Posts Tagged ‘Supply’

Obama Says Energy Costs Beyond His Control; Not So Fast

Thursday, March 8th, 2012

Something Stinks

Barack  Obama has been on the campaign trail mocking Republicans, particularly Newt Gingrich and Sarah Palin(although not by name,) who advocate an energy policy of increasing domestic energy production.  This is a bit odd, because while Obama mocks “Drill Baby, Drill,” he has already undertaken policies with the same effect in mind.  If increasing the supply can have no effect on prices, as the President claims, why did he order a release from the Strategic Petroleum Reserve late last summer?  It’s now rumored that he will soon do so again in response to rising pump prices.  Does Barack Obama think we’re idiots?  Releasing oil from the SPR merely accomplishes the same thing as producing more oil domestically:  It provides more crude oil to the market, and that bump in supply tends to bring prices down over time.

Either Barack Obama doesn’t understand basic economics, or he thinks we’re too stupid to notice the contradiction implicit in the difference between his words and his actions.  Here’s what he’s saying:

 

 

Notice that he continues the lie about the so-called “hand-outs” to “Big Oil.”  You may hear his thesis that “there’s no silver bullet,” but what you must understand is that he fully understands that the silver bullet is supply, and when he has order releases from the SPR, it’s an acknowledgement of the fact that an increase in the supply available to the market is a downward pressure on prices.  This is pretty basic, and I assume even President Obama understands that concept, despite frequently demonstrating a a general ignorance of economics.  If he knows better, then there must be a reason he’s misstating the facts in this case, and there is:  He’s in political hot water over the issue, and he knows it.

This is his attempt to stave off criticisms over escalating fuel prices, but it’s not going to work when the electorate realizes that in other ways, Obama is working to constrict the supply of oil available to the United States.  On Thursday, even Mitch McConnell seemed to get it, and from the well of the Senate, he pointed out that Barack Obama is still obstructing the Keystone XL pipeline, and all of the jobs it would create, and the effect it would have on pump prices domestically:

 

 

Unloading On The Campaign Trail

This is a plain debunking of Barack Obama’s thesis, and Obama knows it.  You can’t expect fuel prices to come down so long as you’re restricting the growth of exploration and development of new productive fields.  Why does Saudi Arabia, in particular, but OPEC in particular regulate its production?  The answer is obvious: To prop up the prices oil brings in the market.  They intentionally restrict supply, and what increased production of domestic oil resources will do is to take away the ability of Saudi Arabia and other OPEC nations to effectively dominate the question of global supply delivered to the market.   Doing so will begin to have an immediate effect, as the oil market, like any other sees dramatic moves on the basis of even small marginal changes in the quantity supplied relative to demand.

Obama can’t talk his way out of this one, and worse, he’s been caught lying. You can’t legitimately claim that to increase  supply won’t effect prices while having undertaken measures to artificially prop up supply in order to drive down prices.  This is the nature of Barack Obama’s dishonesty, and it’s all political. I leave you with this:

Update: I just received this link via email. It’s a story on RightScoop, same basic subject.

__________________________________________________________________________________________________

Advertisements