Obama Lectures Romney On Cargo Cult Economics [the price of gas]

There were several surreal moments in the debate last night between the Democrat candidate for president, Barack Obama, and the American candidate Mitt Romney. While most are focused on Obama’s stunningly brazen lie about his statement of the attack on our Benghazi embassy, the more telling episode showed that Obama is simply disengaged from reality as it is experienced by most people. From the transcript:

>>>"ROMNEY: That was a statement. I don’t think the American people believe that. I will fight for oil, coal and natural gas. And the proof, the proof of whether a strategy is working or not is what the price is that you’re paying at the pump. If you’re paying less than you paid a year or two ago, why, then, the strategy is working. But you’re paying more. When the president took office, the price of gasoline here in Nassau County was about $1.86 a gallon. Now, it’s $4.00 a gallon. The price of electricity is up…

CROWLEY: Mr. President, could you address, because we did finally get to gas prices here, could you address what the governor said, which is if your energy policy was working, the price of gasoline would not be $4 a gallon here. Is that true?

OBAMA: Well, think about what the governor — think about what the governor just said. He said when I took office, the price of gasoline was $1.80, $1.86. Why is that? Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney’s now promoting.

So, it’s conceivable that Governor Romney could bring down gas prices because with his policies, we might be back in that same mess."<<<

This is just another manifestation of the cargo cult economics we’ve talked about over the past weeks. In Obama’s world supply and demand are academic concepts. He thinks that when something is cheap that means demand is low and when something is expensive that means demand is high. If your market knowledge is based on buying the latest Apple product this is entirely reasonable. It fails to acknowledge that supply is the other part of the equation and even if demand decreases the price can still increase if the supply falls faster than demand. It also assumes the costs of production and distribution remain constant.

If Obama is correct, then the increase in gas prices should roughly correlate to economic activity and lower prices will indicated a failing economy. Let’s roll the tape.

If you are really interested in the data, below are the data in tabular form. Click the thumbnail to enlarge:

So what did the GDP look like? If Cargo Cult Economics guru Barack Obama is correct, GDP should be very low over the past decade and now it should be soaring.

Hmmm. Not looking like there is much of a relationship, is there? Well, if the economy is kicking butt people must be working. What does unemployment look like?

So, much to Obama’s discredit, a quick look at other data shows that the skyrocketing gas prices are not the byproduct of an economy running gangbusters. To the contrary, it speaks to an economy in crisis. It is the result of a lot of factors, not the least of which the mismanagement of the energy sector by Barack Obama and his minions.

Can't remember if Mitt had a comeback for this dilusional spin my Dear Reader or if it was one of the many times the fat beetch cut him off.

This is one area that just about everyone can relate to and can be tied to Barry's anti fossil fuel policies.

If I were Romney, I would have a commercial made of people--including small business owners like myself--filling up (if they cab afford to; it costs me about $130) and commenting on how much the doubling of price affects them.

Forbes: [Obama debate quote] “Here’s what happened. You had a whole bunch of oil companies who had leases on public lands that they weren’t using. So what we said was you can’t just sit on this for 10, 20, 30 years, decide when you want to drill, when you want to produce, when it’s most profitable for you. These are public lands. So if you want to drill on public lands, you use it or you lose it. And so what we did was take away those leases. And we are now reletting them so that we can actually make a profit.”

Really? Did the government tear up leases that oil companies had paid billions of dollars for and throw the property back on the market?

The simple answer is no. I’m not sure what Obama was exactly referring to, but his administration has repeatedly accused oil companies of sitting on leases and failing to produce oil and gas from them. It’s a charge that drives the oil industry nuts, since it makes little economic sense to pay hundreds of thousands of dollars or even millions to purchase a lease and then sit on it for no reason. It takes years and a lot of expensive seismic work and exploratory drilling to determine whether an oil deposit has economic value, and the oil industry isn’t in the business of drilling dry holes for the fun of it. If there are delays, industry executives say, it’s because of governmental policy such as the offshore drilling ban Obama issued after the Deepwater Horizon disaster.

“It’s like you rent an apartment for $20 million and the landlord refuses to give you the keys to it,” said Erik Milito, director of exploration and production at the American Petroleum Institute. “Then he turns around and complains about it......"

The Facts: Oil and gas leases, acres, and permits all down under Obama

The Spin: The politics of the painful price at the pump

The headline is a lie... obama is not lecturing Romney on anything... one has to have the attention of their subject or subjects that one is “lecturing to” to lecture. Mitt is not paying attention to what obama is preaching to him and when he did during the first debate he said, “I heard everything that you just said... and I don't understand anything that you just said”!

LLS

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