Posted on 03/17/2012 10:11:22 AM PDT by SeekAndFind
No matter how much President Obama protests, the simple fact is that he continues to oppose and mock and disparage oil and gas drilling. He is a prisoner of the environmental left, and he remains on the wrong side of energy history.
And that’s exactly why he has a 59 percent negative rating on the economy, according to a recent poll, even though jobs and other indicators have actually picked up. It’s about $4 or higher gas at the pump. Polls overwhelmingly show that Americans want drilling in ANWR and offshore, and that they want hydraulic fracturing of shale for oil and gas. They also overwhelmingly want the Keystone Pipeline (by roughly 70 percent). And they believe the government can act quickly to lower gas prices in the short run.
But the president scoffs at all this. In his energy speech this week, he suggested that the drill, drill, drill crowd (of which I have long been a member) would have founded the Flat Earth Society. He says we might even have sided with 19th-century president, Rutherford B. Hayes.
Ha, ha, ha. Very funny.
But the reality is, oil, gas, and coal — not wind, solar, geothermal, and algae — are going to be crucial to America’s transportation, electricity, and economic growth for many decades to come.
What’s particularly galling about Obama’s riff is his constant use of a false statistic. The president argues that America uses more than 20 percent of the world’s oil, although “even if we drill in every square inch of this country, we still only have 2 percent of the world’s known oil reserves.”
This is just patently untrue. According to the Institute for Energy Research, when you include oil shale, the U.S. has 1.4 trillion barrels of technically recoverable oil. That is enough to meet all U.S. oil needs for about the next 200 years, without any imports.
With the technology revolution in the energy business, including horizontal drilling and hydraulic fracking, the old idea of proved oil reserves that Obama keeps using is replaced with the new concept of recoverable resources. Many thanks to Investor’s Business Daily for its story that the U.S. now has 60-times more recoverable oil reserves than Obama claims. And that doesn’t even include the natural-gas shale revolution, which has already slashed electricity prices for homes and businesses and will eventually be used more and more in transportation.
And then there’s the EPA, which is holding up oil and gas exploration in the Outer Continental Shelf, Alaska’s North Slope, ANWR, Utah tar sands, and the whole Green River Formation in Wyoming and neighboring states. Energy development on private lands is leading to greater development and production. But the Obama administration is still way behind on permits for drilling on federal land or offshore.
Steps could in fact be taken to lower gas prices in the short run. EPA mandates for boutique gasoline supplies and ethanol mixtures could be eased, perhaps saving 50 cents a gallon — without sacrificing clean air.
But the best idea I’ve heard to ease gasoline prices comes from Joint Economic Committee vice chairman Kevin Brady, a Texas Republican. He has proposed the Sound Dollar Act, which would require the Fed to monitor gold and the foreign-exchange value of the dollar. He would also replace the Fed’s dual mandate with a single mandate for price stability.
A stronger dollar is key. The Joint Economic Committee just put out a study showing that a 10 to 15 percent appreciation of the greenback to pre-recession levels (before the Fed launched its massive dollar-creation, pump-priming campaign) would lower gasoline prices by 43 cents. So if the Treasury and the Federal Reserve strengthened the value of the dollar, oil and gasoline prices would decline.
It’s an excellent idea. The best one out there. A return to King Dollar would boost consumer real incomes, attract capital from all over the world, and grow the economy at a faster rate.
So there is an action plan on energy. The laws of supply and demand will work to hold back prices. So will a strong dollar. So will easier regulatory mandates. And if market forces generate clean-energy alternatives, then fine. But a true all-of-the-above strategy would take the handcuffs and the sarcasm off of fossil-fuel drilling.
Rutherford B. Hayes can’t do it because he’s dead. But Obama could. Or more likely, a new White House occupant will.
– Larry Kudlow, NRO’s economics editor, is host of CNBC’s The Kudlow Report and author of the daily web log, Kudlow’s Money Politic$.
” A Strong, King Dollar “
Sorry, Larry - the ‘Strong, King Dollar’ booked passage on the QE2, and that ship has long since sailed....
I think the time is right to put that plan into action right now. Newt should pop up everywhere Obama appears and start telling the truth about energy. He would drive Obama crazy. He would look like he is above the fray for the republican nomination and would still probably poll as well or better than he is now.
Where was Larry when W let the dollar go into a nosedive?
A strong dollar might, temporarily decrease the dollar-price of oil, but, to the extent that that increases demand, there will come a price-point where the Saudis will decrease production to lower world supply until a price point more to their liking is again reached.
The major U.S. oil companies are NOT big on U.S./North American energy independence, in spite of all the efforts to drill for more oil and gas here. That’s one business model. We’ve been applying that model for sixty years. Why not try another one? Obtain more of our own available resources, use them here and quit the Middle East as a “strategic interest”.
