Another Dog and Pony Show

Another Dog and Pony Show

© David Burton 2011

A Dog and Pony Show

     For more than five years, I’ve been urging the development and implementation of a comprehensive energy plan for the United States to address the issues of energy independence, the high cost to the American economy of importing foreign oil, and the need to develop means of providing energy to meet the needs of American industry and consumers for the foreseeable future. (Ref. 1, 2, 3, 4, 5, and 6) During this period of time, there has been no such comprehensive plan proposed or implemented. Instead, the government of the United States has continually dithered in its approach or lack of an approach. We are being held hostage by unfriendly foreign governments. Our economy is suffering and, still, our politicians continue to posture, spout off, and point fingers – but, in reality, do nothing. Here is my latest rant on the subject.

So Our Democratic Politicians are Going to Solve America’s Energy Problems With Another Television Spectacular!

     Spring has arrived and with its arrival, crude oil prices have climbed to over $100/barrel and regular gas prices have risen to more than $4.00 a gallon in many localities. With the same certainty that spring follows winter, rising oil (and gasoline) prices have led to congressional hearings. The televised roasting of oil company executives by congressional Democrats is a time-honored Washington ritual sure to warm the hearts of the mainstream media, pony-tailed 60’s burnouts, leftist college professors and environmentalists.

     “Although world crude oil prices are set (mostly) by supply and demand, and manipulated (occasionally, in the short-term) by commodities speculators, demagogues in the U.S. Congress {are} dragging oil company executives in front of hot lights and cameras to answer questions about ‘skyrocketing’ gasoline prices and ‘obscene’ profits. The spectacle of CEOs from Exxon-Mobil, Chevron-Texaco, BP and Shell being dressed-down by smarmy, condescending Democrat politicians is guaranteed to please the leftist base. … Unfortunately, we’ve seen this circus before, more than once.
     “It can be predicted, with near metaphysical certainty, that absolutely nothing of substance will result from any congressional hearings on oil prices.” Congress and the media “will not uncover any secret oil company collusion that has artificially increased the price of a gallon of gasoline, nor will their investigations result in the production of a single additional barrel of oil. But that’s not really the point. The charlatans in Washington know full well that oil companies have no real power to set oil prices. The show itself is the important thing. … Congress would never miss an opportunity to berate ‘Big Oil’ in front of television cameras, in order to score cheap political points ..." (Ref. 7)

     Unsaid in all of the posturing in Congress is the fact that part of the increase in gasoline prices comes from the devaluation of the American dollar which means that oil producers want more dollars for their product since the value of the dollar has decreased because the Federal Reserve has “inflated the money supply with two rounds of ‘quantitative easing,’ which is a harmless-sounding term for what amounts to flooding the money supply with billions of worthless paper dollars.” The reason for this devaluation is the burgeoning government debt. “Just print more dollars, then you can pay off the debt with dollars that are not worth as much as they were before. But the inflation of the money supply has serious long-term consequences for the U.S. government, as well as American citizens and businesses.
     “Already there are calls all over the globe for the abandonment of the dollar as the de-facto international currency of commerce. The Federal government has recently had some difficulty selling its bonds on the world market. The reluctance of investors to purchase U.S. government bonds is perfectly understandable; why would anyone choose to hold dollars, or dollar-denominated debt, when those instruments continue to lose value every day, and may experience a catastrophic loss of value in the near future?
     “This is the real reason that gold prices have increased, and continue to do so. Gold is not really increasing in value so much as the dollars needed to buy an ounce of gold are decreasing in value. This erosion of value is a direct result of the policies and actions of the U.S. government.
     “The congressional oil-price side-shows may be entertaining to a select group of anti-business, anti-growth conspiracy theorists, but they divert time and resources away from legitimate congressional activities that American families and businesses might actually benefit from. Congressional activities that could help create conditions favorable to economic growth, and result in more and better jobs for the hapless American taxpayers who pay their salaries. “(Ref. 7)

     “Sen. Orrin Hatch {wasn’t} wasting words on what he thinks of harsh criticism that oil company CEOs {were} taking on Capitol Hill. {He let} a portrait of a dog sitting on a pony tell part of the story.” (Ref. 8) He correctly characterized the hearings as nothing but a Dog and Pony Show.

     “At a hearing on gas prices, the Utah Republican said that Senate Democrats are conducting a dramatic hearing to ‘make some political hay at the expense of our witnesses today.’
     “The committee called the heads of the five largest oil companies to testify Thursday about proposals to repeal tax breaks for the five companies. The companies are ExxonMobil, Chevron, BP, Royal Dutch Shell and ConocoPhillips.
     “Finance Committee Chairman Max Baucus told the executives the generous tax breaks they enjoy have not lowered gas prices or promoted energy independence.
     “However, the executives are defending high gasoline prices and big profits, saying they also pay high taxes and shouldn't face more.
     “Rex W. Tillerson, chairman and CEO of Exxon Mobil Corp., said in prepared testimony that additional taxes proposed by Senate Democrats are ‘misinformed and discriminatory.’ (Ref. 8)

     Others have pointed out that the Democrats attempt to eliminate the “tax breaks” afforded to the oil industry would be both counterproductive and discriminatory since all other businesses enjoy depreciation allowances, which are the same as the depletion allowances that oil companies receive in lieu of depreciation as the source of their income is depleted over time.

