Obama Speak

Consider two quotes from speeches given by President Barack Obama last week:

“I’m going to keep doing everything I can to help you save money on gas, both right now and in the future,” Obama said. “I hope politicians from both sides of the aisle join me.”

“We can’t just drill our way to lower gas prices — not when we consume 20 percent of the world’s oil.”

Every college student familiar with the lectures of economics 101 will remember the macroeconomic model of supply and demand and it’s familiar graph; prices are proportional to demand and inversely proportional to supply. This simple relationship is fundamental to understanding market forces.

This model is taught as fundamental, because the evidence that market forces follow these trends is beyond doubt for the reasoning person. Surely, the President of the United States of America can not have meant that more drilling would somehow fail to increase supply and reduce prices.

What did he mean? I’ll tell you what I think he meant. [Its my blog. You knew I would.] I think that sentence that started with “I’m going to keep doing everything I can …” is illustrative. First, he said “keep doing”. That means, more of the same tactics that have got us to where we are; a moratorium on drilling in the gulf, obstructionist policies related to exploration and drilling elsewhere, delaying on the Keystone pipeline, and using a runaway EPA to ratchet up environmental regulations related to energy on every front. Second, “everything I can” carries with it the implication “without going against my base of radical environmentalist supporters”. This means more irrational optimism that some Solyndra-like injection of our tax dollars in “green energy” will magically produce extra energy at a cost on par with grid rates. (Don’t entirely discount that someone at the White House might have noticed that parity could be achieved by driving up current energy costs to match the cost of green sources.)

Do you follow current events?  Failure after failure of so-called green energy companies after large government cash infusions is evidence enough that these enterprises should still be considered early-stage research operations. Research is good. We need research to find the answers we need for the long term. It might even be argued that the government may even properly offer research incentives because the likely payoff is so far away.  You won’t get a complaint from me for responsible investment in real research.  Insanity comes in the premise that the early developments resulting from this research should be scaled into expensive manufacturing and production phases before the business case is made. When the business case is sound, investors will be falling all over themselves to get in on it. No further tax infusions needed.

One further observation. “[E]verything I can” carries another implication. This one shouts the President’s priorities in loudest terms. Once one realizes the escalating price of fuel is a cost that must be tacked onto every loaf of bread and tomorrow’s commute to work, one is forced to admit that the radical environmentalist agenda carries more weight in the Oval Office than the plight of the average American.

I’m not fooled by the campaign rhetoric. I think we can expect Barack Obama to “keep doing” until the inauguration of his successor. What I hope, though, is that politicians on both sides of the aisle begin to realize just how many of us have actually had economics 101.

Finally, let me say a few words about my use of the term “radical environmentalists”.  I believe we have a mandate from the Creator to be good stewards of the planet we live on.  We should strive to make conservative use of our resources, use best practices to avoid polluting, etc.  What I consider radical are policies that put protecting the environment above the needs of people.  I put bureaucratic regulation by the EPA without oversight by the legislature as the Constitutional system of checks and balances squarely in the realm of radical environmentalism.

Note: The graph is shared from Wikipedia under the Creative Commons license.

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4 Responses to “Obama Speak”

  1. drugsandotherthings Says:

    And yet you ignore the other aspect of supply- capacity. The truth is the US refineries are currently operating at capacity. In fact- the refieneries are currently renting tankers and parking them in the gulf to hold the excess that they can’t store on land. These same refineries are also currently setting records for exporting us fuel and oil.

    You also seem to forget the other applicaple tenent of economics with a global commodity- the prices are set on the world market. Other then the three times in our history (oce by Obama) that the strategic reserves have been tapped please show me a single example of a presidents actions or policies being able to lower fuel prices in the US?

    You also ignore the reasons for the current rise in prices- increased demand by China, speculators on wall street, and the current situation in the middle east- particularly IRan- a situation which is being worsened by the republican demands for war.

    • writewild Says:

      You do a pretty good job of highlighting just how difficult it has become to get through the interference to building a new refinery or a new storage facility. That is precisely the reason for the Keystone pipeline. It’s easier to build a pipeline than to tough out all the court challenges to building a new refinery at the head end of the the pipeline. If Wall Street speculates on the price of oil, its also because they know the difficulty in getting government out of the way. As a politically active Republican who is involved with many other Republicans, I can’t say I have ever heard a single one demanding war. What a ridiculous accusation.

      • drugsandotherthings Says:

        Your last point first- we currently have every republican candidate, save Ron Paul, saying publicly that they would bomb Iran.

        As to building of refineries- something I actually know a little about- the biggest problem is not government regulations, but the sheer cost of such a facility- costs that would be passed on in every gallon of gas.

        as to the keystone pipeline- maybe read my post here: http://goo.gl/8m5PX . I have initmate experience with the strong arm tatics used by corporations to steal land from citizens under emminent domain. ( A natural gas pipeline in WA state immediately after the Enron crisis- by a company that ultimately failed to build the power plant- but suceeded in ruining the lives of many of my neighbors, and ruining many more of ours lives for a few years as we fought their brutal and illegal tatics).

        And Obama did not kill the keystone project- he asked for an environmental review- as the mostly republican farmers and ranchers in the proposed path asked for. And the issue of a foreign corporation stealing americans land still needs addressed.

      • writewild Says:

        What do you think the solution to Iran’s bomb building and saber rattling should be? I think a military action would be the equivalent of poking a hornet’s nest. On the other hand, I don’t see us having much success diplomatically either.

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