I was drowned, I was washed up and left for dead
I fell down to my feet and I saw they bled.
I frowned at the crumbs of a crust of bread.
I was crowned with a spike right through my head.
But it’s all right now, in fact, it’s a gas!
I’m Jumpin’ Jack Flash, it’s a gas, gas, gas!
— The Rolling Stones
Americans really can’t be blamed if they think that “drowned, washed up and left for dead” and “crowned with a spike right through my head” are good ways to describe the impact of filling up the car these days. It’s hard to find a single economic indicator that has more of a negative impact on the well-being of every American than the rising price of a gallon of gas.
The unemployment rate is important, of course. But no matter how it zips up or down, the jobless numbers reflect individuals, not the whole population. Even though 8 percent or 9 percent of the population is out of work and looking for jobs (leaving aside the nearly equal number who have given up searching and thus don’t figure in the president’s boasts), still, that means that everyone else who wants to work is working.
The price of gas, however, benefits oil producers’ profit margins, but no one else. That’s not a slam on profits — producers often benefit from decisions made by politicians and consumers that have nothing to do with how much it costs to bring a barrel of crude out of the ground and then transport and refine it.
And in fact, America is awash in gas. We have become a net exporter of refined oil products, for the good and simple reason that our “improving economy” is using far less gasoline and other refined products than it did as recently as four years ago.
Retail gasoline deliveries from refineries were running about 68 million gallons per day in early 2006, and have dropped to about 30 million as of late 2011. And the fall began before prices began rising, with the average cost per gallon nearing $4 — with the sky the limit.
It shouldn’t be necessary to explain what costlier gas means to the economy. Everything material we buy is at some point in its supply chain transported by fossil-fueled vehicles, including trucks, trains, planes or ships.
Electric cars? Hardly anyone is buying them, with spontaneous fires reported in some models, and the top-priced Tesla is said to become a “brick” if its battery runs flat, with the cost of replacement listed at $40,000.
So they aren’t causing the decline in domestic demand. True, a better business climate would inevitably boost gas use here, but what we’re seeing now didn’t happen because the law of supply and demand has been repealed.
The price of oil is determined on a global market, and has risen because demand has soared in some locations, and also because a “risk premium” has been levied based on Middle East unrest, partly due to the general uproar there, but most importantly because nobody knows the outcome of the Iranian quest for a nuclear bomb.
The peril of a multinational default in euro-denominated debt in Europe is also creating uncertainty across a broad range of investments, and that means higher prices for commodities, too.
The current rise is showing us that the principal reason for wanting to decrease our dependence on “foreign oil” (meaning oil from outside the Western Hemisphere) is not that it will necessarily produce lower prices (though it probably will), but that it will not be interrupted by war in the places that are currently providing it.
Thus, the president’s decisions to unnecessarily postpone the Keystone XL pipeline from Canada (which still could sell its oil to the Chinese) and continue to impose unnecessary restrictions on domestic drilling are not only economy-degrading, they are a national security issue as well.
Of course, for this administration, higher gas prices aren’t a bug, they’re a feature. As Stephen Hayward pointed out on Feb. 19 on the Powerline blogsite, “Obama, like all right-thinking greenies, wants gasoline prices to be higher, though, to be sure, they want high prices brought about by a government tax rather than the marketplace. High gas prices are no fun if it means more profits for private oil companies. Obama admitted this directly when asked about high gas prices in 2008, when he said he didn’t have a problem with them, only that he ‘would have preferred a gradual adjustment.’ Well, prices have crept up gradually since they collapsed back to about $2 a gallon in 2008. So what’s his problem?”
His problem, as Hayward noted, is that presidential approval rates and gas prices tend to track inversely — the higher the price, the lower the rating, as Gallup poll results dating back to the Carter era show.
Right now, Obama is running below 50 percent job approval, with his Real Clear Politics average at 48.5 percent, not exactly a guarantee of re-election. Especially since the RCP’s “country on right/wrong track” average is 59.5 percent “wrong,” and 58 percent think he isn’t doing enough to lower gas prices.
Thus, higher prices after the election wouldn’t be the problem for this administration that higher prices leading up to it obviously have become. Maybe that’s why Gallup last week reported that in a head-to-head rating, Mitt Romney got 50 percent of probable voters while Obama got 46. The “unelectable social conservative” Rick Santorum only trailed by a single point, 49-48.
Jumpin’ Jack Obama’s just-announced “all of the above” plan continues his effort to distract us from exploiting this nation’s rapidly increasing levels of proven oil and natural gas reserves, while keeping on wasting funds on subsidizing “alternative” sources via “crony capitalism.” (Consider the ridiculous “gas from algae” plan that Charles Krauthammer so wonderfully satirized last week on Fox.)
If the alternatives were truly worthwhile, they would attract sufficient private investment to become genuine contributors to the energy mix.
And in a Houston Chronicle story Feb. 22 headlined, “Oil and gas leaders slam Obama,” the paper reported that industry leaders call the president’s policies “corrosive.” Despite the president’s claims of opening more land to drilling, the leaders say the bureaucracy has “done nothing but restrict access and delay permitting.”
However, an effective energy policy remains within our reach. Trouble is, the earliest it can begin to take effect is Jan. 21, 2013.
M.D. Harmon is a retired journalist and a freelance writer. He can be contacted at [email protected].
