No Comfort and Joy Over Holiday Gas Prices

by Ben Lieberman on December 29, 2010

in Blog


It wasn’t a very merry Christmas for America’s motorists, as pump prices averaged $3.00 per gallon nationwide  for the first time since 2008.   And President Obama’s holiday gift to car and truck owners – new proposals to clamp down on domestic drilling and ratchet up refining costs – will only make matters worse in the years ahead.

The days before a big holiday weekend have become a busy time for Obama’s regulators, who take advantage of the chance to slip through unpopular measures with minimal attention.   Coming on the heels of a pre-Thanksgiving announcement that oil exploration and drilling in Alaska will be curtailed in order to create vast expanses of polar bear habitat, the Obama Department of Interior (DOI) made a pre-Christmas policy change that would further reduce domestic oil supplies by placing more energy rich lands out of reach.   

It is supposed to require an act of Congress to designate federal lands as wilderness areas – and for good reason as this designation places any such lands off limits to oil and gas leasing or any other economically beneficial use.   But thanks to the December 23rd announcement, DOI bureaucrats will essentially be able to make that determination on their own, reversing a Bush-era policy that had constrained this kind of unilateral agency action.  

At issue are millions of acres throughout the West.  Some of this land sits atop promising oil and natural gas deposits – indeed, wherever there’s energy below ground, environmental activists and bureaucrats hype whatever is above ground as some kind of treasure in need of being fenced off.  Utah is particularly hard hit, with up to 6 million acres now in jeopardy of getting locked up.   Rep. Rob Bishop (R-Utah) told the Salt Lake Tribune that “this decision will seriously hinder domestic energy development and further contribute to the uncertainty and economic distress that continues to prevent the creation of new jobs in a region that has unduly suffered from this administration’s radical policies.”     

On the same day as DOI’s anti-drilling announcement, the Environmental Protection Agency proposed another piece of its global warming agenda, this one targeting America’s refiners.   Though the details of the provisions placing limits on carbon dioxide emissions from refineries have yet to be determined, refiners fear it would increase the cost of turning oil into gasoline and thus raise retail prices.

It should be noted that these new measures do not explain the current spike to $3.00 per gallon, which appears to be the result of growing demand from a recovering global economy.    But these and other anti-energy policies are very likely to put upward pressure on pump prices once they take effect in the years ahead.   Arctic Power, an organization funded by Alaska to promote its energy industry, was sharply critical of the polar bear decision as well as other measures that have all but shut down oil exploration and drilling activities in the state.    Adrian Herrera, head of Arctic Power’s Washington office, calls such policies “taking away the farmer’s seeds,” because today’s exploration and drilling leads to tomorrow’s production.  Without new fields to replace the declining output from existing ones, future production will dwindle and prices will rise.

In sum, the administration gave us a Thursday-before-Christmas present of lower future supplies and thus higher prices for oil plus increased costs of refining that oil into gasoline, and did so at a time when pump prices have reached their highest level since Obama took office. Little wonder the feds made the announcement when so few were paying attention.

Sure Energy January 5, 2011 at 8:21 pm

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