Guest Post: Obama's Empty Gasoline Tank
Submitted by Llewellyn King from OilPrice.com
Obama's Empty Gasoline Tank
There is a piece of doggerel which goes:
They said it couldn’t be done.
So I went right to it -- that thing they said
Couldn’t be done.
And I couldn’t do it.
And that is the way it has been with presidents since the 1973 oil
crisis. All of them -- from Richard Nixon to Barack Obama, who has just
joined the club -- have wrung their hands and exhorted Americans to use
less oil in general and less foreign oil in particular.
Nixon had his commerce secretary, Peter G. Peterson (he of enormous
wealth these days), promise far reaching and revolutionary “initiatives”
to tame our thirst for oil. But Nixon was out of office before these
palliatives were revealed.
Gerald Ford, caught up in vicious inflation, partly linked to the
cost of oil, launched the Energy Research and Development Administration
(ERDA), combining the Atomic Energy Commission, the Office of Coal
Research and other energy entities in the federal government. ERDA
initiated many programs, while politicians invoked the Manhattan Project
and the Apollo 11 moon landing. But the search for the Fountain of
Eternal Energy failed.
Jimmy Carter wanted not only to solve the energy challenge, but to be
seen to be solving it. Ergo, he expanded ERDA into the Department of
Energy (DOE) and created a separate Synthetic Fuels Corporation. The
latter failed after a short and unhappy life. No oil reached the pumps.
When the price of oil collapsed in the 1980s, so did hopes for many
of the alternative energy sources, including ocean thermal gradients and
flywheel energy storage.
To its credit, though at great cost, DOE, through its chain of
national laboratories, kept searching. The result has been evolutionary
improvements in many fields, and some really revolutionary ones in how
we find oil and drill for it; these include seismic mapping, new drill
bits and horizontal drilling.
These evolutionary developments brought more oil to market and have
contributed to the recent improvement in domestic production that Obama
likes to point out. It has enabled us to cut our imports slightly, so
they now stand at 11 million barrels per day out of consumption of
20million barrels per day.
Obama wants us to cut those imports by a third. To do this, he has no magic bullet.
In fact, he has no ammunition: solid numbers and research. His speech
at Georgetown University was founded more on hearsay than science or
Because he criticized them for taking out leases they have not
drilled, the oil industry disliked the oil component of the speech, but
thrilled at the emphasis on natural gas. When it comes to leases, the
industry hankers not for those it holds, but for the plums that have not
been leased for political reasons: the eastern Gulf of Mexico and
Sadly, Obama seemed to have learned the wrong lesson on his recent
trip to Brazil because he is brimming with enthusiasm for ethanol. In
Brazil, this is made from sugar cane, of which the Brazilians have a lot
and cheap labor to farm it. Here, it is made from corn with devastating
results on all the food products that come from corn. George W. Bush
shoved the country down that slippery slope, and Obama wants to add more
Another Obama tool is mandated fuel-economy standards. Problem is the
market will start circumventing the regulations. It works like this: If
you mandate 40-miles-per-gallon fleet average instead of floods of new
small hybrids of the Toyota Prius type, the market will supply small,
regular cars and large, luxury hybrids. Better, but not everything the
president might want.
Real oil savings come with high prices dictated either by taxes or
shortage. Presidents, however, have to placate voters by holding down
the price of oil, signaling that it is all right to consume.
That leaves presidents -- and Obama has just proved it -- with that last resort of the impotent in office: exhortation.
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