Oil prices, embargoes, and lies

The Kimmeredge oil well. Is raising the price of oil a motive to let the Middle East erupt in flames?
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Oil prices have more than tripled from recession-era lows, and motor fuel prices have more than doubled. The last time prices were so high, a certain US Senator from Illinois used that against the then-incumbent President and that same Senator’s eventual opponent. That Senator is now President. Now he seems to want oil prices to stay high.

As oil prices rise

None can deny that oil prices are much higher today than they were when the man now holding office as President, took that office. In fact, oil sold for as low as $33 a barrel. Now, the West Texas light, sweet crude sells for $109.77 a barrel. Incredibly, Brent North Sea Crude, which has sulfur in it and is thus more difficult to refine, sells for even more! $125.47 a barrel, to be exact.

Gasoline prices have almost kept pace. When financial markets crashed in 2008, regular gasoline in northern New Jersey sold at $1.69 a gallon. A gallon of gasoline in the same region today sells for $3.37. That’s regular, not premium. And that price has risen three cents a day for two days straight.

High oil prices became an issue in the Presidential campaign of 2008. They also became an issue in the House of Representatives. Few have forgotten the day when Representative Maxine Waters (D-CA) blurted out, to several oil company executives seated at the green table before her committee,

Guess what this liberal would be all about?  This liberal would be about socializing … uh, umm.  … Would be about, basically, taking over, and the government running all of your companies.

Waters provoked her colleagues to laughter on that day. Two newsmen said that Waters really meant to have the government nationalize all oil companies. Commenting on that remark, they then said,

We have seen this movie before. It’s called Hugo Chavez.

They were talking about the President for Life of Venezuela.

One commentator calls for an embargo

The Kimmeredge oil well. Oil prices depend on the productivity of wells liek these

The Kimmeredge Oil Well, the oldest continuously productive oil well in Britain. Photo: Graham Horn (Geograph.UK); Creative COmmons Attribution/Share-alike 2.0 Generic LIcense

On the Fox News Channel, Lou Dobbs created a stir when he said that the oil companies were shipping gasoline, and other refined oil products, to China. And in fact, the economies in India and China are in “boom” times. Thus their people are using a lot more motor fuel than ever.

In reply, Bill O’Reilly (The O’Reilly Factor) called for the most radical measure that he has ever proposed. In three consecutive “Talking Points Memos,” he has called for an export tax on refined oil products. Furthermore, he said that since “We, the People” “own” American territory, and every mineral resource on it, the government has the authority to forbid companies to export gasoline abroad, until they first “take care of the folks at home.” How he would measure that happy result, he never said. But he did suggest that the Interior Department overtly threaten to disallow any future drilling unless the companies agreed to such terms.

Economists have a word for the result that O’Reilly seems to want: Embargo. He will not breathe that word out loud. But his “export tax” idea, and the policy he proposed to have the Interior Department refuse any further leases that do not reserve refined products (in whole or in part) for the American market, amount to embargo.

The American Thinker warned of where embargo might lead:

Do you have any idea where this leads?  There won’t be another refinery built in the United States.  We will end up importing all our refined products to escape the controls.  If the only way U.S. oil companies can reap the world price is to sell overseas, then you’ll see this entire industry migrate out of the United States.

That would be the sober reaction. The less temperate reaction would be the last scene in Atlas Shrugged, Part One, in which Ellis Wyatt lights his trademark Torch and leaves this telephone auto-answer greeting:

This is Ellis Wyatt. I’m gone. Don’t try to find me. You won’t. I am on strike.

In sum, if TMNHOAPOTUS really wanted to be a populist, he would do exactly as Bill O’Reilly suggested about oil prices. When he made his speech on Thursday afternoon at the University of Miami (Florida), he could have said:

By the authority vested in me, as President of the United States, I hereby order that any oil taken out of the ground, or the ocean floor, from this day forward, be subject to export controls. From now on, before you ship our gasoline to China or India, you will ship it first to the American market. You will keep the price of motor fuel in America below $2.50 per gallon for regular, or else you will export no refined petroleum products at all.

Whether that would have worked or not (laying aside whether he risked a lot of Wyatt’s Torches), it would have been a good stem-winding, populist speech.

