The price of oil has almost doubled since Barack Obama was elected president. Candidate Obama blamed Bush’s “ties to big oil,” but President Obama claims there’s no silver bullet to lower the price. Moreover, he ridicules Republican calls for drilling. In his view, our energy salvation can only be found in alternative energy which, of course, required massive “government investment.”
There’s an ounce of truth in the President’s position. Oil prices are market-determined, and short of ill-advised price controls, overt threats to oil producers, or “windfall” profits taxes, there’s little politicians can do in the short run. Alternative energy offers a long-term solution, but there’s no evidence that it will offer much assistance in the short or intermediate terms. Besides, there are many possibilities at this point, and markets—not government—should determine which and when any of these alternatives can begin to make a real difference in meeting our demand for energy.
Ultimately, gas prices are determined by supply and demand. While China had increased global demand, President Obama has stymied oil exploration in the U.S. It takes several years for drilling permits to translate into increased production. Increases in domestic supply have resulted from permits issued in the Bush years, and prospects for increased production in the short term are bleak.
The decline in the value of the dollar is a major and often overlooked contributor to the crisis. With much of the global oil production occurring outside of the U.S., a weak dollar leads to higher prices. Obama favors a weak dollar.
R&D into alternative energy sources is a good idea, but more drilling is the only real solution for the time being. Increasing domestic supply not only brings down the price of oil, but it also creates jobs at home that would otherwise be created elsewhere. When the President mocks his opponents for a drill-drill-drill strategy, he’s either showing his economic ignorance or he’s comfortable with higher prices. The latter might sound a bit farfetched at first glance, but he’s on record supporting a gradual hike in oil prices as a means of trimming demand and shifting the country away from oil (see www.canadafreepress.com/index.php/article/44810 or simply Google “Obama high gas prices” for more on this).
While the current spike in oil prices cannot be blamed completely on the President, he has contributed to the malaise through his weak dollar policy and his unwillingness to promote the expansion of supply. For this he should be held accountable.