Let's Find a Way to Afford Gas Prices
President Obama owns high gas prices, whether he’s responsible for them or not. As he travels the nation trying to claim credit for glimmers of good news in our energy economy, he can’t shed blame for high gas prices, no matter how dire they seem for his reelection prospects.
So if the president isn't responsible for high gas prices, who or what is? It doesn't help that oil is a global commodity, easily transported to the land of the highest bidder. And developing nations are aggressively trading for oil, seeking to fuel economic development and ever richer populations. Concern about the combustible Iranian regime and what that means for the future of their oil production is also driving up prices. Since global crude oil prices make up about three fourths of the price of a gallon of gas, these are considerable obstacles to affordable gasoline.
There are local issues, too. Like the glut of supply at Cushing, Oklahoma, with no practical way to get the oil to refineries and buyers. This week, Obama will go to Cushing and talk about what his administration is doing to alleviate this regional bottleneck. Unfortunately for him, it means speaking in support of the southern leg of the Keystone XL pipeline, the only portion of the project advancing in the wake of his decision to deny a construction permit for the Alberta-to-Texas route. But that’s another story.
The East Coast is also suffering the closure of several refineries in Philadelphia, Delaware, and the US Virgin Islands, representing over a million barrels per day of capacity, partially as a result of the costly and at times conflicting regulatory expenditures that refineries would face should they continue operations. Earlier today, a House Homeland Security Subcommittee held a hearing on the ramifications of these closures for our security and for critical infrastructure safety. We’ll also have to worry about higher and more volatile prices for fuel in the Northeast region, especially as the supply chain for this high-volume energy market gets longer.
OK. President Obama can’t turn a dial or pull a lever and reduce gas prices. But if he’s not responsible for high gas prices, shouldn't he quit claiming credit for all the other portions of the oil market that he isn't responsible for? Like aggressive oil development on private lands giving us our highest oil production in eight years. Or our reduced dependence on foreign imports. (Well, actually Obama is sort of responsible for that. The president’s continued bad economic policies make it more difficult for us to fuel our cars, depressing our ability to pay for oil and pushing down imports. What a bright silver lining.)
But there’s another important and entirely controllable side to this conversation. Of our half a trillion dollar trade deficit, purchasing foreign oil constitutes 60 percent. That’s $332 billion that we send to foreign countries, including unfriendly regimes, instead of to domestic companies and American workers. Importantly, if we had spent that money buying American oil, more Americans would have jobs and more Americans would look at high gas prices as an inconvenience, not a crippling tax on their limited incomes.
So domestic drilling might not give us $2.50 gas, but it’s certainly not a short sighted political point, either. It’s a conceivable and feasible way to put Americans back to work, cultivate substantial wealth, and bring our trade deficit back into balance. It’s a plan to increase employment in one of our fastest growing sectors and build a vibrant, competitive, capital-rich economy. And with the most advanced, safest exploration and development technologies on the planet, we can increase output of our domestic resources safely and buy more time for President Obama’s much beloved renewables to mature enough for the market.
Who cares who’s to blame for high gas prices? It’s an argument that holds back action and leaves Americans languishing. Instead, let’s find a way to pay for them.
This piece originally appeared on the National Journal Energy Expert Blog.