The Obama administration’s bizarre energy policy took another confused turn last week as the President asked Congress to spend $52 million for more oversight and investigation of petroleum markets. The crackdown would supposedly be aimed at “those who manipulate the market for private gain at the expense of millions of working families,” although neither Mr. Obama nor presidential press secretary Jay Carney could identify who these dastardly villains supposedly are, or if they even exist.
It was, even by this administration’s standards, a pathetically inept response to an issue that could be a big problem for the President come November: brutally high gasoline prices. Rather than addressing the well understood, free market supply and demand forces that keep driving up the price of crude, the administration resorted to class warfare once again, to the point of resurrecting the Enron boogeyman in a vain attempt to divert attention and decline responsibility for Obama’s spectacular failures with regard to energy issues. Even the Washington Post wasn’t buying it, taking the administration to task in an April 17 editorial:
"President Obama is fond of saying that there is no silver bullet to bringing down gasoline prices. On Tuesday, however, he went into the silver bullet business."
Recent history shows that gas prices over time depend on a range of factors, predominantly supply and demand fundamentals, that the U.S. government can’t easily control. And even if bona fide Wall Street manipulation were a primary force moving prices, The Post’s Brad Plumer points out, the United States alone can’t police the world market.
Republican leaders were even more direct, dismissing the President’s proposal as nothing more than an election-year tactic:
"It probably polls pretty well, but I guarantee it won't do a thing to lower prices at the pump," said Senate Republican leader Mitch McConnell.
"The president has all the tools available to him if he believes the oil market is being manipulated," said John Boehner, the Republican speaker of the House of Representatives.
This comes at a time when the Obama administration surpassed a dubious record that was previously held by the Carter administration (to which the current regime is often compared): the greatest increase in nationwide gasoline prices during a president’s term. Gas prices rose by 103.77 percent during James Earl Carter’s term in office. As of two weeks ago, gas prices have risen by 103.79 percent since Barack Hussein Obama took the oath. By way of comparison, gas prices dropped 66 percent during the Reagan years, rose by about 30 percent when Clinton was in office and climbed roughly 20 percent under George W. Bush.
Gas prices are, of course, evidence of just one of President Obama’s many energy policy failures. There’s the ludicrous diversion of tax dollars to solar energy companies whose business model depends on evading the laws of both economics and thermodynamics. There’s the remarkably short-sighted decision to kill the Keystone XL pipeline. There’s the continuing effort to undermine drilling in the Gulf by throwing up pointless regulatory obstacles. Yet, in spite of all that this president has done to damage the cause of American energy independence, there is one sector of the energy business that even he hasn’t been able to screw up – yet: the natural gas industry.
Make no mistake: were it not for the incredible renaissance of the American natural gas industry, what is currently an economic mess would be a far larger economic disaster. The natural gas industry is creating hundreds of thousands of jobs, developing export markets that will help address our trade imbalance and recovering byproducts that will revitalize our chemical manufacturing sector. Natural gas will also take a big bite out of foreign oil sales. The big natural gas producers are investing billions in infrastructure that will allow semi-trailer tractors to use natural gas fuel, at less than one fifth the price of diesel. Will natural gas-powered automobiles dominate the roads a decade from now? It would not be at all surprising if that were the case.
The growth in natural gas production in the United States is largely due to the industry’s ability to access gas trapped in shale formations. We can now get at that gas because horizontal drilling technology has evolved to the point that it’s economically viable to get at those deep, but relatively “thin” formations in a cost effective manner. Once producers put horizontal pipes into place in a shale formation, they can then get at the gas trapped in the formation using the age-old technique known as hydraulic fracturing, or “fracking”. This technology, which dates back to the late forties, involves injecting a lot of water, along with a bit of sand and a tiny amount of chemicals in order to fracture the shale and release the trapped natural gas.
There is nothing more sinister about drilling for shale gas than there is about any of the other myriad of ways that we drill into the earth for a variety of other reasons. Unless, of course, one happens to be an eco-activist. In that case, there has to be something horrible about shale gas drilling, since it involves fossil fuels and because people are making money while doing it.
With that history as a backdrop, last Friday President Obama signed an Executive Order coordinating federal oversight of domestic natural-gas development. If Obama were a President who both understood and believed in free markets, that would be a good thing. There is much in the way of overlapping state and federal authority when it comes to natural exploration and production. If “coordinating” equated to “streamlining” that would be welcome news indeed. Unfortunately, the history of this administration suggests that every regulatory review of this sort will inevitable result in the creation of more onerous regulatory obstacles in the free market.
More than any other factor, energy availability, energy prices and energy policy drive this nation’s – or any nation’s – economic future. In the past week the President of the most powerful nation on earth has demonstrated that he neither understands nor cares to understand the realities that drive global energy markets. It’s hard to imagine that Obama could contrive of ways to prove that he is even more out of touch with reality, but he has once again manage to exceed America’s lowest expectations.
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