Last week in a speech at Prince George's Community College, President Obama pressed back against those seeking to pin the blame for rising gas prices on his administration. Hailed by many as a campaign speech, the tone and tenor of the president's address should be a reminder that the issue of energy policy is highly political -- and one not likely to go away anytime soon. The reality is that the president has very little control over oil prices. Republicans incorrectly suggest that increasing domestic supply can alleviate the pain at the pump, when every economist knows that oil prices are set on the world market, and since United States reserves account for about two percent of total world oil supply (in proven reserves), even a huge increase in domestic supply wouldn't change the price by more than a few cents. Furthermore, this is the most short-term solution on the table. The good news is most people aren't buying into the Republican blame game. A recent Pew poll found that only 18 percent of respondents think the administration is the most to blame for rising prices. There is no doubt, however, that U.S. supply is a factor (albeit minor), and the president can point to the fact that domestic production of oil has increased during his administration. The conservative Cato Institute opines,
So despite the popular perception of President Obama as anti-oil, domestic oil production is increasing for the first time since the Johnson administration. Alas, little of this has to do with the President. Prices increased from $22 in 2002 to just under $100 a barrel average in 2008 and supply has responded. President Obama is no more responsible for production increases than other presidents were responsible for production declines. Unfortunately, presidents get blamed for world market changes that occur during their time in office... but generally, they do not cause them.
Arguably, oil speculation (futures traded on the commodity market) does more to drive up prices than any adjustment in domestic supply. Tensions in the Middle East and increased demand in China have more weight on the price of oil than any permitting decision in the United States. The upcoming summer "driving season," Iran's threat to close the Strait of Hormuz and the ramped up rhetoric on Iran's nuclear program all have a hand in the game. And just who is adding fuel to the fire between Tehran and the West? That's right, the Republican presidential candidates.
They talk tough on Iran, stoking fear in investors who then trade under the assumption that prices will rise -- which they do. Then they turn around and blame the president for something that their own sabre-rattling bellicosity is contributing to. It's brilliant political strategy, but bad for our country.
The president rightly spoke to the promise of alternative energy; which would simultaneously release us from our dependency and open up new markets for growth.
Alternative energy is not only good policy; it's good politics for the president. For one, most of the high-profile options for a further increase in domestic supply present challenging political problems. The Keystone XL pipeline pits environmental interests against union interests. Tapping into the oil reserves in the Arctic National Wildlife Refuge and the Gulf of Mexico are equally eco-unfriendly. Granting waivers to the Merchant Marine Act of 1920 (Jones Act) -- to allow more tankers of oil to ship from the Gulf Coast to New England -- is opposed by unions but could lighten the burden on households in the liberal northeast. Regardless, even if all of these politically lose-lose options were exercised; it would have a negligible impact on the price of gasoline.
President Obama, faced with these dueling constituencies and an irregular marketplace, must choose a responsible and measured way forward. He must continue to push back against the belief that he alone is responsible for the nation's gas prices. And he must continue to press for an alternative energy future.
But there is plenty of good news. Gas prices seem to be peaking earlier than usual and are likely to come down in the months leading up to the election. We can expect the recent hit the president has taken to his approval ratings to lighten in-step with declining fuel prices. Further, some of the major swing states will be spared peak prices. Colorado, Iowa, Ohio and Wisconsin are all hubs of domestic supply, and costs there will be much lower than on the coasts, which are strong Democratic footholds.
Going back to Gerald Ford, American presidents have delivered promises of ending our dependence on foreign oil. Each in kind imagined a renewable future. Embracing new technology, harnessing the power of American ingenuity and industry: these should be the President's calls to action in pushing for wind, solar, biofuel and hydroelectric. As our economy looks to add new jobs and emerge from the specter of the boom-bust cycles, President Obama must resist the temptation to give in to uninformed domestic interests calling for short-term solutions, and instead present a bold vision for our energy future.