If US did not keep low interest rates (cheap dollar) she will be unable to continue deficit spending and prop up the weak US banks. MSM spin is banks paid off their TARP only after they got funding from other federal sources. US Treasury has shortfalls in their monthly T Bond sales. Foreign nations and investors are not buying them all. Fed Reserve simply print and loan US dollars to Wall Street banks at near zero interest and encourage them to buy the leftover unsold T Bills. We borrow about 40 percent of the US federal budget and must service the interest payments. If interest rates go up the interest payments will eat up the Federal Budget. Excessive printing of dollar can lead to the world dumping the dollar because it causes harmful inflation of vital commodity prices such as food and oil. Emerging nations are starting to do that as Brazil, India, Russia, China and even Japan are dealing with each others trade via their own currencies and not the traditional US dollar. As time goes on, the usage of the dollar will drop gradually. That will ignite inflation in the US which can only be stopped by higher interest rates which in turn will collapse the US Federal Budget. Excessive debt and kicking the can down the road with more debt and near zero interest rates by the Wall Street bank debt, and Gov debt has trapped the US into default. Federal Reserve policy of saving the banks first with extreme low interest loans have trapped the entire US with no way out.
Cheap energy is vital to US economic competitiveness. Unfortunately US oil companies want to drill and sell it to the world because local US demand only commands a low price while adding the world to the demand rate can justify higher oil prices (which the US consumer must participate in due to free global trade). This is one area we can learn from the Chinese. China understands that certain macroeconomic factors are strategic to China’s economic power. They will not hesitate to stop the export of vital minerals and etc even if it commands higher prices in the global market, so the domestic Chinese industries can benefit from the lower prices. China has stopped the export of gold, silver, copper, limited rare earths and etc. Unfortunately oil companies do not think strategic, they think profit only. Currently US natural gas is dirt cheap but as soon as a port and pipeline is established so foreign tankers can ship it out, the prices will soar because the world customer (and demand rate) will be added to the American demand rate. We are capable of providing cheap energy to our industries, as long as the oil and gas is sold in the US and a small excess is exported. Oil and gas companies want all of it sold at world spot prices because it is higher and do not care about helping other US industries compete with cheap domestic energy. In some sense the Dems are correct in their reserve judgement of US oil and gas companies and the GOP places too much faith in them to do the right thing.
That's incorrect. Even oil drilled in America is priced on the world commodity markets. Now, increasing the domestic supply would cause oil prices to drop -- but they would drop everywhere, not just here.
Natural gas is a different story. It is subject to local supply and demand. Preventing its export, though, sounds like just another way for the government to prevent Americans from making money on their own property. Sacrificing freedom for security isn't a real good idea in my opinion.
So if the Treasury and the Federal Reserve strengthened the value of the dollar, oil and gasoline prices would decline.
And subsequently bankrupt us with rising interest rate payments on the $17 trillion in US Treasuries floating our deficit.
More people believe in the tooth fairy than they do in the fairy tall of a strong dollar.
No, he is not a prisoner of the environmental left.
He is a willing partner of the murderous barbarians who send him his orders through his Blackberry, doing everything they can to destroy this country.
That cabal has no more interest in the environment than does the Chinese government.
The "environmental left" is just a batch of useful idiots ostensibly legitimizing this course of action.
Achieving a strong dollar would require that we quit printing a trillion+ of them every year.
If we quit printing a trillion+ of them a year, that takes even more out of the US economy, and all of a sudden were in a new Depression.
In today’s world of total uncertainty the US can no longer depend on allies or adversaries to do what we want or anticipate. We are going back to a multipolar world where the US dominance is not assured. There are really two competing thoughts on free markets. The Chinese approach and US approach. The US approach is discipline of the markets. Don’t regulate or worst enforce regulations, no business man will run his company into the ground for short term profits. That was Greenspan’s thinking until Wall Street imploded in 2008 and now it is revealed that businessmen are capable of inventing short term gain, retire before the scheme collapses and let someone else holding the bag.
China understands the coming resource limitation. They buy and stockpile commodities like they may not exist tomorrow. We on the other leave it on the profit criteria of corporate America and democratic special interests. Result is environmentalists will kill certain strategic needed industries and commodities or corporate America will neglect certain strategic industries and commodities. Result is in a crisis our country will be in a world of hurt because the source for our critical commodity is cut off with no domestic replacement. Result is either war or degradation of middle class America while the ones responsible for the neglect pocket all the profits while the rest of us suffer from their short term thinking.
The question is not freedom vs security, it is now freedom and security tempered by common sense. The US has plenty of oil and natural gas. Drill and keep it home so it will bring the prices down for US consumers and businesses. Oil and gas companies will still make huge profits despite unable to command premium ones in the world. The US should strategically determine what is needed to keep our oil and gas companies drilling, and any excess produced may be sold on the global market. I think this balance approach is more effective, peaceful then letting oil and gas companies dump it all into the world, hammering other US industries (and job creation) and more reliance on overseas energy sources that will lead to dependence and war.
He was on the sidelines, cheerleading. Larry’s interest in King Dollar seems to be something recent.
You ate probably 98% correct.
I would say more, but I am tired of how dumb so many of our leaders are, and decided they didn’t deserve so much of our advice.
No.
Everything you wrote in that comment is approval of and a cry for more government authority over our lives. You seem willing to give up some freedom in the name of common sense that you get to define. I don't.
Free people and free markets, backed up by a strong military to defend them, will always outsmart and outperform bureaucratic tyrants. Don't be fooled by the appearances of China's government-sponsored capitalism. It will fail spectacularly.
King Dollar would probably lower food prices somewhat as well.
PING!
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