Saturday, April 02, 2011

Obama Still Tries to Sell Non-Policy on Energy

This week the President chose energy production as his topic for the weekly address. He is under criticism for his lack of a true energy policy, given the rise in gas prices that affect everyone. The speech he delivered at Georgetown University was not illuminating, to say the least. He said nothing other than what every president has for the past 30 years. He continues to make false claims in the hopes that no one is really focused enough to question him.

President Obama has a habit of trying to convince the listener that he is a truly new age, innovative thinker. He tries to convince listeners that he's the best and the brightest man to ever hold the office. He counts on the short attention spans of Americans.

President Obama's deceitful arrogance does us no favors.

The Institute for Energy Research was not impressed with the President's choice of venue - what with filling the young peoples' minds with utter ideological nonsense.

The Administration’s “logic” regarding oil leases is liable to drive one insane. The claim is that oil companies pay billions of dollars to the federal government to obtain the right to drill, and then purposely don’t drill in order to drive up the price of oil. But wouldn’t it be cheaper to not bid on the lands in the first place? And why is the oil industry in favor of expanded access to drill offshore and in ANWR, if their nefarious plot is to keep oil off the market and push up prices?

Obviously the whole thing makes no sense. The reason the oil industry doesn’t extract oil from certain leased land is that oil isn’t distributed evenly across the globe. Companies can’t be sure where it is profitable to set up a major well until they explore the land. The real beneficiaries of stunting U.S. oil production aren’t domestic oil companies, but state-owned oil companies around the world. It’s a good thing Energy Secretary Chu wasn’t in charge of Thomas Edison’s search for a commercially viable light bulb. After the 3,000th failure, Chu would no doubt have accused Edison of purposely driving up the price of incandescents. (Of course that would be construed as a good thing, in light of climate change rhetoric…)

Maybe the kids weren't really paying attention.

President Obama is sticking with the line that oil production is up thanks to his policies. Wrong. Clearly, the production levels are due to the wheels put into motion during the days of the Bush administration.

In the U.S. Energy Information Administration's July Short-term Energy Outlook, the EIA projected that the moratorium would result in lost production of approximately 82,000 bbl/d on average during 2011 or a cumulative 30 million barrels.

The chart above illustrates that after the hurricanes of 2004 & 2005, it took several years to regain production crippled by the storms. The years 2009 and 2010 benefit from projects started in the previous six years that resulted in Gulf of Mexico production exceeding the prior peak set early in the decade.

The President is defensive about his lack of energy policy - the fact that his only policy is to shut down drilling for oil and natural gas - and rightly so. It is not helpful to our slow, slow, slow economic recovery due to the rest of his administration's policies. Consumer confidence is at an all time low level. Now there is the creep of inflation entering the picture. Prices of goods are going up and the past week brought warnings from WalMart and Toyota of rising prices.

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