Cheap oil: breathing room to get off fossil fuels
One of the more absurd criticisms of Barack Obama as president was the complaint that gasoline was a mere $1.84 a gallon when he took office, but he somehow allowed it to soar to around $4 a gallon.
U.S. Rep. Roger Williams, a Texas Republican, put it this way in the summer of 2013: “It doesn’t take an economist to figure out how a gallon of gasoline has increased by $1.62 in four years. The liberal anti-free market policies of the Obama administration discourage the exploration of American sources of energy and hinder production and job growth.”
Fox News, the Heritage Foundation, the Drudge Report and others took turns hammering rising gas prices as among Obama’s failures, in part hoping it would hurt him in the 2012 election.
The conservative website breitbart.com crystallized this criticism in April 2012: “So why did gas prices fall under [George W.] Bush, once they had spiked, whereas they are rising under Obama with no sign of abating? That’s simple: Bush wanted to lower them, and Obama doesn’t.”
The president must be terribly disappointed, then, that oil prices have fallen by nearly half since summer, creating an economic stimulus at home and hurting some of the biggest thorns in our side globally, including Vladimir Putin, Iran and Syria.
With the nationwide average gasoline price at $2.33 a gallon on Friday — its lowest inflation-adjusted cost since 2002, when the nation was recovering from the tech bubble recession — it’s pretty clear that all of this talk was just part of the divisive rhetoric that defines national politics now.
This column is about energy, not about Obama, but our bitter partisanship makes it tough to talk about already-complex issues rationally. I’ve never been a big believer in the idea that a president can control the price of oil, a volatile commodity influenced by just about every spat or storm in the world. Our unholy alliance of necessity with the Saudis, started by FDR, has done as much to stabilize oil prices as anything else.
At the beginning of 2009, with the nation near the lowest point of the Great Recession, gas prices were low for all the wrong reasons. Shipping was down, commuting was down, recreational driving was down — the economy was in a quagmire, and demand for gasoline reflected it. That core economic principle of supply and demand was at work. Prices tanked.
“Increases in shale oil output have allowed overall American crude oil production to rise to an average of about 9 million barrels a day from 5 million a day in 2008, according to the United States Energy Information Administration,” the New York Times reported last week. “That 4-million-barrel increase is more than either Iraq or Iran, the second- and third-largest OPEC producers after Saudi Arabia, produces each day, and it has put strong downward pressure on world prices.”
Supply and demand is at work again, but this time more in our favor.
That reality has sapped the power of OPEC, which early this month opted against cutting production, leading to the current rapid oil price decline. The Saudis, who unlike Russia and Iran have cash reserves, wouldn’t cut production because they are concerned about maintaining their market share and hope low prices sort out weak competitors. Certainly, they hope that low prices slow U.S. production growth by making some plays more risky.
It’s nothing but good for the United States to become less dependent on Saudi Arabia, a repressive regime whose long-term stability in a volatile region may prove no greater in the long run than that of former oil-rich U.S. allies Iran and Iraq.
But it’s worth noting that the Saudis are investing in solar power. They are working to develop 41,000 megawatts of solar projects to support a third of the country’s electricity production by 2032. The energy will replace oil used for desalination plants — freeing up more oil for export.
The Saudis know energy. The United States, finally in a position to rid itself of damaging dependence on foreign oil, would do well to follow their lead and work seriously and without baseless, partisan finger-pointing to secure its own long-term energy future by investing in renewable sources. (As Garfield County is doing with aggressive energy-efficiency and solar-generation programs even as it remains a top natural gas producer.)
Despite our current boom, fossil fuels remain finite. Burning them remains harmful to our health, environment and climate at any price. While low oil prices provide an immediate boost to our economy and a setback for some of our global adversaries, including the terror group ISIS by depriving some of its supporters of excess cash, this is just a moment, not a new status quo.
Working earnestly to get off of oil now, while we have new breathing room, will enhance our security and economy in the long run. Perhaps more importantly, it fulfills a wise Greek proverb: “A society grows great when old men plant trees whose shade they know they shall never sit in.”
Randy Essex is editor of the Post Independent.
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