     The supposed reason for the Congressional Hearings hearing “was for Senate Democrats to explore with the energy executives why their industry, with its huge profits from higher gas prices, should still be allowed to benefit from $21 billion annually in tax breaks.
     “But it was also about political posturing by all sides.” (Ref. 9)

     For Republicans, “the hearing allowed them to stick it to the Obama Administration for . . . getting in the way of domestic production and wanting higher prices for fossil fuel prices in order to raise demand for renewable and green energy. . . . It was also an opportunity for them to reinforce their enduring message that Democrats are all about taxing and spending.
     “For the energy executives, the hearing was an opportunity to defend their industry. They weren't being unreasonable, they said, in not wanting to part with the tax benefits. They just didn't like being singled out.
     “It also gave them the chance to publicly air the threat that a higher tax burden could mean they would do less exploring or producing of oil in the U.S. And that would mean fewer American jobs and fewer taxes paid to the U.S. Treasury. . . . The oil executives also used the opportunity to ding the administration … for not more aggressively approving oil production in all the places the industry would like to drill.
     “John Watson, Chevron Corp.'s chairman and CEO, summed up the industry's position in his opening statement:
... The most sensible path is simple. Don't punish our industry for doing its job well. Create energy and tax policies that make our country a more attractive place to do business. Allow us to develop our nation's vast energy resources and strengthen, don't weaken, our ability to compete against large national oil companies who are major players in the U.S. and global energy markets.’” (Ref. 9)

Where the hell did Barack Obama learn economics?

     “He’s in a panic at rising gas prices – because there’s nothing worse than angry voters furious at what it costs to fill up the tank. . . . Obama put part of the blame for the sharp spike in gas prices on ‘increased global demand’ compounded by ‘unrest and supply disruptions in the Middle East.’ Well, China’s demand didn’t spike overnight and any disruptions from the serial crisis in the Middle East have far more impact in Europe than here.” (Ref. 10)

     As with everything else he has done since assuming office, the President has taken the path of pointing his finger at each and everyone else and proclaiming “Don’t blame me! It’s someone else’s fault!” That line is getting pretty old and tired.

     “When in doubt blame Big Oil and propose to ‘eliminate unwarranted tax breaks to the oil and gas industry,’ which he insisted were ‘wasteful subsidies.’ Now, if you take away $4 billion in tax breaks from the oil industry, what do you suppose that will do to the price of gasoline? Make it go up or down?
     “We’re not sure how the natural gas industry gets fingered here, but then this While House simply won’t let facts get in the way of a good beat-down for corporate America.
     “And with $4 billion at stake, it’s no wonder the president wants to get his hands on those ‘subsidies’ as part of his high-wire budget-balancing act. The current gas ‘crisis’ is just another of those opportunities this administration can’t imagine going to waste.
     “What the current crisis ought to prove is that this nation needs to become energy independent – the smart way, by using the natural resources within our own reach – oil, gas and – oh, horrors! – coal included. The very inconvenient truth for Obama is that those ‘subsidies’ for the oil and gas industry help encourage and fund exploration – that is if this administration would end its regulatory jihad against deep-water drilling.” (Ref. 10)

Where is the Leadership?

     For nearly 40 years, since the first Arab oil embargo, the United States has faced the prospect of higher oil prices, an energy shortage, and petro-blackmail. Politicians have wrung their hands in despair, pilloried oil companies in public, spouted rhetoric over proposed solutions, and done practically nothing to realistically address the problem.

     Indeed, had they actually done nothing, America would be in a better position to address the energy crisis. Instead, our political leaders have prohibited the search for and drilling of new sources of oil and they have hindered the use of America’s most plentiful source of energy, coal

     American citizens have nodded in agreement with the politicians, called for the heads of the greedy officers of the largest oil companies, while buying and driving gas guzzling SUV’s. In truth, we all are complicit in creating and fostering a “do-nothing” attitude toward the issue of energy independence.

     For nearly 40 years there has been a total lack of leadership in the United States with respect to energy independence. What we have witnessed over this span of time is total indifference, except when a crisis appears, primarily a financial one, i.e., when the price of gasoline jumps. On a nearly daily basis, we are faced with an infinity of excuses of why we can‘t search for oil, why we can’t drill for oil, why we can’t dig for coal, why we can’t burn coal, why we can‘t build nuclear power plants, why we can’t have offshore wind generating farms, and on, and on, and on.

