Troup’s Corner: Chuing on Gas Prices

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I’m happy to see that the President finds all of this to be so funny. Bill Clinton felt your pain. Bush forty-one wanted to be kinder and gentler. Somehow this President has lost his sense of touch. To be sure, an ironic ailment for the self-proclaimed “warrior for the middle class.”

At a speech in Largo, Maryland at Prince George’s County Community College, the President decided to talk energy. Really, where else would one discuss our Nation’s energy policy but a community college campus? It makes some sense, as campuses are pretty much the last few places where he is still a rock star. I think he knows this to be true, since he used the trick employed by rock stars and professional wrestlers to garner cheap props – he worked the name of the location into his spiel.

In any event, it was unfortunate that the President chose to display his arrogant side. His speech was an interesting blend of Al Green and Alfred Newman, appearing smooth and cool to his audience, but condescending and out of touch to observers from afar. He mixed in a few yucks minutes after telling community college students (commuters) that he realized there was pain at the pump.

One example of his new material: ” . . . politicians dust off their three-point plans for $2 gas. I guess this year they decided to make it $2.50. Why not $2.40? Why not $2.10?” That’s golden, Mr. President! It’s not quite: “Why do they call it Ovaltine? The jar is round. The cup is round. They should call it roundteen.” But he’s getting there. How about I give it a go? “Every generation, politicians dust off their spending plans that will keep unemployment from reaching 8%. Why not 8.3? Why not 9.1?” I’ll be at the Warner Theater next week. Tip your bartender.

The problem that the President has when it comes to gasoline prices is that humor is his lone remaining defense mechanism. Rationalizing really doesn’t work. While he noted that: “gas prices and the world oil markets are putting a lot of pressure on folks,” it is a similar defense that George W. Bush employed. Candidate Obama spent 2008 campaigning against “eight years of failed Bush economic policies.” With the shoe on the other foot, the market forces defense rings hollow.

The President has another problem when it comes to the market forces rationalization. It took the price of oil to tickle $150 per barrel to yield $4 for a gallon of gas in 2008. We are now seeing similar results with oil at $106 per barrel. People want to know how a lower price of inputs four years later can yield a similar price for the output. This is why politicians are dusting off their three-point plans for $2.50/gallon gasoline. Something is clearly amiss in the marketplace, and a plan is needed to bring some equilibrium. Why doesn’t the President seem concerned?

In fairness, the President has decided to reconvene the Oil and Gas Price Fraud Working Group to examine speculation in the marketplace. Why not tout this step, as opposed to making a political point? One reason may be that the think tank was established last April, and has provided no results to date. Also, the group is headed by Attorney General Eric Holder, and he has a few other problems to tackle right now (cough, fast and furious).
President Obama has yet another problem when it comes to the gasoline issue, in that he is boxed in by his own words. Candidate Obama said he had no problem with $4 gasoline. He took issue with how quickly it got there. Prices rise over time, and rational people know that $4 gasoline is a given without changes to America’s energy portfolio. That said, a ninety-five percent increase (using a $2 base) during his first term, coupled with “what, me worry” arrogance leaves that opening for those on the right who believe the President is willfully creating this hardship to satisfy his ideology.

Adding fuel to that fire is Energy Secretary Steven Chu. Chu said in a 2008 interview with the Wall Street Journal that “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Again, this provides inroads for those who will say that this administration is satisfied with taking the United States down a notch on the world ladder. Think about that quote. It would be like Wal-Mart telling its suppliers, “We want the pricing of your twentieth best customer.” In the interest of efficient use of resources (something that ought to interest conservatives), the United States should move towards an “all of the above” energy policy as the market allows; however, the United States should not apologize for its gas prices. Are we going to demand the same of the Chinese and the Venezuelans (nations that enjoy highly-subsidized gasoline)?

The President made clear to the students at his speaking engagement that the United States has two percent of the world’s known reserves, but uses twenty percent of annual production. He also said that someone taking a math class at PGCC could figure out that there is a math problem. There certainly is a math problem. The President is comparing numerators with different denominators.

The two percent figure is also a bit misleading. The United States currently has 1,442 billion barrels of recoverable oil within its dominion. Only 20 billion barrels are deemed to be part of known reserves because of the amount of deposits the government has declared off-limits. The Institute for Energy Research declared in 1944 that oil reserves were at 20 billion barrels. That is the same figure as today, yet the US has produced 160 billion barrels since then. In other words, technological advances are constantly redefining the word recoverable. If we eliminate all of the middle men in our energy production, we can limit speculation and keep prices reasonable until widespread renewable energy becomes feasible.

It is critical to add renewable energy to our portfolio; however, our government cannot continue a punitive mind-set with current methods of production. The right must realize that renewable energy is ultimately beneficial to our Nation. The left must realize that the world’s largest economy can remain strong while the bridge to an affordable green infrastructure is built.

Letters to Editor

  1. D LaMotte says:

    Gosh, where to start? Are we not drilling domestically more than we were during the previous administration?

    Are we not addicted to “cheap” gas? Many in the world are paying $8.00 a gallon …good for them that they are not filling up Tahoes. I was under the impression that the president really cannot dictate gas prices..but how convenient to admonish him in an election year. How can anyone be mad at high gas prices when we have spent the last 25 years ignoring the necessity to wean-off fossil fuels.

  2. John Rolfe says:

    D LaMotte, I agree with what you are saying, but even you have to admit this is bad. I am 23 years old, I remember when gas was $ 1.50 a gallon. To now be almost $ 4.00, and jump up almost 20 cents a gallon in 2 weeks, not very good. And now O Malley wants to add more taxes to it. I agree we need to get away from fossil fuels, but the gas companies make that really hard to do. If you disagree with that last statement, please correct me. Big Oil companies lobby the government and give campaign contributions, to help keep taxes high on oil products and on alternative fuels.

  3. Michael Troup says:

    @DLa – What you say is true on its face; however, the drilling permits were not his authorization. Like many things, this is a problem years in the making. In 1998, Bill Clinton denied Arctic drilling on the basis that it would take ten years before we saw any benefit from it. Taking President Obama at face value, Bush 43 when crafting an energy policy, consulted oil and gas firms at a ratio of 40:1 over other energy sources. Maybe we agree that our leaders have had chances to get in front of this thing?

    BTW, I think I was also quite fair to President Obama. The election year has nothing to do with it. I’m not a member of any central committee.

  4. DLaMotte says:

    I agree John. I don’ t mean to suggest that $4.00 gallon gas is not exorbitant for everyone. I become
    so frustrated at our political “traffic jams” every time we attempt to change course…I mean, tax credits for
    Oil companies?! Additionally, living in a global world has us competing for the same fossil fuels as China,
    India, on and on. It really is about time our nation commit to alternative fuels so we are not tempted
    to drill in vital animal habitat, like the Artic. I have no idea,though, how we reign in the power of
    the oil companies. Taking away tax credits as a start? I don’t know….

  5. To riff on DLaMotte’s response…gas does cost $8 a gallon in many other countries, but these countries also aren’t financially supporting a foreign policy and petroleum industrial infrastructure in the Middle East. I’m in agreement that we should look for alternatives to fossils fuels mostly because of our nation’s dependence on Middle Eastern oil. My question is how much our foreign policy investment in the Middle East and support of oil industry interests (which serves to keep our gasoline prices low) reduces the incentives for American industry to develop those alternatives.

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