Energy from politics?

March 25, 2013
From a president who seems to think energy comes from politics, yet another innovation emerged Mar. 15 in a speech at the Argonne National Laboratory in Lemont, Ill. "The only way to really break this cycle of spiking gas prices," said President Barack Obama, "the only way to break that cycle for good is to shift our cars entirely—our cars and trucks—off oil."

From a president who seems to think energy comes from politics, yet another innovation emerged Mar. 15 in a speech at the Argonne National Laboratory in Lemont, Ill. "The only way to really break this cycle of spiking gas prices," said President Barack Obama, "the only way to break that cycle for good is to shift our cars entirely—our cars and trucks—off oil."

Like so many of Obama's proposals for energy, this one is vacuous. If the demonstrated ability of the price of a major oil product to spike justified policies aimed at ending oil consumption, the same argument logically should apply to other commodities. Guess what: Prices of commodities other than oil spike, too.

Other price spikes

According to data from the US Department of Agriculture the price of milk flew from $3/gal in late 2009 to $4/gal 2 years later. Yet no one likened the increase to a tax increase, as Obama did with regard to gasoline in Lemont. And no one summoned Americans to shift "entirely off" milk.

Similarly, the price of white bread jumped 16% in the first 7 months of 2012. Between June 2007 and August 2008, the price of rice jumped 38%. In February, the price of ground beef was 72% higher than it was at its recent low of October 2009.

These increases all qualify as "spikes." Where are the appeals for Americans to quit eating bread, rice, and hamburger?

In any free market, the prices of commodities, and the goods made from them, fluctuate, sometimes dramatically. This process is normal. It is good. Among other things, it assures the adequacy and efficient distribution of supply. The process as it applies to gasoline is no exception.

But, of course, Americans are characteristically touchy about gasoline prices. They feel cheated when prices reach levels high enough to make them conscious of their consumption of the product. Their hypersensitivity about the subject is unfounded, but no politician dares to tell them so. Some politicians instead exploit it to promote their agendas.

That's what Obama was doing in Illinois.

If the president really cared about the pain gasoline prices supposedly inflict on Americans, he'd work harder to increase supply of crude oil. He would, for example, make more federal land available for leasing by oil and gas producers. Instead, his administration not only leases slowly but is, yet again, discussing the shortening of lease terms and imposition of fees on leases on which drilling doesn't promptly occur. Also in service to greater supply, Obama would end the rush by agencies of his administration to regulate hydraulic fracturing, an activity already subject to state oversight.

If Obama really cared about the pain of elevated gasoline prices, moreover, he'd stop his Environmental Protection Agency from raising the costs of producing the material by unnecessarily limiting emissions of ozone precursors by refineries.

If the president really cared about the pain of high gasoline prices, he'd stop the EPA from imposing new and environmentally unwarranted limits on the sulfur content and volatility of gasoline.

If he really wanted to moderate gasoline prices he'd ask Congress to repeal Jones Act limits on tanker transportation of oil products between US ports and to accommodate renewable-fuel mandates to market and physical realities.

Hollow concern

In the context of his administration's restrictions on oil supply, zealous regulation of refining, and mismanagement of fuel chemistry, Obama's expressed concern about gasoline prices looks hollow. And it doesn't at all support the hope—popularly appealing though it may be—to move cars and trucks "off oil." Replacing vehicle fuels naturally high in energy intensity with much-less-concentrated substitutes would be a very costly project. Proposing to do so as an antidote to gasoline price spikes amounts to self-contradiction.

No amount of publicly funded brilliance can remove the form disadvantages politically favored energy must overcome in competition with hydrocarbons. It's past time for Obama to quit pretending otherwise.