But, to O’Reilly’s chagrin, that is not the speech he made.

And from Obama, crickets

Instead, Barack Obama said that he had no “magic bullets” to bring oil prices down. Indeed, the college students in his audience did not seem to mind! They laughed with him when he mocked the obvious solution: drill for oil to increase supply. They cheered when he literally said,

We’re going to double down on green energy.

To name one example, he talked of deriving motor fuel from algae. In other words, pond scum.

Thus he had his chance to score a lot of political points, at the expense of an industry whom everyone loves to hate when its prices rise. And he did not take it.

Aside from the spectacle of Bill O’Reilly’s jaw hanging open so that houseflies can fly into it, this means only one thing: Obama wants oil prices to rise. In fact, he said so three years ago, and so did his advisers. He said that, with the cap-and-trade system he proposed,

electricity prices would necessarily skyrocket.

And like those U. Miami students two days ago, his listeners cheered. They cheered almost as loudly when his “energy czar” wondered aloud how to make motor fuel prices in America go up as high as they are in Europe. (Or Israel, for that matter, though no one mentioned that.)

That’s why Obama disallowed the Keystone XL pipeline. That’s why Obama allowed no more drilling after the Deepwater Horizon incident, and today says that he will allow it, but doesn’t. (His bureaucrats seem to find any excuse not to allow drilling on any given lease.) Now he has the results he wants. So why should he think about slapping an embargo on American-refined gasoline, et cetera?

Add to it that his chief jobs “adviser,” Jeffrey Immelt of General Electric, has ordered that his “company car” program offer the Chevrolet Volt as the only car available.

Add something else to the mix: UN Agenda 21. Oil prices that rise and stay high are one way to convince people to move into those dingbat dormitory developments that the Agenda calls for building in major cities. In fact, no one will ever consider getting rid of his car until the total price of motor fuel, insurance, maintenance, and repairs is higher than the price of taxi, bus, and/or rail fare. Obama knows this. So do his “environmentalist” friends.

So when Obama insists that “there are no magic bullets,” he lies. He has deliberately restricted the supply of oil, and for a reason: he wanted oil prices to rise all along. Now he has his wish.

Summary

When oil prices rise, politicians and other rhetoricians always talk of populist measures. Why not this time? Because now our nominal head of state wants oil prices to go up and stay up. His “double down” remark shows that he will keep oil prices high through the summer. That might prompt the American people to light millions of “torches” of their own, at the polls this November. All political challengers, should have such luck in their choice of incumbents.

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Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.

12 Responses to Oil prices, embargoes, and lies

  1. JamesF says:

    You do realise that US domestic oil production is at an 8 year high and the US actually had a net export of oil last year? If the US is exporting oil, what would producing more do? Lead to more exportations. The world is full of countries that can’t even produce the stuff and they would be willing to buy that US surplus at a good price. The price of oil is dictated by the market, not by the president. An embargo would be counter to a free market, a principal you claim to support.

    • Terry A. Hurlbut says:

      First, I have only your, and Obama’s word on those domestic oil production figures. Second, Obama deserves no credit for them. None. That extra production is due entirely to the permits that Bush granted.

      And I never said that I agreed with Bill O’Reilly’s embargo proposal. I think it stinks, for the same reasons I have given all along.

      But: if TMNHOAPOTUS really wanted oil prices to go down, an embargo would be just the sort of brass-hat idiotic stunt he would pull. Contracts would mean nothing to him.

      So if he is actually willing to let those prices rise, that can mean one thing, and one thing only: he wants those prices to rise.

      • JamesF says:

        So if he does something it is brass-hat and idiotic, but if he does nothing he wants gas prices to rise as part of an international conspiracy?

        Shorter, Terry: Obama can do nothing right as far as I am concerned.

        If you produce more oil you are just going to export more overseas, basic economics, increased domestic oil production will have minimal impact on the price now that you have are exporting more than importing.

  2. JamesF says:

    I am actually so confused at how this is consistent with any of your other statements. First you call the president a socialist that over step his authority. Now you want him to circumnavigate congress and create a law that will prevent US companies from getting the best possible price for their product. Now to me that is more socialism.

