Blue Collar Muse

Just a couple of thoughts in the midst of a busy day.

THE SPIN: The Left, including Barack Obama, continues to maintain the charade that increasing domestic oil production and refining capabilities will have no impact on energy independence in the long run or to reduce prices for oil and gas in the short run. The mantra and talking point is “We can’t drill our way out of this!”. As late as a day or so ago, Speaker Pelosi called continued GOP efforts to boost domestic energy production “a hoax”.

THE TRUTH: 3 days ago, the President rescinded an Executive Order banning offshore drilling for oil in US coastal waters. Within 48 hours, not only had financial markets bounced significantly, but the price of light, sweet crude for August delivery dropped by almost 10%. There was a corresponding, immediate $.05 to $.07 drop in the price of a gallon of gas at most retailers I pass by.

This is significant because the President’s rescinding of the ban on offshore drilling, in and of itself, will not produce more domestic oil. Even though it is now legal for companies to drill, Congress must still act before they can actually do so. Thus, even essentially meaningless talk about drilling produces an overnight effect on the price of both oil and gas. What do you think might happen if we seriously moved forward with plans and actions to actually drill?

There are two competing energy philosophies currently at war on Capitol Hill. The Left says, “We can’t drill our way out of this!” The Right is saying, “Drill Here! Drill Now! Pay Less!” Only one of those premises can be true. A glance at any gas station sign while you’re running errands or headed home will tell you which one is.

And please remember which side is which on election day.

Blue Collar Muse

Popularity: 32% [?]

In his first real chance to speak to an issue with seriousness and substance, Democratic Presidential nominee Barack Obama demonstrated the truth of the charge leveled against him that he is all flash and no bang. The Right has known this from the beginning and the Left has feared it might be true for just as long. Obama can sway a crowd like the worst stereotypical tent revival preacher. He can promise a moon he knows he can’t deliver as well as any politician from any party. And he can stay on message as long as no one is asking too many difficult questions. It’s this last part that may be his undoing for this election. If Obama cannot do a better job of crafting and explaining his vision for America than he is doing on Energy, he will prove to be his own worst enemy. Consider the following.

Obama says we cannot drill our way out of the mess we are in. I’m curious how he has arrived at that conclusion. For starters, how does he know? Have we tried it? His too ready dismissal of Right of Center ideas is more partisan than practical and may give lie to his credentials as a uniter. Basic Economics tells us the more there is of something, the less it costs. Surely Obama doesn’t believe his words alone can change Economic reality.

Perhaps he means drilling will not immediately impact our fuel costs. That statement at least has the possibility of being true. It is also a foolish argument against drilling. In the first place, it means there really is a value to drilling. It’s just not an immediate value. It also means the statement, “We can’t drill our way out of this!” is false. We can drill our way out of this tomorrow or on one of the many tomorrows headed our way. It just remains to be determined how many tomorrows it will take. But we can drill our way out. In the second place, if there is a benefit to drilling to be derived at some future point, then let’s get started! The sooner we begin, the sooner we’ll enjoy the results. We may have to do other things in the meantime but let’s not ignore a benefit just because it doesn’t impact the economy until later. This is tradtional Democratic short sighted thinking at its worst. Do whatever you can to deliver a benefit this afternoon and let the long term chips fall where they may. Operating on the same premise, we would not have built railroads or Interstates because they didn’t fix the transportation problems immediately. What do you mean it will be years before we can go from New York to Los Angeles by train?

So much for the drilling solutions Obama rejects. What about the ideas Obama wants to pursue? His solution to high fuel costs is not to increase Supply, it’s to reduce Demand. That would actually be a legitimate approach to the problem, IF, Obama could actually control Demand. What Demand is it Obama thinks he will be able to reduce? The only one he has a shot at is US Demand. If, however, his plan is to only reduce US Demand he’ll play right into the Right’s hands. He’ll be vulnerable to charges he’s hurting American interests and strengthening foreign interests. Again, that’s a legitimate strategy. It’s just not one usually found emanating from the Oval Office.

The biggest challenge to his plan to reduce Demand is the limited ability he has to implement a reduction in Demand outside the US. The inconvenient truth for Obama is that the Demand driving up the cost of crude and products made from it is a global Demand. While the US uses more oil than any other nation, increases in demand for oil are not coming from the US market. It’s coming from China and India in particular, along with many other nations as they strive to continue and increase their economic expansions with all of its attendant prosperity. Any reduction in Demand from the US market would either not impact global Demand at all or would be quickly swallowed up as global Demand outpaces US reductions. Oil on the world market would continue to cost more and more while we will have given up contracts and agreements that keep crude and fuel flowing our way first. Selfish? Perhaps. It’s the way the game is played by everyone. The sooner Obama realizes this the better.

The bottom line to Obama’s position is it weakens the US instead of strengthening the country. The problem is reduced energy availability, not increased demand. There are very different outcomes depending on the strategy one uses to combat it. Increasing Supply is a solution that depends on a few entities (oil companies) acting in their self interest. Reducing Demand is a solution that depends on the many (every American) acting against their own self interest. More to the point, while it may be in their long term interest to reduce Demand, Americans will behave just as Obama is behaving and choose what benefits them most now and ignore later. Obama personally rejects proven, long term strategies in favor of untested ideas he claims will fix the problem quickly. But when it comes to how you should behave, he wants you to reject the short term strategies and think in terms of years. He’s shilling against drilling and willing to let America pay the price. Just one more reason Obama is wrong on the issues and wrong for America.

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