Obama’s Gas Crisis

We have become a nation that thinks the federal government is responsible for everything, good or bad. Since that is the case, here is why gas prices are rising to five dollars a gallon and why the gas crisis is Obama’s fault.

The price of gasoline, like all commodities and services, is based on the available supply and how many people want it. Even though the American economy is still languishing in a painfully slow recovery from a severe recession, other parts of the world are doing better. The two largest nations in the world, China and India, who together have over one quarter of the earth’s total population, are in an incredible economic boom.

After centuries of subsistence economies that kept their people in poverty, both countries have moved to the free market economic system, resulting tremendous economic growth. This growth fuels the demand for all types of raw materials, especially oil. This increases the demand for oil supplies which, in turn, increases the price. Just look at the business channels and you will see that a barrel of oil now costs over one hundred dollars. When this price goes up, gasoline prices go up.

Despite a world-wide economic slowdown, other underdeveloped nations’ economies are also growing as they embrace the free market system, adding to the global demand for oil. Again, as demand goes up, the cost goes up for all consumers around the world. Further inflating the price of oil is the uncertainty of supply.

Commodity prices will also rise when there is a risk that production and supply will drop. Venezuela, a major supplier for western hemisphere nations, has threatened to manipulate its oil production levels for several years in its government’s attempts to exert influence among its neighbors and cause economic hardship in the United States. When Venezuela’s Chavez government started this, there were spikes in oil costs, based on the uncertainty of supply that resulted in gasoline prices. However, these periodic rumblings from the Chavez government have not come to pass and they have been factored into domestic oil production.

The Iranian government has now begun to destabilize oil supply by threatening to close the Straits of Hormuz. One fifth of the world’s oil supply moves through the Straits. The threat of disruption of oil tanker traffic in recent weeks has caused the price of crude oil to rise nearly twenty-five percent. In conjunction with this, Saudi Arabia, our purported ally, cut both its oil production and exports in December, further inflating domestic oil prices.

As foreign nations conspire to reduce oil available to the American consumer and raise the price of gasoline, what steps has the Obama administration taken to reduce the impact on the average American?

The answer to stabilizing American gasoline prices is to increase domestic production. Crude oil pumped from American wells and waters is not subject to the political intrigues of foreign nations. Domestic production protects consumer prices by adding to the world supply which reduces prices by both making more oil available and reducing the uncertainty of world supply. So what has Obama done to make gas cheaper for us?

In the Gulf of Mexico, the government has only issued 43 new drill permits since the BP oil spill ended in October 2010. The approval rate now averages. 2.5 permits per month in comparison to 5.8 permits per month before the spill and the average approval time have increased from 34 days to 109 days.

President Obama vetoed the Keystone pipeline that would bring additional oil from Canada to Texas refineries, increasing total domestic supply. In the same bill, Obama also rejected opening up a small section of the arctic wildlife refuge to drilling. In a statement released by the Department of the Interior, their spokesman claimed that they recommended that the administration reject the pipeline because it had inadequate time to review the pipeline’s environmental impact. The payroll tax extension bill required the administration to decide on the pipeline within sixty days of enactment.

Not mentioned by the Obama administration was the fact that the Keystone pipeline was first proposed in 2008 and the EPA commented on its draft environmental impact statement on July 21, 2010. While Interior said it had insufficient time to review the pipeline, it had already been under government review for more than two years! Oil pipelines are not unusual. The US has some 40,000 miles of smaller, feeder pipelines plus another 55,000 miles of large trunk pipelines. This is relatively small when compared to the 1.8 million miles of natural gas pipelines running through the country. The Keystone line is not especially unique and would just add to the aggregate total. TransCanada, the owner of the Keystone pipeline, projected that it would create 20,000 direct jobs in manufacturing and building and another 118,000 indirect jobs in businesses that serviced the construction of the pipeline. 138,000 jobs are more than half of all jobs that the US economy creates in a month. With the economy growing as slowly as it is, couldn’t we use these jobs?

During the Bush presidency, his administration approved 41,700 permits to drill for oil on federal lands. This was more than a 350 percent increase over the previous eight years of the Clinton administration. Under Obama, the average number of permits issued numbered 4,200 per year, according to the Bureau of Land Management.

As President Obama wrote to me last year, “I understand the impact gas prices have on families and businesses across our country, and that is why I am committed to developing our capacity for domestic energy production. My Administration is working to expand responsible oil and gas development in the United States, ensuring this is done safely and responsibly.”

So, Mr. President, where are the pipelines? Where are the offshore wells? Where are the drilling permits? Why are federal lands closed off to drilling? Why is gasoline heading to five dollars a gallon?

At least we know the answer to the last question, Mr. President.

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One Comment to “Obama’s Gas Crisis”

  1. Matt
    Posted September 4, 2013 at 12:43 AM | Permalink

    I take a great deal from this piece of writing from your website.

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