     Every time that an accident occurs in the field of energy production, the Chicken Little’s of the world come out of their henhouses screaming, “the sky is falling!” There was an accident at the Three-Mile Island nuclear power plant in Pennsylvania and, for the next three decades, there have been no new nuclear power plants built in the United States. Never mind the fact that no deaths or injuries have been reported as a result of the Three-Mile Island accident. The Exxon Valdeez ran aground in Alaska and fouled the waters and adjacent shores. As a result, oil exploration and drilling has been prohibited in the Alaskan Wildlife Reserve and in U.S. offshore waters. Never mind that Alaskan waters have been restored and that Alaskan salmon and crab fishing is as vigorous as ever. Even the Chernobyl disaster, which was totally the result of Communist stupidity, abominable engineering and a total disregard for public safety, “killed two Chernobyl plant workers on the night of the accident, and a further 28 people within a few weeks, as a result of acute radiation poisoning” (Ref. 11 ) according to the World Nuclear Association. Put this in perspective by contrasting it with the 200,000 people lost in the Southeast Asia Tsunami of 2 years ago or of the estimated 20,000 deaths expected in the most recent Japan earthquake and tsunami disaster.

     “When an iceberg brought down the Titanic, trans-Atlantic shipping did not stop.” Instead, the company learned from its errors and modified its fleet to correct the design flaws of the Titanic. In addition, the U.S. and Britain decreed that from then on ships had to have enough lifeboats to accommodate all onboard. (Ref. 12. ) MESSAGE: Learn from your mistakes, correct the errors, but keep moving forward.

     “A massive earthquake and monstrous tsunami triggered a nightmarish sequence of system failures at Japan’s Fukushima Daiichi nuclear power plant.” . . . “ after partial meltdowns and explosions in Japan, the Obama administration was, at first, interested in reaffirming its commitment to nuclear power. {But}, nearly a week after the disaster, President Obama {reversed course and} called for an urgent review of safety regulations and oversight. As usual, he was calibrating a response to alarming headlines against a political desire to shake any image as a tree-hugging, green energy-loving liberal. Second-guessing is for sissies and the political left.” [Emphasis mine] (Ref. 12 )

     Within 2 or 3 days after the earthquake and tsunami disaster befell Japan and well before the nature and magnitude of the nuclear power plant problems could be ascertained, Massachusetts Representative Edward Markey and Senior Massachusetts Senator John Kerry, like Chicken Little, called for a moratorium on nuclear power plants, similar to the informal moratorium that stopped the development of nuclear power in the U.S. some 30 years ago. One might question the motives behind these requests – are they the result of concern for the safety of the public or are they meant to attract publicity, as were their vitriolic, but ineffective, attention-getting public attacks on the CEO’s of the major U.S. oil companies when oil prices rose to $4.00 a gallon a few years ago. “Cooler heads must prevail and conclusions avoided until a full assessment of the Japan disaster is known.” (Ref. 11 )

     “There are dangers and unpleasantries associated with every energy source.” (Ref. 12 ) How many people have been killed in natural gas line explosions? How many miners have died while extracting coal from the earth? How many people died or become sick as the result of breathing the polluted air caused by the burning of coal and wood? How many people have been killed in the explosions and fires of tanker trucks transporting oil on our highways? “No regulation or safety precaution can offer 100 percent guarantee against an accident or natural disaster. … Politicians tend to overreact to such things and stroke public fear.” (Ref. 11 )

     Today, “the Obama administration continues to stonewall when it comes to exploring for new sources of oil in or near American territory. (It has approved just two deepwater drilling sites since the BP oil spill in the Gulf, which contrary to doomsday predictions, did not foul beaches for a decade or cripple the seafood industry.) Too many politicians continue to oppose coal exploration, an American natural resource.” (Ref. 11 )

     “Politics should never get in the way of figuring out better ways to confront the deadly risks that are part of powering up our world.” (Ref. 12 ) For 4 decades we have suffered from “paralysis by analysis” There is always an excuse not to move ahead. There is always a reason to wait – it’s too dangerous; let’s study it some more; if we wait, there’ll be a better solution; the problem will go away by itself; a miracle will happen.

     Over the past 4 decades, American has been saddled with a total lack of political leadership and the absence of a will to face the issue of energy independence. Instead, we and our leaders have preferred to dig a hole in the ground, to jump into that hole and to pull the soil back over our heads so we won’t have to face up to the realities of modern life in the 21st century. We have repeatedly listened to the Luddites among us who keep repeating, “we can’t do this and we can’t do that.” What America desperately needs is for the shortsighted and the unwilling to get out of the way and for a true leader to come forward and say “yes we can!” and then get the job done. America has found these leaders in the past and we will hopefully find one again that will finally get the job done.

