Oil at $30 a Barrel
The big fall off your chair moment during President Obama’s State of the Union address came when he proclaimed:
“We’ve cut our imports of foreign oil by nearly sixty percent, and cut carbon pollution more than any other country on Earth. Gas under two bucks a gallon ain’t bad, either.”
Sure, Mr. President. Take a bow for the smashing success of the very domestic oil and gas industry that you have tried to destroy.
Even Mr. Obama couldn’t carry this off. The smirk on his face as he sang the praises of an oil and gas industry was unmistakable.
Right after Mr. Obama boasted of these low gas prices, he reverted back to form, by sermonizing:
“We’ve got to accelerate the transition away from dirty energy” — by which he means fossil fuels. Then the hammer came down: “I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”
So 30 seconds after toasting lower gas prices he pledges to find ways to make gas more expensive.
The irony of the Obama war against fossil fuels is that the shale oil and gas revolution in America has saved Mr. Obama. During his first term, all of the net new jobs that were created in America came from oil and gas as fracking took off in Texas, Oklahoma, North Dakota, West Virginia, Ohio and Pennsylvania. Mr. Obama owed his reelection to the frackers, but instead he and his EPA have tried to shut them down.
The EPA has issued three regulations in the last year — the clean power plant rule, the methane rule, and tougher clean air statutes — that have begun to shutdown fossil fuel production in America — as planned.
How bad are these rules? According to Harold Hamm of Continental Resources, a major driller in North Dakota: “these rules and red tape are killing us. They are raising our costs at a time when oil prices are low and margins are already thin. This means layoffs of workers.” Mr. Obama seems to be doing exactly what the Saudi oil sheiks are trying to achieve: shut down fracking in America.
Mr. Obama won’t allow drilling on federal lands, he wants to raise taxes on oil and gas production, he won’t give the go-ahead to the Keystone XL pipeline or any pipelines for that matter, and he just handed out hundreds of millions of dollars to keep the solar and wind industries from bankruptcy. Other than that, he’s pro oil and gas.
He also neglected to mention that the major reason that U.S. carbon emissions are falling is that cheap and clean-burning natural gas due to the shale drilling is becoming the number one source of electricity production in America. The lesson: free markets and innovation are almost always the best way to clean the environment.
If Mr. Obama’s vision of an American energy future is fulfilled, the price of oil and gas will skyrocket — again. He’d like that to happen. This is the only possible scenario that makes green energy financially feasible.
One last point about low gas prices. How come when oil prices rise the entire industry is accused of price fixing to gouge consumers. But if the industry has the monopolistic powers to keep prices as high as possible, why aren’t they doing that now? The answer is in the new era of shale oil and gas this a brutally price competitive industry — unlike in the past where the OPEC monopoly was able to fix prices. OPEC can’t manipulate prices now because the United States will soon be the world’s largest producer. All the more reason to let the domestic oil and gas industry flourish.
For now, Mr. Obama will unbelievably hog the credit for lower gas prices that he never wanted in the first place while he finds every way possible to make gas more expensive in the years to come. No wonder voters have grown so cynical of the political class.
- Stephen Moore is a Distinguished Visiting Fellow at The Heritage Foundation's Project for Economic Growth.
This piece originally appeared in The Washington Times.
Stephen Moore is a Distinguished Visiting Fellow at The Heritage Foundation's Project for Economic Growth. This piece originally appeared in The Washington Times.