy

The stated plan of the Obama administration, or at least their stated goal, was to see gas prices rise “to the level of Europe” so alternative energy sources would be more feasible, affordable and attractive.  Or that’s how I remember it.  

So here we are, headed that way.  But while the administration may find that to be a good thing, most Americans watching gas prices rise … don’t.

And who do they blame?  Well they blame the same person they always blame – the president.  Right or wrong, the reason is irrelevant.  That’s politics in America.  So the best thing to do is implement policies that will ensure this potential political landmine is kept disarmed.  Of course, this administration, despite its strident claims and outright falsehoods to the contrary, has done anything but that.

The so-called “experts” are trying to rise to the defense of Obama on this:

“This notion that a politician can wave a magic wand and impact the 90-million-barrel-a-day global oil market is preposterous,” said Paul Bledsoe, strategic adviser to the Bipartisan Policy Center and a former Clinton administration official.

Well a straw-man statement like that really does make one wonder about his expertise, doesn’t it? And one wonders if this expert from the “Bipartisan Policy Center” remembers the last time politicians laid blame for gas prices on a president.

Of course no one is talking about a magic wand (although it could be argued that George W. Bush used one by announcing his intent to lift the offshore moratorium that saw the price of oil plunge in its wake) except Democrats (“tap the Strategic Petroleum Reserve!”).

This isn’t about “magic wands” or immediate actions to stem adverse political results.   This is about the sum of a policy of 3 plus years that has seen us end up moving toward the administration’s stated goals.  The only thing that has kept it from being worse is the rather large increase in production of oil and gas on state and private land which has offset the overall decline in production on federal lands.

As political calculations go, though, this administration forgot one important thing about their goal of making gasoline more expensive in order to make alternative fuels more attractive.  The one thing they forgot was to get the people’s buy in (same problem with ObamaCare).  And, as you might imagine, the people aren’t buying in.  Add in the tsunami of negative stories about “green energy” companies and the cost of alternative fuels and you have a situation that is entirely predictable – Obama continues to try to sell his goals and the American people continue to refuse to buy into his pitch:

Monday’s efforts were just the latest in an aggressive messaging blitz that has included three recent swing-state speeches touting Obama’s backing for oil drilling, federal investments in green energy and his administration’s tougher fuel economy rules.

But a Washington Post/ABC News poll released Monday suggested the effort is falling flat with voters upset about prices at the pump, which according to AAA are now averaging $3.80 per gallon — a 30-cent increase in the last month alone.

The poll found that 65 percent of U.S. adults surveyed disapproved of Obama’s performance on gas prices, while 26 percent approved and 9 percent had no opinion.

As mentioned, this isn’t just about gas prices alone.  This is also about Obama’s energy policy goals, well documented, that want to see fossil fuels eliminated as the predominant fuel for our economy. 

Naturally, because of the obvious negative political results, the Obama administration has embarked on a campaign to shift the blame about gas prices elsewhere – leopard/spots. 

In this President’s view, only the good things that happen during his watch are his responsibility, the bad things belong to someone or something else.  Bush was the blame for high gas prices (and just about everything else) when Obama was running for President – speculators, however, are the bad guys in this particular gas price crisis.  Never mind the “permatorium” and reduced drilling on federal lands during his 3 plus years have also had a detrimental effect.  Forget the promise of the Keystone XL pipeline and the immediate effect its approval might have had on gas prices.  Oh, and approval to expand Gulf Coast refineries?  Who needs that?   Nothing to see here citizen, move along.  Its those damn speculators.

Politics is about perception, and the perception is that Obama is an enemy of the oil business (and he’s done nothing to dissuade that perception) and those chickens are coming home to roost, to quote his favorite pastor:

“Anything that is perceived by people as a problem in the immediate advance of the election has a chance to impact the election,” said Paul Beck, a political science professor at Ohio State University.

The threat to Obama from rising fuel prices is likely to become more grave if the economic recovery stalls.

“It depends in part on what happens with gas prices, and it depends to some degree on the state of the economy as well,” Beck said.

Among other things.  Bottom line, as much as the Obama spin-meisters try to lay this off on others, it just isn’t working.  Its that record of statements damning the oil industry and those statistics that show that this administration has done everything in its power to slow the production of oil in this country where it could that counts.

Much to Obama’s chagrin he’s being judged on his actions, not his words.

~McQ

Twitter: @McQandO


Obama claims oil a “fuel of the past”

Here we go again:

As rising gas prices become a key issue on the campaign trail, the president argued that using less oil is an important part of the solution.

“We’ve got to develop every source of American energy; not just oil and gas, but wind power and solar power, nuclear power, biofuels. We need to invest in the technology that will help us use less oil in our cars and our trucks, in our buildings, in our factories. That’s the only solution to the challenge, because as we start using less, that lowers the demand, prices come down,” the president told workers at the Daimler Trucks manufacturing plant in Mount Holly, N.C.

Yet in the same speech he calls oil “the fuel of the past”.

Is it?

Of  course not.  It is a fuel he’s decided he no longer wants to pursue for political reasons based in very shaky science.  But fuel of the past?  Fossil fuel is more of a part of our lives now than it has ever been and while alternate fuels are desirable, they’re not even close to being ready for prime time despite massive investment for decades.  But oil a fuel of the past? 

