Obama Can Control Some Factors That Affect Oil Prices
Domestic energy production has increased despite president, not because of him
March 2, 2012
There are countless factors that affect oil prices, and some of them fall outside the president's immediate control, but to argue that an American president has zero ability to impact domestic gasoline prices is simply false. As most people know, the price of gasoline is largely determined by the price of oil. The recent increase in oil prices, and the subsequent increase in gasoline prices, is largely due to a potential disruption in the supply of Iranian oil—there has been no actual decline in international oil production. Conversely, allowing America's oil and natural gas producers to explore our vast oil reserves would absolutely quell concerns about future oil production, increase international spare capacity, and bring down the price of gasoline.
Under the Obama administration, consumers have seen a real increase in energy prices. The price of gasoline has increased by more than 90 percent. Last year, the average American household spent over 8 percent of its income on gasoline, the largest portion in three decades. Still, the president opposes oil and gas development here at home: Billions of barrels of oil contained in Alaska, America's West, and our Outer Continental Shelf are off-limits.
In the face of criticism, the president is quick to trumpet increased domestic oil production going on today. True, the U.S. is producing more of the energy we consume, but these trends stem from increased development of oil and natural gas on private and state lands—production on federal lands is declining.
Only about a third as many offshore drilling permits are being issued compared to historical averages, and the approval process takes nearly three times as long. The president has publicly taken credit for natural gas development across the country, but most of the shale boom is due to technical innovation and exploration that began years ago. Finally, the Keystone XL pipeline would have created thousands of blue-collar jobs and increased America's energy security, had the president not killed the deal. Indeed, domestic energy production has increased despite President Obama, not because of him.
Far from facilitating domestic production, President Obama has threatened to cripple America's job creators by repealing standard cost recovery tax policies employed by oil and natural gas producers. Raising oil and natural gas producers' taxes by $90 billion would force these employers to delay or scrap future projects—outcomes that can only increase the price of oil.
The complexity of the energy markets makes it impossible to pin the blame of high gas prices squarely on President Obama. But by the same token, the president has largely squandered the options available to him, and now advocates policies that would only take the country in the wrong direction. Our energy policy needs to harness all our resources to position ourselves once more as a global leader of innovation and growth.