Energy Costs – They Will 'Skyrocket' Thanks to Obama

The debate for 2011 is what will happen with crude oil, heating, oil, gasoline, and natural gas prices? Will they increase or decrease?

Google “Crude Oil and Natural Gas Spot Prices NYMEX” and you will get a mass of detail prices. Fuel prices are controlled by a free market and the numbers are surprising:

Spot Prices

Crude Oil WTI Cushing June, 2010, $67 bb Dec, $91.49

Crude Oil North Sea Brent June, 2010 $68 bb Dec, $94.06

Unleaded Gasoline – NY Harbor Aug, 2010 $1.85 gal Dec, $2.43 gal

Heating Oil June, 2010 $1.90 gal Dec, $2.50 gal

Natural Gas Feb, 2009 $7.40 mmbtu Dec, $4.11 mmbtu

Natural Gas – NY Spot MMBTU 2010, 10 Dec, $8.98; 11 Dec, $20.43; 13 Dec. $19.80 ; 15 Dec $11.94

These are short term cycles in fuel prices. The key issue is what will happen to our medium and long range fuel prices? That is not a difficult question since there are major federal and state government policy changes which will have a defining impact on our energy industries.

It is ironic in 2008 House Speaker Nancy Pelosi attacked President Bush for rising gasoline prices. In April, 2008, Harry Reid noted “gasoline prices are the number one issue facing America today!” Actually when President Bush left office gasoline prices were 9% lower than when he entered office. Where are the Democratic Party gasoline expert critics today? President Obama has sponsored legislation which in his own words will cause “electricity prices to skyrocket.”

Specifically, he has ordered a seven year ban on eastern Gulf of Mexico, Atlantic, and Pacific coasts offshore drilling. He declared a moratorium on deepwater and shallow water Gulf of Mexico drilling. He has officially lifted the ban, but is actually issuing few drilling permits and has postponed or cancelled new lease sales. The drilling ban also impacts offshore Alaska. He has ordered a multi billion dollar program to remove all non-producing oil platforms from the Gulf of Mexico, a program which will drain oil company funds from exploration and development budgets. He is instituting major increases in oil company taxes. Finally, the EPA on December 23 announced it will now regulate oil refineries and power plants to control global warming.

What are the consequences of these policies? Watch the price of gasoline. We now are at record $3 plus gasoline, but expect higher prices. The highly respected John Hofmeister, ex president of Shell Oil, warns us to expect $5 gasoline by 2012. Many groups are predicting over $100 bb crude oil.

The impact on jobs will be significant. Higher fuel and energy prices will impact a cross section of our nation- airplane, trucking, transportation, food, manufacturing, etc, etc. The job loss from the restrictions in the Gulf of Mexico will be massive. It will force domestic offshore oil rigs, service companies, and industry experts overseas.

The sum of these regulations, taxes, and mandates will result in much higher fuel and energy prices.