     America has been faced with similar situations in the past and we have found the leadership and the courage to overcome all the obstacles that were facing us. During our war of independence, many in the colonies doubted our ability to defeat the mightiest nation of that day, Great Britain. Under the leadership of George Washington and a cadre of dedicated revolutionaries, we defeated Great Britain and won our independence. George Washington faced defeat after defeat, but he persevered and fought on to final victory. Similarly, in the mid-1800’s, Abraham Lincoln led our nation in a civil war where the North suffered defeat after defeat and where many of his fellow citizens entreated for a negotiated peace with the South that would have split our country in two and would have perpetuated the institution of slavery. Lincoln had the courage and the leadership qualities to stay the course until the South finally capitulated at Appomattox. Early in the 6th decade of the 1900’s, President John F. Kennedy announced to the world that America would send and return American astronauts to the moon within a decade. He set in motion the space program that achieved that goal in spite of huge technological challenges, risks and even catastrophes, characterized by the famous exhortation that “Failure is not an option.” Where now is that leader who will come to forefront, assume the leadership role, and institute the program that will end America’s dependence of foreign sources of energy once and for all? America has been diddling and daddling for far too long. The time to begin was 40 years ago!

     In order to solve America’s energy problem and make us energy independent, we need a comprehensive energy plan. There is likely no one action that will suffice. We need to make up for lost time. We simply cannot wait any longer. The road to energy independence will not be painless. We will likely have to pay a high financial price for putting off solving the problem for so long. We can’t wait for the ephemeral risk-free solution – there is no such thing. All progress involves risk – there will be financial risk, there will be risk to human life, and there will be risk to the environment. Our job will be to minimize these risks and to balance the risks against the benefits. America put men on the moon in spite of the loss of life in the Apollo 10 fire and the near-disaster of Apollo 13. Those disasters did not stop us. We learned, but we continued on in spite of them. Our energy program must do the same.

     Clearly, President Obama and his administration have placed too many limits on U.S. oil and gas exploration and drilling. As former Massachusetts Governor Mitt Romney said:

     “The decisions that the president is making on energy and he has been making since the beginning of his administration has made it very clear that America is not interested in developing our own energy resources. And that, of course, has lead to a position where we're highly vulnerable to the imports that come into the country, highly vulnerable to the cartels. And when there are disruptions, as there are now in the Middle East, prices go through the roof,” (Ref. 13. )

     Wider U.S. oil and gas development would send a signal to energy markets. As Romney said, “You get the prices down by convincing people who are investing in gasoline futures, so to speak, the speculators – you let them understand that America is going to be producing enough energy for our needs. And that means we're going to start drilling for oil. We're going to use our natural gas resources, which are now extraordinarily plentiful, given new technology.” (Ref. 13 )

     Echoing Romney, Former Governor of Minnesota Tim Pawlenty said, “In the intermediate term we have to get serious about Americanizing our energy sources and developing it aggressively. This president and this administration have been sitting on their hands in that regard. We should be drilling in ANWR {the Arctic National Wildlife Refuge} and other places around the country. We should have an aggressive posture towards developing American sources. That would help.” (Ref. 13 )

     The Obama administration claims they support domestic drilling but their actions over the past two years clearly belie this claim. While the Administration’s position that drilling is not a tonic for addressing U.S. energy security problems or curbing skyrocketing oil prices is correct, they have offered no alternatives nor have they faced up to the fact that a comprehensive energy plan most likely will include drilling as part of the overall strategy. Expanding domestic oil and gas exploration and drilling are steps which can be taken immediately, and should have been taken years ago. Other parts of the plan can be added as they are developed. Instead of starting to develop a comprehensive solution, during his two-year tenure in office, Obama has said much and done nothing. We are still at the starting gate. He rants at the obscene profits of big oil and blames them for high energy prices. In reality, the blame is squarely on the shoulders of Obama and his administration. They have utterly failed to lead this nation in addressing the energy problem. He rightly pontificates that “Even if we increase domestic oil production, that is not going to be the long-term solution to our energy challenge,” He notes that the U.S. has 2% percent of the world’s proven oil reserves but accounts for 25% of world consumption. “What that means is, that even if we drilled every drop of oil out of every single one of the reserves that we possess — offshore and onshore — it still wouldn’t be enough to meet our long-term needs” (Ref. 13 ), but fails to initiate actions to meet our long term needs. Instead, he prohibits off-shore oil exploration, he places a moratorium on drilling in the Gulf of Mexico and he bans drilling in ANWR.

     Imagine the effect of the government imposing a tax of $50 on every barrel of imported oil for the next ten or twenty years. (The current price of oil at the wellhead is now around $110 per barrel.) Demand for foreign oil would plummet; domestic exploration, drilling and production would skyrocket; fuel usage would nosedive; investment in alternative energy sources and methods of energy conservation would balloon as the economics tilted in favor of alternative energy sources and energy conservation; money normally sent overseas would be diverted to the U.S. treasury. Outlandish? Many of our friends overseas already pay $5 to $10 for a gallon of gasoline. Their drivers drive less and they drive smaller and more fuel efficient vehicles. Foreign oil imports have been reduced. Where these high gasoline prices are in effect, the economies have not spiraled into bankruptcy. In Israel, the lack of domestic oil production and the high cost of gasoline are spurring the development of an all electric car transportation system. And with all of that, Israel’s economy is quite healthy.