Absurd.

This is typical Obama – try to have it both ways.  Talk about developing “every source of American energy” to include oil and gas and then claim that oil is a ‘fuel of the past’.  That’s a not so subtle reminder that he really doesn’t support fossil fuel production (and hasn’t – see his claims about the “oil industry subsidy”), despite the continuous attempt to take credit for increased oil production during his time in office when his administration has had no hand in it).

The president continued to defend his “all-of-the-above” strategy against Republican attacks on his energy policy. “If somebody tells you we’re not producing enough oil, they just don’t know the facts,” he said.

Really? Well, we’re not, and that’s a fact.  We could be producing much, much more if the Obama administration would get out of the way.  The little known truth about the so-called “fact” Obama throws around about oil production being at its 8 year high, is he had nothing to do with that.  And furthermore, next year, we’ll see a significant decline in production from the lands the federal government controls (it will conveniently happen after the election, of course).  Note the final paragraph below.  It points to another reason why Obama’s claim is disingenuous:

The federal government controls about a third of the nation’s oil production, through federal onshore leases (mostly in the West, where it owns half the land) and leases to drill in outer continental shelf (OCS) starting 10 miles off the coast. The rest of America’s oil production is on state-owned land (including coastal areas) and on private lands subject to state regulation.

As a direct result of the president’s severe constriction of oil production under federal leases, domestic U.S. oil production will be nearly one million barrels per day lower this year than it would have been otherwise.

Meanwhile, production from newly available shale oil and oil sands on private and state-owned land has been booming—more than enough to make up for the steep decline in production under federal leases. That boom, combined with slackened demand since the start of the recession, has reduced America’s dependence on foreign oil to about half its daily consumption of 20 million barrels per day, down from 60 percent in 2005.

In fact, the truth is much different than the Obama claim in which he attempts to take credit for today’s oil production:

Even in the few areas of the OCS that remain open, the administration is seeking to strangle production. As a result of the various deep-water drilling moratoriums, a third of the Gulf’s deep-water drilling rigs have left for other shores, dissuaded by the regulatory uncertainty. As a result of the shallow-water “permitorium” even shallow-water drilling has slowed to a crawl. According to the Department of Energy, oil production from the Gulf of Mexico will drop by 700,000 barrels per day by the end of 2012, which further decreases in ensuing years. And as for America’s working families, the combination of moratoriums and “permitorium” are estimated to have cost 60,000 thousand jobs in 2010 alone.

On federal lands the story has been the same. Just as technological breakthroughs have paved the way for tapping into the vast oil reserves of the Rocky Mountain states, the administration cut the number of new leases by 50 percent in 2010 alone.

Oil is not a “fuel of the past”.  Obama’s agenda actually demands we abandon it.  And he would in a New York minute if there wouldn’t be electoral consequences.     His administration’s track record concerning oil and gas exploitation as well as new regulatory regime the EPA is implementing and actions of Secretaries Chu and Salazar give lie to the claims made.

Oil and gas are, in fact, the critical fuels of the future.  It is and will remain the lifeblood of our economy for decades.  An administration that doesn’t realize that and works to curtail it deserves to be shown the door at the earliest possible opportunity.  If you think gas prices are high now, remember that without the increase in oil production on state and private land, it would be higher than it is now.

Unicorns and moon-ponies (or pond scum) won’t fuel the economy.  Oil will.  And an “all of the above” strategy should obviously include massive increases in oil production on federal lands.  Don’t let this guy get away with his false claims and destructive energy policy.  Help show him the door, November.

~McQ

Twitter: @McQandO


Energy prices are rising, but energy demand is declining.

We’ve been seeing some better—if not good—economic numbers lately, mainly in employment, but also in industrial production, and general business conditions. One might be tempted to believe there’s at least a mild recovery on the way. That’d be nice.

But I’m…troubled. First, there’s this:

Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more…

In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.

During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl…

At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot.

In other words, there’s at least an 18% price differential in the current price of oil compared to gold, compared to the historical average.

Another important thing to remember is that the current rise in energy prices does NOT appear to be related to demand for energy. According to the US Energy Information Agency, the US demand for both electricity and petroleum has been decreasing.

Statistics for energy use usually run a couple of months behind, but the recent figures for petroleum are that from August, 2011 until November 11, Total Crude Oil and Petroleum Products consumed, in thousands of barrels per month, fell from 593,757 to 562,019. Figures for the same months in 2010 are 609,517 and 569,312, respectively.

Similarly, the most recent electrical generation numbers, in millions of kilowatt hours, show that from August to November, 2011, total electricity consumption fell from 370,073 to 273,053. Both figures are about 2 million kWh less than the same months in 2010.

Now, maybe in the last two months there’s been a huge turnaround in energy consumption, but please note that the year-on-year demand is declining, and in general, has been since 2006.

So, if energy use is declining, while prices are increasing, and supply remains steady—or is increasing—then we can reasonably look to monetary reasons for the price increase, as the economic fundamentals do not explain the price changes.

