With his budget, President Obama shows he misunderstands arithmetic; with his energy plan, he shows he misunderstands supply and demand. Or perhaps, as his congressional critics allege, he understands them all too well.
Speaker Boehner laid out the charges: “[The Obama administration has] cancelled leases for new exploration, jeopardized new nuclear energy, and imposed a de facto drilling moratorium.” Senator James Inhofe (R-Okla.) accuses Obama of manufacturing the crisis, pointing to Candidate Obama’s promise that, under him, energy prices would “necessarily skyrocket.” “Higher gas prices… [and] high prices for the energy we use…are explicit policy goals” of Obama’s administration, he said on the Senate floor. In other words, President Obama doesn’t want a good energy crisis to go to waste, even if he risks becoming a second Jimmy Carter, with attendant malaise, inflation and Middle-East mischief.
The thinking is as follows: Demand increases, supply decreases, buying power plummets, high prices trigger rebellions that threaten supplies, while speculators bet on further trouble – a safe bet in the Middle East. And so, Americans spend an average $3.54 a gallon when filling up, compared to $2.78 a year ago – up 42 cents in the last month alone. Congressional Republicans say it needn’t be so; Mr. Obama says, at a press conference, it must be so, because with only two percent of the world’s reserves, Americans consume a quarter of its oil.
This figure, much bandied about by environmentalists, is misleading, as it includes only the proven reserves where drilling already occurs, ignoring those (like in Alaska, the Outer Continental Shelf, and the shale deposits in Wyoming, Utah, and Colorado) where drilling has been banned through executive fiat. These reserves, worth some 900 billion barrels, languish untapped. They could change America from a net importer to net exporter of oil. But Obama remains uninterested. In fact, his Secretary of the Interior canceled 77 leases for oil and gas drilling in Utah as one of his first acts on the job.
Still the “pinch at the pump,” as Obama called it, prompted calls from Democrats to release oil from the Strategic Petroleum Reserve. How these Democrats reconcile depleting the SPR where barrels are measured in millions with banning drilling where barrels are measured in billions is anyone’s guess. Indeed, a common refrain heard in the debates about drilling in ANWR was that the oil would run out. At best, this proposal is a feel-good measure that will leave us ill-prepared for the next run up in prices. At worst, it signals to speculators that the worst is yet to come, driving prices higher still.
Instead, President Obama ought to reduce speculation by giving the speculators less to guess about and thus Americans less to worry about — but that clearly hasn’t happened with his rush to war in Libya. When President Bush lifted the ban on offshore drilling in July 2008, oil hit $60 a barrel by early November. There are some signs that President Obama is caving in after lifting the moratorium on offshore drilling in October of last year. In the Gulf, BHP Billiton was granted only the second deep-water permit on March 14, 2011 – some eight months after the well was capped from the BP oil spill. The first, to Nobel Energy, was granted only two weeks earlier. Steps in the right direction, but there is much work to be done yet; Obama’s “responsible” caution feels more like deliberate delay, which, while questionable in the best of times, is irresponsible in a crisis.
Democrat Rep. Ed Markey, a longtime foe of nuclear energy, knows a lot about delay, having spent much of his career slowing down nuclear technological development. On Sunday, while the bodies from the tsunami were not yet cold or even counted, he called for an immediate suspension of plans for a Generation III reactor, feigning worry about “another Chernobyl,” and direly predicting the “same thing could happen” in America – all the while without having a clue about what was actually happening in Japan. The IAEA labeled the incident in Fukushima as a level 4 – well below that of Chernobyl, which ranks as a 7, or even Three-Mile Island, a 5. For those people exposed, it compares to a strong hospital X-ray, not nuclear apocalypse. Still Senator Lieberman wants to “put the brakes” on new, far safer nuclear power plants, making us wonder which party really is anti-science.
By leaving America with no nuclear power and no fossil fuels, congressional Democrats must realize that no policy is the worst possible policy. It is a man-made crisis worse than any natural one they claim to avoid.
Pity America can’t fuel her energy needs from Democrats’ blather, a seeming infinite resource.