     Effective leadership in solving the energy dilemma does not mean stupid government mandates nor communist-style decisions by government bureaucrats on where to invest government (read that as yours and mine) money by deciding on which technologies, industries, and companies will be the eventual winners in developing the “best” solutions to the energy problem. Investments by the government have historically been proven to be dismal failures. Investments of this kind should be left to our capitalistic system. Let the winners be decided by the marketplace, not by government civil servants who have no skin in the game.

     Let’s look at one example of the government attempting to drive the market. “In a March 30 speech in Washington, Mr. Obama announced his mandate that 100% of the federal vehicle fleet be ‘advanced technology’ vehicles by 2015. This means that every vehicle in the federal fleet — some 600,000 currently — will have to be a hybrid or electric vehicle.” This mandate will likely mean extraordinary and unnecessary costs to the American taxpayer. “For example, the conventionally fueled Chevy Cruze, the platform on which the Chevy Volt is based, would cost approximately $17,000” while the Volt would cost $41,000, an additional $24,000. “The taxpayer will be forever in the hole for every Volt purchased.” “Mr. Obama’s mandate, of course, has a loophole that exempts him, allowing him to travel in style in enormous, conventional SUVs.” “To “incentivize” the Volt, the Obama administration is providing a $7,500 tax rebate for each sale.” (Ref. 14 )

     “Just four years from now, Mr. Obama has mandated a CAFE average of 35.5 MPG for all manufacturers. The current average achieved is 22.2 MPG. It is not possible, with current technology, to say nothing of customer preferences, to reach this absurd goal.” (Ref. 14 )

     At the end of March of this year, President Obama finally gave a speech that was supposed to clarify his Administration’s energy policy. In his speech he stated, “today, I’m setting a new goal: one that is reasonable, achievable, and necessary. When I was elected to this office, America imported 11 million barrels of oil a day. By a little more than a decade from now, we will have cut that by one-third. Meeting this new goal of cutting our oil dependence depends largely on two things: finding and producing more oil at home, and reducing our dependence on oil with cleaner alternative fuels and greater efficiency.” (Ref. 15 )

     Challenging credulity, the speech goes on to claim that he is “working to expedite new drilling permits,” but only for companies that “meet new standards.” (Ref. 15 ) For the record, only 7 deep water drilling permits have been issued since the official Gulf drilling moratorium ended, mostly for work already in progress. For two years, the administration has canceled dozens of oil and gas leases all across America. It’s raised permit fees. It’s shut down deep-water drilling in the Gulf. It won’t even allow a conversation about exploring for oil in a remote, 2,000-acre piece of land in northern Alaska that experts think represents one of our best opportunities for a major oil find. While the President says one thing, his actions and his lack of real action convey a far different message.

     “A disturbing pattern has emerged during Barack Obama’s first term as president.
     “At the times when our nation most needs presidential leadership, Barack Obama chooses to let others take the lead.” (Ref. 16 )

     “During the Gulf oil spill, the president took too long to respond and then, according to Louisiana Governor Bobby Jindal, awkwardly decided to focus his energy on making sure that food stamps were still being adequately distributed, rather than using his status as Chief Executive to clear bureaucratic roadblocks to effectively responding to the disaster.” (Ref. 16 )

     “During the president’s press conference Friday {March 11, 2011} on rising energy costs, he sought to assure the American people that gas prices would not rise too much because other oil producing countries have “committed to filling any gaps” in supply.
     “This isn’t the first time the administration has said this. In February, the Deputy Secretary of Energy said he hoped ‘spare capacity’ in other countries ‘will be brought to bear so that it will continue to support our economic recovery.’
     “Since President Obama took office, gas prices have increased over 90 percent.
     “After presiding over this enormous rise in prices that are putting a greater and greater strain on family budgets, imagine the naiveté of hoping OPEC and other hostile and unstable countries will ‘continue to support our economic recovery.’
     “Top 3 Energy Myths in Obama’s Press Conference:
     “The fact is that since taking office, the Obama administration has conducted a war on American energy that has killed jobs and increased gas prices.
     “The House Natural Resources Committee has a useful list of all the hostile actions the administration has taken, including trying to regulate carbon dioxide as a pollutant through the EPA and the drilling moratorium and roadblocks in the Gulf.
     “Thanks to the moratorium and the lack of permits once the moratorium was lifted, seven of the thirty deepwater oil rigs that were in the Gulf of Mexico have moved or are moving to other markets.
     “Even former Democratic President Clinton has slammed the Obama administration’s ‘ridiculous delays’ for offshore energy production.
     “Nevertheless, President Obama tried to create a smokescreen at his press conference on Friday to obscure the facts about his war on American energy.
     “He reiterated three commonly repeated myths that anti-energy radicals use to block domestic oil production.
     “Steve Everley at American Solutions does a great job dissecting these myths here. In short, they are:
     “1. The US has only 2% of the world’s oil. This number only includes proven reserves where we are already drilling. It does not include where U.S. law currently forbids drilling, such as the 10 billion barrels in ANWR, 86 billion barrels in the Outer Continental Shelf, and 800 billion barrels of oil shale in Wyoming, Utah, and Colorado.
     “2. The oil industry has millions of leases where they aren’t producing a thing so we should impose fees on unused land. These leases are for drilling and exploration. Common sense tells us that oil is not distributed evenly across the globe. You need to first look for the oil before you can drill, and much of the leased land will never produce oil. Furthermore, much of the delay in the exploration and drilling process is imposed by government regulations. So the idea of government imposing fees on companies for failing to produce oil when it is government rules themselves that are partly responsible for the delay is outrageous.
     “3. Last year oil production reached its highest level in 7 years. This increased production is not due to the actions of the Obama administration, but in spite of it. Most of this new production is occurring on private land in the Dakotas, and the rest is due to the actions of previous administrations. In fact, the Energy Information Administration predicts a decline in domestic oil production during 2011 of 220,000 barrels a day and a drop-off of 150 million barrels in the Gulf of Mexico during 2012. All because of the president’s policies. “(Ref. 16 )

