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Redstate...
10 Ways Obama Could
Reduce Gasoline Prices Now
I’ll hold my breath.
Posted by Steve Maley
Saturday, February 25th
Tulsa World headline: Obama: No magic bullet to lower gas prices
WASHINGTON — President Barack Obama says there is no easy answer to the
problem of rising energy prices, dismissing Republican plans to address
the problem as little more than gimmicks.
“We know there’s no silver bullet that will bring down gas prices or
reduce our dependence on foreign oil overnight,” Obama said Saturday in
his weekly radio and Internet address. …
Obama said Republicans have one answer to the oil pinch: Drill.
“You know that’s not a plan, especially since we’re already drilling,”
Obama said, echoing his remarks earlier in the week. “It’s a bumper
sticker.”
Speaking of bumper stickers, remember “Yes We Can”, Mr. President? No
one understands the concept better than the oil and gas industry. The
main thing holding domestic energy companies back from making a
stronger commitment to future domestic supplies is uncertainty. Capital
hates uncertainty, avoids it like the plague. Your rhetoric may appease
your doctrinaire base, but it makes domestic energy producers hold
back, fearful that you will punish their success, or that you will
change the rules on them in the middle of the game.
Erasing uncertainty is the #1 thing you can do as a national leader if
you truly desire to lower gasoline prices. Not only could it change the
psychology of energy investing, there is still time for companies to
change their 2012 investment plans.
Below the fold is my humble 10-point plan: Things President Obama could
(but won’t) do to reduce domestic gasoline prices by November 2012.
1. Commit to a strategic goal of North American energy security.
That includes reasonable and responsible domestic drilling. That
includes taking the lead on the Keystone XL Pipeline; we could find a
way to make it happen while addressing the legitimate environmental
concerns of Nebraskans. It includes a commitment to maintaining the
Trans-Alaska Pipeline System and opening ANWR.
2. Ditch the anti-industry, anti-capitalist rhetoric. It is not
the President’s or the government’s place to decide when an industry’s
profitability is “high enough”. High oil company profits fund more
drilling; more drilling means more future supply and lower prices.
Besides, American oil companies are not owned by a cabal of wealthy
executives, but by America’s pension funds, mutual funds and private
investment accounts. “They” are “us”.
3. Stop targeting the oil industry for punitive tax treatment.
States such as Texas and Louisiana have production tax abatement
programs that have successfully encouraged new drilling. If you don’t
believe that the threat of increased taxes discourages drilling, just
ask Governor Perry or Governor Jindal.
4. Realize that Uncle Sam is in the energy business and is a
partner in industry’s success. Oil and gas royalties are the federal
government’s #2 source of revenue, after the income tax. Offshore
slowdowns hurt not only industry and jobs, but government revenue.
5. Recognize that industry does not need to be led by government;
industry needs to be unleashed and encouraged to innovate. The
resurgence of the domestic energy sector was rooted in the private
sector, not matter how much President Obama and Dr. Chu would like to
take credit for it. The growth in North Dakota, Pennsylvania and Texas
happened in spite of the federal government, not because of it.
6. Trust that no oil operator wants to be the “next BP”. The BP
spill cost that company something on the order of $40 billion. Industry
safety and environmental commitment is motivated more out of
self-interest and less out of fear of the government. When it comes to
federal regulation, the nation would be better served by Sheriff
Taylor, not Barney Fife.
7. Return offshore permitting to the pre-Macondo pace. Your
overreaction to the BP Spill has cost on the order of 500,000 barrels
per day of domestic oil production from the Gulf of Mexico. The
ridiculous “Worst Case Discharge” calculation as a routine part of
offshore permitting is engineering malpractice, in my humble opinion.
The professional staff of the Bureau of Safety and Environmental
Enforcement is capable of reasoned regulation, but they currently
operate in fear of their political masters.
8. Declare hydraulic fracturing & well design to be the
regulatory domain of the states, not the EPA. Geology and environment
vary widely; Pennsylvania is not Louisiana is not North Dakota is not
California. It is insanity to think that one broadly-applied set of
rules can be applied to regulate industry without suffocating
development.
9. Rescind the recently-enacted royalty rate increase for new
onshore Federal oil and gas leases. Secretary Salazar’s stated
rationale for increasing the government’s take by a whopping 50% – from
12.5% to 18.75% of gross production – was to equate onshore royalties
with the offshore royalty rate. That makes no sense. Higher royalties
mean less drilling, poorer economics of production and premature
abandonment of wells. Besides, an IHS-CERA Study recently showed that
the federal government’s total take of offshore cash flows makes the
Gulf of Mexico the second-most punitive fiscal regime in the world,
after Hugo Chavez’s Venezuela. [Update: In keeping with the First Rule
of Holes, rolling back the royalty rate increase may be the first thing
the government should do if it is serious about reducing energy prices.
- Ed.]
10. Encourage development of a nationwide distribution system of
natural gas as a transportation fuel. Natural gas is clean, abundant
and nearly 100% domestic. Its potential as a transportation fuel has
scarcely been tapped.
Bonus #11: Get real about the promise of alternative fuels. Recently
you said: “You’ve got a bunch of algae out there; If we can figure out
how to make energy out of that, we’ll be doing alright.” Maybe so, but
I will stick my neck out and say it ain’t gonna happen, at least not in
my lifetime, not on a scale that will impact pump prices.
Energy policy will be a President Obama’s key vulnerability in
November. His goal has always been to encourage alternative fuels by
raising conventional energy prices. Alternative energy may poll well,
but the average voter who fills his tank with $4+ gas on the way to the
ballot box will certainly “Hope for Change”.
Read this and other articles at Redstate
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