Obama’s Energy Repackaging: Not the Problem but Not the Solution Either

A too little-noted aspect of Obama rhetoric is the incessant repetition of outlandish claims. Energy is a major example. He repeats so often that reiteration of the defects is desirable. Whatever he may say, Obama is actually devoted only to the proposition that global warming is such a threat that the United States should rapidly move away from its reliance on fossil fuels. The basic implementation plans have undergone a major change after the 2009 fiasco of the Waxman-Markey bill. That bill proposed an extremely convoluted program to limit greenhouse-gas emissions. A core element was setting caps on such emissions, allocating them to energy-users, and allowing those users to buy and sell the rights. Government allocation of any valuable rights is always an invitation to unseemly battles for shares. At best, dubious vote-seeking allocations arise. At worse, bribery prevails. The combination of controversial meting out of quotas and the mess of additional regulations imposed by the bill led first to House of Representative passage only through arm-twisting. Next, fear of a similar fight caused the Senate not to consider either Waxman-Markey or various Senate alternatives.

Obama has since turned to his typical response. He has devised a public presentation of limited dubious ideas that supposedly allow the United States both to maintain fossil-fuel use as long as necessary and transition to non-fossil energy. He repeats these frequently. With the rise of gasoline prices, Obama has tried radically to change the form of presentation. Given the inherent defects of his stated objectives and the disparity between them and his actions, Obama has turned to an outrageously vituperative effort to claim that he has presented a vision of the truth that only politically motivated opponents reject. He vainly hopes that the public cannot see past his innocence about current prices to his guilt in wanting higher energy prices that he does cause.

He and Secretary of Energy Steven Chu are also trying to defuse their prior candid admissions that they wanted higher energy prices. Their current statements at best recognize that events beyond their control caused the increases and try to evade the reality that their goals also would produce higher energy prices. Suddenly, the widely available record is ignored. A quick Google search confirms that Obama admitted that cap and trade would cause electricity prices to skyrocket and bankrupt the coal industry. Similarly Chu did say “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” They have not backed off from seeking to implement these goals.

Obama’s March 15, 2012 speech kicked off this new packaging. He claimed “What I just said about energy, by the way, is not disputed by any energy expert. Everybody agrees with this.” Obama would have been right if he had only said “There is no such thing as a quick fix when it comes to high gas prices. There’s no silver bullet. Anybody who tells you otherwise isn’t really looking for a solution -- they’re [sic] trying to ride the political wave of the moment.” It is agreed both that developing energy substitutes is time consuming and likely to increase energy costs intolerably.

However, he goes on to argue “So if we don’t develop other sources of energy, if we don’t develop the technology to use less energy to make our economy more energy-efficient, then we will always be dependent on foreign countries for our energy needs.” That is disputed at both ends. Dependence on foreign oil is no more undesirable than dependence on other foreign commodities. Removing energy imports would leave the indirect impact of oil instability on our trading partners in other commodities. It is generally believed by advocates of action on global arming that policies that do not include China and India are doomed to failure. Some fear that the proposed alternatives are so unattractive that crash effort are needed to develop alternatives. Obama’s statements of goals (which appear in every energy speech and are reiterated excessively in this one) make things worse

So we can’t have an energy strategy for the last century that traps us in the past. We need an energy strategy for the future -- an all-of-the-above strategy for the 21st century that develops every source of American-made energy. Yes, develop as much oil and gas as we can, but also develop wind power and solar power and biofuels. Make our buildings more fuel-efficient. Make our homes more fuel-efficient. Make our cars and trucks more fuel-efficient so they get more miles for the gallon. That’s where I want to take this country.

He adds later the blatantly jingoistic and protectionist assertion, fortunately grossly in conflict with his actual foreign-policy posture:

We can’t allow ourselves to be held hostage to events on the other side of the globe. That’s not who we are. America controls its own destiny. We’re not dependent on somebody else.

His oil statements are selective. His noting of the positive steps taken to increase oil and gas drilling ignores his anti-drilling actions. No mention is made of the anti-coal measures involving restrictions on coal use and making some forms of mining more difficult emanating from the Environmental Protection Agency; indeed the speech makes no mention of coal. The alternative-energy and energy-efficiency goals are widely criticized as too intrusive, too slow moving, and too doubtfully efficacious.  At least two well-researched books argue that alternative energy in general will at best take many decades to become substantial contributors to energy supply. Ethanol, the biofuel now in use, at a minimum produces a stain on food supply and may raise rather than lower greenhouse gas emissions. Experts hold that alternatives such as cellulosics and algae are the only hope and disagree about when, if ever ,either will emerge as viable alternatives.

Mandated energy standards suffer at a minimum as paternalistic measures to impose the supposed values of the government on individuals. A key example is the decision (back in the George W. Bush administration) to offset consumer rejection of the inadequate light from energy efficient light bulbs by banning traditional incandescent bulbs.

Auto-efficiency standards on which Obama ranted at length have at least three drawbacks. First, they are a particularly obnoxious effort to impose standards. Good reasons exist for American to want large cars. (Obama who is always accompanied by a fleet of obvious gas guzzlers and helicopters to the Boeing 747 that is Air Force One makes himself particularly vulnerable in asking others to use more fuel-efficient cars.) Second, the main way to boost fuel efficiency is to make cars lighter and thus expose riders to greater safety risks.  Third, mileage standards are inferior to gasoline taxes in discouraging gasoline use. The tax makes every purchase of gasoline more expensive and thus clearly discourages gasoline consumption. A mileage standard raises the cost of the car itself. This fosters a delay in replacing lower mileage vehicles. Once the car is purchased, the higher mileage lowers the cost of driving. People drive more. Conceivably, that incentive could produce increases in gasoline use.
His further point that the low United States share in reserves makes energy independence impossible was unnecessary political posturing. At best, the numbers are one of the less satisfactory indicators that independence would be inordinately expensive.

Yet another constant is his attack on “subsidies” for the oil industry. This relates to tax benefits. Whether the term subsidy is the best is debatable but not central. What matters is the demagoguery of Obama’s tax proposals. Where the need is simplification and the total cessation of use of the Internal Revenue code for social engineering, Obama wants to give and take to increase such engineering. His actual oil proposals were buried in an annex to fiscal year 2011 budget. The vast majority of the tax changes came from removing oil from inclusion in a stupid provision to benefit manufacturing. The rest come from tax provisions that largely benefit smaller oil companies. More broadly, he argued that rather than eliminate equally unwise tax benefits to alternative energy only the modest offset for oil should be removed.

Obama, moreover, cannot refrain from adding a demonstrably misleading point “Ending these subsidies won’t bring down gas prices tomorrow.” Since he goes on to talk of other things, it might charitably be concluded that he was admitting the tax change was but another symbolic snipe at the U.S. oil industry to make politicians feel good. Given the tone of the speech, the alternative that he was trying to suggest that a tax increase would lower prices seems likely. Whatever the virtues of a tax change, taxing more is a disincentive and would raise oil prices (modestly to be sure, but then why bother with the tax change.)

His March 17, 2012 weekly speech (largely a recap of the earlier one) added the outrageous claim that traders manipulated oil prices but the Dodd-Frank bill would eliminate this.

Thus, the quickly refuted use of an urban legend about Rutherford B. Hayes and the revival of the flat-earth myth are just the most obvious of the misstatements to which Obama is devoted.