     Let’s remember that in December of 2010, President Obama re-imposed the same sort of drilling ban that contributed to earlier skyrocketing gasoline prices in 2008.

When Will President Obama Show Consistency in his Policies?

     One of the most consistent features of President Obama’s administration has been a total lack of consistency. His actions and statements in regard to energy constitute just one more example of this inconsistency and dithering. His actions and statements are and have been completely reactive and seem to be based upon political expediency. Beat up on the oil companies when it seems that is what the electorate wants. Stop all oil and gas exploration when the greenies demand such action. Lift the exploration and drilling bans when the populace rises up in arms against high gasoline prices. Case in point. “President Obama, facing voter anger over high gasoline prices and complaints from Republican and business leaders that his policies are restricting the development of domestic energy resources, announced yesterday {May 14, 2011} that he was taking several steps to speed oil and gas drilling on public lands and waters.” (Ref. 17 )

     It would have been nice if this had been Obama’s policy when entering office some 2+ years ago. The effects of such action back then would be felt by now. Instead, we still face the same energy problems that have been bedeviling this nation since the first Arab oil embargo some 30-plus years ago. The most recent energy policy statement by the president is a step in the right direction, even though it is a bit late and less than the push for a comprehensive energy policy that has been so-long needed. If only - if only – if only he had fought for and pushed for a comprehensive energy policy as hard as he fought for and pushed for his comprehensive health care program. As has been noted, “the policies announced yesterday {May 14, 2011} would not have an immediate effect on supply or prices, nor would they quickly open any new areas to drilling.” “In his weekly radio and Internet address, the president said the administration would begin to hold annual auctions for oil and gas leases in the Alaska Petroleum Reserve. … The move comes after years of demands for the auctions by industry executives and Alaska’s two senators…
     “In March {of 2010}, President Barack Obama announced that he would allow – or at least entertain - some new oil development off the Atlantic Coast and in the eastern Gulf of Mexico. Last week {just some 9 months later in December, 2010} he reversed himself, saying such exploration is now off the table for at least five years.” (Ref. 18 ) In fact, he “announced that his moratorium on oil exploration off our own East and West coasts and the eastern Gulf of Mexico would continue ‘indefinitely’." (Ref. 19 ) The word indefinitely is relative when it comes to pandering to incensed voters. According to the Wall Street Journal, “[The Department of Energy] predicted that domestic off-shore oil production will fall 13 percent this year from 2010 due to the moratorium and the slow return to drilling.” (Ref. 19 ) Pity the poor oil companies who are trying to figure out what are the policies of this administration. Today it’s in one direction, tomorrow in another direction and a day after that – who knows? The actions and the words coming out of the White House are, at best, confusing and inconsistent – not a sign of great leadership and no way to develop a comprehensive energy plan.

     “The administration will also accelerate a review of the environmental impact of possible drilling off the southern and central Atlantic coast and will consider making some areas available for exploration.” (Ref. 17 )

     Note the weasel-wordings: They will accelerate a review of the possible environmental impact. They carefully avoid saying that they will take positive action and will move forward. Instead, they promise to review and maybe then consider allowing exploration. Note also that they will consider making some areas available for exploration. Hey, what about actually drilling for oil and gas? “The move is a change from current policy which puts the entire Atlantic seaboard off-limits to drilling until at least 2018.” (Ref. 17 )

     The effects of the President’s actions since taking office are evident at the gas pump and in the amount of money passing into the hands of foreign oil producers. We have lost ground in our battle for energy independence and will likely continue to do so, notwithstanding the President’s apparent recent about-face. “A 2007 report by the Department of Energy’s Energy Information Agency predicted that oil production from federal lands and offshore sites in 2010 would be 16 percent higher than what Obama’s policies have actually produced.
     “Analyzing the same report makes it clear that Obama’s energy policies will lead to a further - and dramatic – decrease in oil production on federal lands in the future. Under Obama’s policies, oil production in federal lands and the Gulf of Mexico will fall by 15 percent in 2011 and will decline by 26 percent in 2012 from the 2010 production high.” (Ref. 20 )

