Fri, Jan

Hitting the Highs

ENERGY - “He looked pretty bad. The next time I walked past he was dead and people just kept walking over and around him.”  These were the words of my wife on our first visit to Karachi, Pakistan. This is the persona of many of the folks and governments of the Middle East. This is the persona of many of the folks and government of Iran and they hate us.

They are going to continue walking over us causing turmoil and conflict at the pump. They are going to shake and bake. Turmoil will erupt and it will affect oil flow through the Strait of Hormuz. The area is a tinder box and it is not a question of “if”. It is a question of “when”.

The latest Lundberg report shows that the cost of gasoline continues climbing nationwide and Los Angeles is in the lead. The highest price in the lower 48 U.S. states among the cities surveyed was in Los Angeles, [link] Lundberg said.

Higher pump prices heading into peak summer driving season have become an issue in this year’s U.S. presidential election. The Obama administration said it is monitoring prices in 360 U.S. cities to guard against fraud or price manipulation. Republican presidential candidates said yesterday environmental and permitting decisions by Democrats affecting oil drilling have exacerbated oil-price spikes.

“As refineries complete their maintenance, overall motor- gasoline supply will become more generous, and this will probably put a stop to the price rise,” Trilby Lundberg, the president of Lundberg Survey, said yesterday in a telephone interview. “This of course depends on whether crude-oil prices cooperate.”

A Washington Post-ABC News poll published today showed 65 percent of Americans surveyed disapprove of the way President Barack Obama is handling the situation on gasoline prices, with 26 percent expressing support.

No wonder Obama is desperate to get out in front of the issue. The dilemma is that he has invested so much of his prestige in his energy policies that he cannot admit those policies have been an abject failure. But he also cannot have people thinking his policies are responsible for the energy price Americans care about most: gasoline.

"Despite the gains we have made, today's high gas prices are a painful reminder that there is much more work to do to free ourselves from our dependence on foreign oil and take control of our energy future," the president declared Monday in a statement on the one-year anniversary of his "Blueprint for a Secure Energy Future."

Let us take the second proposition first. Obama often says, "Under my administration, America is producing more oil today than at any time in the last eight years." That is true: It is also true that under Obama's administration, Snooki from "Jersey Shore" got pregnant and Charlie Sheen lost his job. And he can take about as much credit for those developments too.

Never mind that if he had gotten the cap-and-trade proposals he campaigned on, energy prices would be even worse. (He once acknowledged that under his proposals, electricity prices would "skyrocket" and coal companies would go bankrupt. His Energy secretary, Steven Chu, admitted he wanted America to emulate European gas prices, when they were about $8 per gallon.)

The boom in oil production has taken place almost entirely on private and state lands, while on federal lands it dropped (11% from 2010 to 2011 alone). The administration has also slowed the permitting of offshore oil and gas development to a trickle.

Another major factor is the development of new technologies that make it possible to extract ever-more fuel from domestic sources. Instead of words of support, Obama keeps telling those companies they need to be taxed more and have their subsidies yanked.

Ending subsidies to business entirely, including oil companies, is a good idea. But Obama's policy is completely different. He thinks he is smarter than the market and can pick winning industries and products.

It is an ugly record. Forget Solyndra — and other solar and wind firms that have been going belly up like birds around a windmill — that is old news. So is his decision to block the Keystone XL pipeline.

Few of the issues we face are as crippling here in Los Angeles as the price of gasoline and yet we continue hitting the highs. There is no end in sight on our current path.

(Kay Martin is a writer and a new contributor to CityWatch. His years of travel and work included tours in Russia, Europe, the Middle East, Africa, Asia, Australia, Hawaii, Latin America, and the Pacific.  He can be contacted at [email protected]) –cw

Tags: oil, oil prices, gas prices

Vol 10 Issue 22
Pub: Mar 16, 2012