Obama Leading the Wrong Direction on Gas Prices

Beating up on the oil companies doesn’t solve the problem of high gas prices.

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America desperately needs an American energy policy

Under Barack Obama, it doesn’t have one. What it does have is an ongoing effort to encourage and subsidize the development of so-called alternative sources of energy, but only at the expense of existing fuels like coal, natural gas, and oil.

Following the infamous Gulf oil spill, the Obama administration took steps to block any additional oil and gas development in the Gulf of Mexico. In what should come as a surprise to no one, this was followed by a dramatic increase in energy prices, particularly gas. [Check out a roundup of political cartoons on gas prices.]

Now, because the price of gasoline is too damn high, Obama has reversed course, announcing in a recent radio address that he’s going to push to bring energy development in the Gulf back on line.

It’s too little, too late. And it’s hard to believe. Texas Republican Sen. Kay Bailey Hutchison, who favors expanded domestic energy exploration, called Obama’s change of heart “welcome news,” but added it was “unclear what leases will be extended and for how long.”

Hutchison is the principal author of The LEASE Act, which extends the leases of offshore drilling operators to make up for the time lost as a result of Obama’s drilling moratorium.

“Until we have assurance that every moratorium-impacted lease is made whole, I will continue to push the LEASE Act," she said. "The domestic energy producers and workforce have been effectively sidelined for months due to the administration’s regulations, and passing the LEASE Act will give them some badly needed certainty.” But that’s only part of the story. [See a slide show of 10 states that use the most energy per capita.]

Congressional Democrats have reacted to the increase in gas prices, with some predictability, by attacking the oil companies and calling for an end to any tax breaks and subsides they receive from the federal government. What they haven’t explained is how this will do anything to bring down prices at the pump. Sure, it’s easy to be mad at the oil companies, but taking away their tax breaks without a corresponding reduction in tax rates—making the move revenue neutral—will only increase the amount of money flowing into the federal treasury. It’s a shell game, and will do nothing to benefit consumers.

Congressional Republicans, on the other hand, are doing all they can to revive domestic energy production. The House of Representatives voted recently, and ahead of Obama’s announcement, to open more of the nation's oceans for oil and gas exploration by a vote of 243 to 179.

The GOP plan would, by some estimates, create 1.2 million very badly needed jobs and, by increasing petroleum stocks, actually help lower the price of gasoline. Obama’s plan is to give money to Brazil to help our neighbor to the south develop its oil production capacity. As the president said, he wants the United States to be their “best customer.” [Check out a roundup of political cartoons on energy policy.]

Republicans, on the other hand, want to make the United States its own “best customer.” The House-passed "Reversing President Obama's Offshore Moratorium Act" requires the Interior Department to set a production goal of three million barrels of oil per day for its 2012-2017 leasing plan by forcing the department to hold lease sales off the coast of Southern California, in the Arctic Ocean, off Alaska's Bristol Bay, and in the Atlantic Ocean from Maine to North Carolina—a far bigger footprint than what the president proposes to do.

Beating up on the oil companies doesn’t solve the problems created when the price of gasoline goes up. Their profits may be big, but their revenues are, for companies of their size, rather small. Adding to their costs by raising their taxes—the cost of which may be passed along to consumers—doesn’t make it cheaper to fill up your car. The only thing that would do that is increasing supply—something the Obama administration and congressional Democrats just seem loathe to do. Drill here, drill now is more than just a slogan—it’s good policy.

  • Check out a roundup of political cartoons on gas prices.
  • See a slide show of 10 states that use the most energy per capita.
  • Check out a roundup of political cartoons on energy policy.