     Under the Obama administration, America has sat on billions of barrels of untapped oil reserves while the economy has tanked and the price of oil has risen from well under $50 a barrel to more than $100 a barrel. “The Congressional Research Service found that in addition to America’s proven reserves of 19.1 billion barrels – the number the president cited - the United States has access to deposits of ‘technically-recoverable’ oil, meaning that total U.S. reserves amount to 164.1 billion barrels, 8.5 times the figure cited by the president. And this doesn’t include oil shale, which according to DOE provides recoverable reserves of 1 trillion barrels.” (Ref. 20 )

     The president is quick to point the finger of blame at everyone but himself. Indeed, “The president is correct to say that Congress needs to ‘get moving on a comprehensive energy strategy that pursues both more energy production and more energy conservation.” But, the president has failed to take those steps which he himself could have undertaken. He could have lifted “the many onerous regulatory burdens and restrictions on production that have gotten the United States into this situation in the first place.” (Ref. 20 ) The Obama administration has given the appearance of trying to find any and all excuses to avoid domestic oil exploration and drilling. “Case in point, an administration report used to justify its six-month ban on new deep-water drilling in the Gulf of Mexico in the wake of the BP oil disaster. … Now the Interior Department’s inspector general has confirmed that the White House did … alter a report that was supposedly the work of scientists and experts in the field to make it appear they supported the ban.” 8 of the 15 scientists involved in preparing the original report signed a protest over the revised report, stating that “We believe the report does not justify the moratorium as written and that the moratorium as changed will not contribute to increased safety and will have immediate and long-term economic effects.” (Ref. 21 )

     How serious is the president about really increasing domestic energy production? “If the president were {really} serious about increasing domestic production, he would {immediately} urge exploration of promising no-drill areas like the Arctic National Wildlife Refuge in Alaska and the Atlantic and Pacific continental shelves.” (Ref. 22 ) He should have taken these steps two years ago – he should be taking them now.

     Only now, the president is saying that he will begin to lift these restrictions. Does anyone want to put up money that drilling will actually begin before 2018 if Obama is re-elected in 2012? Once the pressure of a political campaign is over, what will Obama’s policy be then? Will President Obama formulate, support and fight for a consistent and comprehensive energy policy? Or, will it be the same-old, same-old patch here and patch there to keep the dogs at bay? Will President Obama be consistent – or will he be consistent by being inconsistent?

Economics 101

     “The price of gold has been steadily increasing over the past decade—from $300 per ounce in 2003 to $1,100 per ounce in 2010. This year, gold topped $1,500 per ounce, setting records for both the cost itself and the speed at which the price is rising. “ (Ref. 23 ) In November 2008, when President Obama was elected, the price of gold stood around $750 an ounce. (Ref.:

      Rather than thinking in terms of the price of gold in dollars, it is more instructive to think of the value of the dollar as measured against gold, i.e., consider the value of gold as a constant and then let’s see how the dollar has been changing in value. Then, let’s see how much the cost of oil or gasoline has changed as a result of a decline in the value of the dollar. In other words, if the cost of gasoline were to be measured against some constant, i.e., gold, then what is the effect of the change in value of the dollar against this constant?

     In November of 2008, the price for an ounce of gold stood at $750 and the dollar was worth 0.00133 ounces of gold. Here, in 2011, the price of gold has jumped to $1,500 an ounce, meaning that the value of the dollar has dropped to 0.000667 ounces of gold. Since Barack Obama has assumed office the value of the dollar, as measured in terms of the price of gold, has decreased by 50%, from 0.00133 ounces to only 0.000667 ounces.

     O.K. Now, let’s see how the price of gasoline has changed over this period of time. Today, in the 2nd quarter of 2011, the price of regular gasoline has risen to around $4.00 per gallon. Back on November 10th of 2008, the average price of regular gasoline stood around $2.22 per gallon. (Ref.: In other words, the price of gasoline from November 2008, until now had risen nearly a factor of 2 or, conversely, the value of the dollar, as measured in terms of the value of a gallon of regular gasoline has declined by nearly 50%, almost the same decline in the value of the dollar as measured by the price of gold. I contend that a major portion of the increase in the cost of gasoline is the result of the decline in the value of the dollar, and, I further contend that one of the main factors in the decline of the dollar over the past 2 or 3 years is the massive increase in the debt facing the United States since Obama and the Democrats assumed power and went on their unprecedented spending spree and their attempt to combat the deficit by increasing the money supply. A Massachusetts Republican spokesman, “blaming President Obama for the run-up in fuel prices {said} ‘If the dollar wasn’t so weak, commodities like oil wouldn’t be so expensive. … If president Obama stopped printing too much money, we could see a drop in prices at the pump'.“ (Ref. 24 )