    On the flip side you seem to be almost fantastical about the idea of Israel going to war with Iran, but it is this fear that is driving up the oil prices.

    I find this convenient about face confusing.

    • Terry A. Hurlbut says:

      As I have said before, I never said that I thought that Bill O’Reilly’s embargo was a good idea. That’s a bad idea. But it is just the sort of idea that a populist President would put in place, if he was looking for a quick fix to get re-elected.

      So if he doesn’t do that, am I supposed to believe that he suddenly has respect for markets or contracts? That would require more persuasion than the universe possesses.

      No. He’s actually using global markets as an excuse. And that he refuses to allow any more oil production than he can get away with throttling, speaks volumes.

  3. Slock says:

    I think you may want to revise this statement you wrote, “In fact, no one will ever consider getting rid of his car until the total price of motor fuel, insurance, maintenance, and repairs is higher than the price of taxi, bus, and/or rail fare”. I have not crunched the numbers myself but I believe the cost of owning a car now exceeds the cost of the alternative transportation you listed.

    • Slock – Re: Your February 25, 2012 at 11:17 pm:

      You stated, that the:

      “….cost of owning a car now exceeds the cost of the alternative transportation….” [Your words]

      However, you did not qualify what you stated. You failed to mention that “alternative” transportation is often “public” subsidizied taxpayer funded transportation. Witnessing from my own state and resident county, I dare say that there are numerous other county and local governments collecting tax monies from the rank-in-file taxpayers to pay for transportation for those who don’t own and operate their own set of wheels.

      Hence, your comparison is not an apple to apples and oranges to oranges comparison, which makes your assertion, rather mute.

  4. Excellent says:

    How specifically has this occured… “He has deliberately restricted the supply of oil”.

    How has this president been able to have such a big impact on oil prices when prior presidents seem to have no control over oil prices?

    Didn’t oil get to around $140 a barrel when Bush was president? How did that happen?

    • Terry A. Hurlbut says:

      Refusing permits in the Gulf of Mexico, or on any public lands.

      Letting the EPA and State Departments of Environmental Protection and Energy shut down the building of new refineries.

      About that price spike during the Bush era: Hurricanes Katrina and Rita shut down twenty percent of our refining capacity and nearly all production in the Gulf until they finally blew over and blew themselves out. Whereas Obama has determined: Drill nowhere.

      • Excellent says:

        Those hurricanes were in 2005. Oil reached it’s high of 140 in 2008 so when you say they finally blew over and blew themselves out I don’t see the connection to 140 oil in 2008. That explanation seems anecdotal.

        When was the last time permits were permitted in the Gulf of Mexico or on public lands?

        Also, if we are net exporters of oil (2011) that clearly reflects that there is something else in play then just needing more oil drilling domestically.

        Do you think the oil company monopoly has anything to do with the situation at all? And just so you know I worked for Exxon for over 30 years, but I’m objective enough to be honest about what the oil companies represent. What about a weak dollar as a result of 30 years of FED policy. Seems all commodities are up huge the last 10 years.

        IMO too many people get caught up in their own political agendas and can’t look at things objectively because they are married to a political ideology.

        Saying we just need to drill more, or that we need more green is too simplistic. There is much more at work here behind the scenes then we will ever probably know about.

        Just my 2 cents…

  5. Cartwright says:

    The supply needs to be increased. That is plain and simple.
    Drilling more increases the supply, measurably. The failure that is called ‘green energy’ cannot possibly increase the supply enough to make a dent. Simplistic or not, I’ll take drilling more any day over the pie in the sky that is green energy.

  6. Excellent says:

    The world supply needs to be increased. The U.S. is producing at 2002 levels, yet most of that is being sold on the world market.

    Just drilling in the U.S. won’t solve the problem. It’d be great if that was the answer. Oil production numbers for the last 30 years don’t support that though. Now, if we had sustained global supply increase, then YES that would cause prices to fall.

    It’s my dream that people will stop listening to politicians when it comes to oil prices and examine the numbers for the last 30 years. They tell a totally different story.

    Hey, I can still dream can’t I?

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