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

By: Steve Maley (Diary)  |  April 29th, 2011 at 12:00 PM  | 

RESIZE: AAA

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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  • Old_Crow
  • Common_Cents

    Is Obummer just going to go after speculators and blame them? and hope that is enough to deflect voters away from his high energy price policy?

    Not sure what their plan is as I’d think sustained prices over $4 would torpedo re-election in a hurry, unless they think they can somehow get prices to decline afterwords making him look like a hero.

    • earlgrey

      Not sure it will be as effective now. Particularly with the trouble in the Middle East, which I thought his election was supposed to solve.

  • steve010

    if it’s only demand what about silver, nobody uses this metal much for commercial purposes anymore:

    May 2008 12
    May 2009 14
    May 2010 19
    Now 40

    no inflation here, pay no attention to the man behind the curtain.

  • ohiohistorian

    And at that time the mantra was that other forms of energy would take off at $50/bbl. Unfortunately, so did the price of all of the equipment needed, so that even today, at $100/bbl, there is no real willingness to invest in alternative energy. It remains a government boondoggle.

    You CANNOT get to a green economy except by doing what Obama is doing; you kill off the other forms, and then the green is the only legal mode. Want to ask Spain how that worked out? They estimate that they lost two jobs for every green job created.

    Obama will be long remembered as the President who turned the US into Zimbabwe.

  • 1stRichard

    Ok, the ultimate goal is we want to go all green, we want to change our cars to run on electricity (our government has already spent billions for a car battery) but to do this we need something green, wind and/or solar power. This seems to be a simple conversion, 746 watts equals one horsepower, and an average car is about 200 horsepower (some much more) or 149,200 watts. There are some 254,400,000 cars in the US or equivalent to 37,956,480,000,000 watts. Forgoing the entire math on transmission line loss and all the others factors how close is this lower horsepower come to equaling wind and/or solar power. Wind turbines run from 25,000 to 2,500,000 watts, lets use a middle number of of that, 1,262,500 so we may have a chance of planting one of these in your back yard. That would mean we need 30,064,539 windmills to equal the power in our cars. There are 3,794,083 square miles (including water) in the US or a windmill planted every 8 miles, which is why I picked the middle number so we may have a chance of planting one of these in your back yard. Let us next add in the service to households, there are about 130,000,000 households in the US, mostly with 100 amp service (with others having 200 or more amp service) or 12,000 watts each or over 1,560,000,000,000 watts total. Again, I picked the lower number for an example. Now we are up to 39,516,480,000,000 watts or 31,300,182 windmills or a windmill placed almost every tenth of a mile. The good news is that if we use the larger windmills they would only have to be placed every 6 miles but the bad news is the much larger sector, our industry and jobs also needs power. For photovoltaic solar panels, 125 square feet equals about 100 watts sunny day idealistically, realistically they only work half the day, we do have a cloudy day or two and have a large conversion loss going from DC to AC, thus more realistically 50 watts. To produce the 39,516,480,000,000 watts service we have now we would need 3,543,646 square miles of solar panels out of the 3,794,083 square miles (including water) in the US. Again, this does not include our industry and jobs but there is good news, the government is only trying to mandate a third of our energy to come from renewable resources such as wind and/or solar power for starters. I could go on but I am simply out of space with wind and/or solar power, this proposed green economy would not fit. We have some choices to be made here on this path and they include extreme rationing of power and/or eliminating or industries and jobs, or stop this insanity and find a better way to produce power. Blast from the past, it is much worse then that, it is more like regulating our selves back to the stone age.