     Want to strengthen the dollar and contribute to reducing the price of oil – how about reducing the deficit? How about turning the oil companies loose? “The oil industry already pays the U.S. treasury more than $95 million a day in taxes, rent, royalties and the like. If you expand exploration, you expand revenues. According to estimates, if America unlocked its oil and gas reserves, the government could take in somewhere between $1 trillion and $2 trillion in additional revenue over the coming years.
     “And that’s not counting the increased revenues from the stimulus of lower fuel and energy costs.
     “Trade imbalances? Domestic oil and gas is, by definition, not imported. The more we produce here, the less we import, or the more we sell overseas. Either way, the trade deficit goes down and GDP goes up.
     “Jobs? You can’t drill for American oil or natural gas in China, Saudi Arabia, or anyplace other than America. Oil and gas exploration jobs pay more than twice the national average.” (Ref. 25 )

     While the president and the liberals in Congress have been calling for an end to “tax breaks” for oil companies and for higher taxes on their profits, it has been correctly pointed out that “the Obama administration is contributing to higher energy prices, which inflate the companies’ bottom lines.”
     “The Environmental Protection Agency has prevented Shell from proceeding with its Northern Alaska drilling project after Shell reportedly invested more than $4 billion in the project.” (Ref. 26 )
     While stymieing domestic drilling, “President Barack Obama promised {while visiting South America} that the United States would help Brazil develop its offshore resources. “(Ref. 26 ) Sure, more imported oil, but no support for our domestic oil production! Sounds like a great plan.

     How about the part of the president’s plan that calls for more taxes on the oil companies that “aren’t paying” their fair share? “Between 1998 and 2008, the oil and gas industry paid $1 trillion in total income taxes. That’s in addition to the $178 billion the companies sent the federal government in rent, royalty and bonus payments between 1982 and 2009. What oil companies pay in taxes is higher than the average American manufacturer, more than their ‘fair share’.” … “Demonizing the oil companies won’t produce one more drop of oil. Neither will higher taxes, which will {negatively} affect employment and create many more negative consequences.” (Ref. 26 )



  1. Solving America’s Energy Dilemma, David Burton,, {Article 8; Govt_02}, November 15, 2005.
  2. America Needs 4 to 7 Dollar-a-Gallon Gasoline, David Burton,, {Article 17; Govt_04}, May 2, 2007.
  3. They’ve got us over a barrel, David Burton,, {Article 23; Govt_06}, May 2, 2007.
  4. A few simple baby steps to begin solving the “energy crisis", David Burton,, {Article 46; Govt_10}, June 30, 2008.
  5. Nero is Still Fiddling as Rome Continues to Burn, David Burton,, {Article 66; Govt_16}, December 18, 2009.
  6. Catastrophe or Opportunity, David Burton,, {Article 83; Whatever_18}, June 14, 2010.
  7. The Circus is Coming to Washington!, P. A. Wilshire, EnergyDigger,!.aspx (accessed 13 May 2011), March 14, 2011.
  8. Oil Company CEOs Face Congress, Stephen Ohlemacher, Associated press, (accessed 13 May 2011), May 12, 2011
  9. Senate Oil Hearing: Of Tax Breaks And Unicorns, Frank James, NPR, (accessed May 13, 2011), May 12, 2011.
  10. Obama’s new math, Editorial, Boston Herald, Page 20, April 28, 2011.
  11. Japan syndrome mustn’t empower anti-nukes, Cal Thomas, Boston Herald, Page 21, March 18, 2011.
  12. When the impossible happens, Joan Vennochi, Boston Sunday Globe, March 20, 2011.
  13. Romney, Pawlenty hammer Obama on energy, Ben Geman, E2 Wire, THE HILL’s Energy & Environment Blog, April 26, 2011.
  14. Obama’s Energy Lunacy - Will consumers revolt against the Volt?, Mike McDaniel, PAJAMASMEDIA, April 21, 2011.
  15. Obama Talking the Talk on Energy Independence, Jazz Shaw,, posted at 2:55 pm on March 30, 2011.
  16. Rising Gas Prices and Obama’s Failure to Lead, Newt Gingrich, Human Events,, March 16, 2011.
  17. In shift, Obama takes steps to speed domestic drilling, John M. Broder, Boston Sunday Globe, Page A10, May 15, 2011.
  18. Energy jobs at stake , Jonah Goldberg, Boston Herald , Page 27, December 7, 2010.
  19. Fuel for firing Obama , Michael Graham, Boston Herald , Page 19, March 23, 2011.
  20. Drilling delayed makes crisis, Mackubin Thomas Owens, Boston Herald , Page 21, May 13 , 2011.
  21. Fudging the facts on oil, Editorial, Boston Herald , Page 24, November 11, 2010.
  22. Obama’s energy hoax, Editorial, Boston Herald , Page 14, April 2, 2011.
  23. The True Price of Gold, Lindsey Blomberg, The Online Home of E–The Environmental Magazine, May 16, 2011
  24. DEMS: OIL’S NOT WELL, Thomas Grillo, Boston Herald , Page 20, May 12 , 2011.
  25. Obama has power to energize U.S. , Jonah Goldberg, Boston Herald , Page 21, January 24, 2011.
  26. Obama flunks econ lesson, Cal Thomas, Boston Herald , Page 19, May 10, 2011.

  19 May 2011 {Article 103; Whatever_23}    
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