Published April 22, 2011
President Obama is at it again. Soaring gasoline prices are hitting Americans where it hurts, and threatening to undermine our fragile recovery. With oil hitting $111 today, and gasoline topping $4 a gallon in many markets, economists are beginning to ratchet down their GDP forecasts, boding ill for continued job growth. Meanwhile, and not coincidentally, the nation is souring on our elected officials, and on the president, whose approval ratings are sinking like a failed soufflé. A staggering 70% of the nation thinks we’re headed in the wrong direction. What’s Obama’s solution? Find someone to blame.
To show he’s on top of our energy crisis, the president has…created yet another commission! This one – a task force from the Justice Department - is charged with ferreting out the scoundrels behind the jump in gasoline prices – surely there must be some nefarious speculators or market manipulators who can be hauled before Congress in one of those satisfying and cathartic inquiries that, at the end, yield almost nothing. But, these hard-light investigations do provide plenty of room for posturing and prime-time sound bites.
President Obama has resorted to the blame-game throughout his presidency. GW Bush was responsible for the recession, the budget deficit, extravagant healthcare costs, the quagmire in Afghanistan, potholes, global warming and quite possibly Charlie Sheen’s meltdown. Wall Street fat cats brought on the banking crisis (not aided and abetted by Barney Frank et al), insurance miscreants are to blame for soaring healthcare expenses, oil companies are guilty of sitting on leases, pharmaceutical companies should be taken out and shot and Republicans have been mulishly resistant to even the most winning proposals. Now, rascals are at work pumping up gasoline prices; what is a president to do?
On oil prices, the president is vulnerable. First, the administration is accused by U.S. oil explorers of issuing misleading information about why offshore drilling is not moving forward. At the moment, the number of rigs operating in the Gulf of Mexico is about half the level of a year ago; the head of the Independent Petroleum Association of America has said that the government has dragged its feet in issuing the permits necessary for work to move forward.
President Obama dismisses these allegations, pointing out that domestic oil production was up last year. He didn’t mention that when oil prices move dramatically higher, production always increases, as marginally profitable wells are brought on stream. Our output would have been even higher if offshore development had moved forward as planned. Instead, the new organization charged with issuing permits is like a deer in the headlights – panicked that they will approve a drilling project that will one day go awry. No one doubts the need to buttress our safety standards, and especially in deep waters, where failed technology led to the Deepwater Horizon blowout. Still, with the impact of climbing oil prices becoming all too visible, no one should prevent us from ramping up domestic supply as quickly as possible.
Also, economists worldwide are blaming the loose monetary policies of Fed Chair Ben Bernanke for having helped unleash commodity price inflation around the globe. Though Mr. Bernanke denies that the quantitative easing programs in the U.S. are boosting the prices of gold, corn, cotton, copper and oil, to name but a few, his is quickly becoming the minority position. The U.S. dollar is sinking and excess liquidity is flowing into commodities markets. Bernanke is singularly focused on preventing deflation; that global food and raw materials prices have climbed as much as 40% to 50% over the past year and that inflation is creeping higher seems to have eluded his gaze.
Finally, Americans may connect the rise in oil prices with disruptions in the Middle East. Though no one can hold President Obama responsible for the popular uprisings in Tunisia or Egypt, our disconnected and inconsistent response has heightened uncertainty in the region. Confusion is the enemy of price stability.
Mr. Obama’s blame game is quickly losing favor. Americans are now ready to hold President Obama responsible for their problems, recognizing that he has had two years in which he and his party were in charge. He needs to channel Harry S. Truman and acknowledge: “ the buck stops here.”