The implications for energy prices, therefore, are not good. Start saving those pennies, kids.

For all the good it’ll do you.

Oh, and by the way, if the economy is recovering, why is energy demand decreasing, rather than increasing? Just asking.

~
Dale Franks
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Observations: The QandO Podcast for 19 Feb 12

This week, Michael, and Dale talk about the controversy over the HHS contraception mandate.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Does the economy doom Obama’s re-election hopes?

I’m beginning to wonder if the Republicans can run just about anyone for President (note the qualifier – “just about” – not everyone, even among the declared candidates) and win given this economy and this president:

Americans’ disapproval of how President Barack Obama is handling the economy and its growing budget deficit has reached new highs amid broad frustration over the slow pace of economic recovery, according to a Washington Post-ABC New poll released on Tuesday.

The ratings boost Obama received after the killing of Osama bin Laden has dissipated with his job approval rating back to 47 percent. Forty-nine percent disapprove of his performance.

Obama’s approval rating bounced to 56 immediately after bin Laden was killed last month.

But it went back to a plurality very quickly.  On the key issue, however, it hasn’t returned to a particular percentage – it’s gotten worse.  Much worse:

Fifty-nine percent, a new high, gave Obama negative marks for his handling of the economy, up from 55 percent a month earlier.

Obama’s approval rating on the deficit issue hit a new low of 33 percent, down 6 points since April.

Anyone who doesn’t understand that is where the election will be decided hasn’t been paying attention to politics very long.  Bill Clinton knew it when he rode to victory on his “It’s the economy, stupid”.   Ronald Reagan knew it when he continually asked, “are you better off now than you were 4 years ago”?   And Barack Obama would probably kill to have the economic problems Jimmy Carter faced – not that he’d do any better than Carter.

The point is, in bad economic times, incumbents have a tough road ahead of them at election time.  That’s because economic issues, joblessness, insecurity and fear are felt and understood by everyone.   Pocketbook issues are personal issues.   And the public has always voted those issues in general elections – much to the disadvantage of incumbent politicians, especially presidents.  There’s a number going around out there which claims that no president  since FDR has been re-elected with unemployment over 7.2% .  Of course keep in mind only a some of them since then have run for re-election and not all of them had bad unemployment numbers at the time.   The point, however, is that this sort of issue is critical to re-election chances.

The survey reflects a broadly pessimistic public mood as high gasoline prices, sliding home values and high unemployment numbers raised concerns about the pace of the U.S. economic recovery, The Washington Post said.

Eighty-nine percent of Americans say the economy is in bad shape; 57 percent say the recovery has not started and 66 percent said the United States was seriously on the wrong track.

Forty-five percent said they trust congressional Republicans over Obama to handle the economy, up 11 points since March.

If much of what is listed in the first paragraph isn’t improving fairly dramatically when 2012 arrives, Obama is in for a long year and, just guessing here, an “upset” loss.  The shine has worn off.  The cache of electing a black president has run its course.  History has been made.  And now the results part of the show come to bear.   Having been a moment in history won’t save Obama if the economy still sucks as badly as it does now.

My dad used to always tell us boys, “you live between your ears”, meaning attitude was critical to how you approached life and overcame obstacles.  Attitude is also critical in economies.  Pessimism isn’t the predominant mood one wants within the citizenry when they’re hoping to see it turn around.   And it certainly isn’t the mood a president wants through out the lane when he’s running for re-election.

Yeah, this is going to be an interesting year and a half until election day 2012.  I’m betting it’s not better economically and, again depending on who the GOP eventually nominates, Republicans stand to win the election.  Or, and you heard it here first with all the caveats – it is most likely the Republican’s election to lose.

Of course, knowing them, I have little doubt they can manage to do that.

~McQ

Twitter: @McQandO


Quote of the Day–how screwed up are we edition

Actually we have a pair of quotes of the day.  First from Roger Pilon who is the VP for legal affairs at Cato”

Our tax system sucks the substance and spirit of entrepreneurs and workers alike, filters that substance through Washington, then sends it back through countless federal programs that instruct us in minute detail about how to use the government’s beneficence. Manufacturing, housing, education, health care, transportation, energy, recreation — is there anything today over which the federal government does not have control? A federal judge held recently that Congress can regulate the "mental act" of deciding not to buy health insurance.

Steel on target.  Key word?  “Control”.

Our next quote in this edition comes from Mark Steyn about our Sneerer in Chief who addressed the concerns of an American had about gas prices by telling him maybe he ought to get rid of his gas hog:

America, 2011: A man gets driven in a motorcade to sneer at a man who has to drive himself to work. A guy who has never generated a dime of wealth, never had to make payroll, never worked at any job other than his own tireless self-promotion literally cannot comprehend that out there beyond the far fringes of the motorcade outriders are people who drive a long distance to jobs whose economic viability is greatly diminished when getting there costs twice as much as the buck-eighty-per-gallon it cost back at the dawn of the Hopeychangey Era.

Bingo. Definitely  campaign advertising fodder.  A “let them eat cake” moment. The man defines “don’t care” and “out of touch”. One assumes he considers statements like that to be "leadership".

~McQ

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