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FRONT PAGE CONTRIBUTOR

Blast from the Past: ‘Remember $4.00 Gas? Just Wait.’ (Dec ’09)

From Vladimir’s diary, dated December 18, 2009:

Remember $4.00 per Gallon Gasoline? Just Wait.

Well, here we are, less than 18 months later.

A little context: Gasoline prices (national average, all grades) peaked over $4.00 per gallon for a couple of months in the summer of 2008.

Prices bottomed in December 2008 at $1.66. By December 2009, at the time of the writing of the linked diary (reproduced below), the price had rebounded to $2.60 per gallon. Since then, the price is up 50%, and Our President is acting both clueless as to the reason, and powerless as to the solution.

Not only were higher energy prices totally foreseeable, they were part of the plan all along. High energy prices were considered necessary to boost green energy. Not only does Mr. Obama not have a solution, he does not want a solution.

Despite Kyoto, despite Copenhagen, despite the New Green Economy and despite the Democratic Party, world oil demand is expected to increase by 0.8 to 1.5 million barrels a day in 2010, depending on the source of your forecast. That kind of increased demand could lead to a substantial increase in oil prices; when demand exceeds production capability by just a little bit, the price reaction is usually pretty strong.

What has the Obama Administration done to prepare for such an eventuality?

Nothing. Well, nothing positive.

  • In February, Interior Secretary Salazar extended the comment period on the 2010-2015 five-year offshore leasing plan by six months and has not taken any additional action.
  • Likewise, the Administration has failed to make progress on Lease Sale 220 offshore Virginia that was planned for 2011. It’s estimated that the Sale 220 area could contain 1.14 trillion cubic feet of natural gas and 130 million barrels of oil.
  • Sec. Salazar cancelled oil and natural gas leases on 77 parcels of federal lands in Utah, then announced that 60 of them would be removed from development–eight permanently and 52 indefinitely.
  • The administration’s fiscal 2010 budget contains at least $80 billion in tax increases on the U.S. oil and natural gas industry. These increases will depress investment in new domestic oil and natural gas projects, weakening the nation’s energy security and doing nothing to defray the impact of higher world oil energy prices on America.

Even as the climate change community is starting to realize that clean, abundant, domestic natural gas is part of the solution, the Administration promulgates policies that delay and discourage domestic production. It’s time to encourage domestic oil and natural gas production to benefit all Americans by raising supply levels, creating well-paying jobs, and improving the nation’s energy security.

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Cross-posted to stevemaley.com.

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