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  • Obama's Top Six Gas Price Myths Busted

    The same Washington press corps that hammered President George W. Bush relentlessly when prices were still well under $3 a gallon—well before the $4 a gallon peak, which lasted only six weeks in 2008—have given President Obama a pass thus far on the recklessness of his energy policy.

    In fact, in the first two years of his presidency, as gas prices steadily rose to over $3 a gallon, the press corps never asked the President about gas prices in any of his press briefings. Even when he called a press briefing specifically on gas prices last month, he was asked only one question on the subject, which was historic in itself, being the first question on gas prices of his presidency.

    According to the Media Research Center, in the past year, just 1 percent of stories related to oil prices or the Gulf oil spill on the network evening news even mentioned the President’s energy policy.

    President Obama has been more than happy to feed the media alternative narratives. But the myths created in the White House don’t stand up to scrutiny.

    Myth #1: Speculators Are to Blame

    Ah, speculators. Nobody worries about pesky market investors when gas prices are rising from $2 to $3, but when prices hit $4 they are the only people to blame. But the economics of supply and demand don’t back up the argument.

    Heritage energy expert Nick Loris explains: “Speculators could marginally increase the price of gasoline if it led to oil inventories building up while sellers waited for higher prices—but even then it would be only in the short run, because businesses have to unload these inventories.” And those inventory build-ups do not appear to be happening.

    The Cato Institute’s Jerry Taylor and Peter Van Doren explain: “While crude inventories in the U.S. are increasing, they always increase at this time of year, and this year’s increase is well within the normal range. More important, gasoline inventories are decreasing and decreasing much more rapidly than normal. Hence, there’s no evidence that speculators are reducing the supply of crude or gasoline through increased storage.”

    Craig Pirrong, a finance professor at the University of Houston who specializes in commodity prices, told Fox News: “This is a transparently political fishing expedition that insinuates that fraud or manipulation is distorting oil prices without providing even the flimsiest factual basis for such a suspicion.”

    Busted.

    Myth #2: Price Gouging Is to Blame

    Price gouging certainly sounds menacing. Who wouldn’t be against someone “gouging”? But it’s not the reality of markets. As Reuters White House correspondent Steve Holland recently tweeted: “Presidents typically stage fraud probes when gas prices spike. Fraud is almost never found.”

    Heritage expert Diane Katz explains: “In the case of oil and gasoline, higher prices induce producers to increase supply—precisely what’s needed to alleviate shortages. But, with the threat of fines and jail time if they charge ‘too much,’ producers will be reluctant to respond to the higher market prices. Consequently, the shortages persist or worsen.”

    This type of government price control, via heated presidential rhetoric, usually makes the situation worse, not better—as we saw in the Carter Administration, when artificially low prices caused shortages and gas lines. Yes, consumers need to be protected, but price gouging is not the cause of the high gas prices, and the President knows it.

    Busted.

    Myth #3: The Solution Is Alternative Energy

    This is President Obama’s favorite line. We simply need to “invest” more in alternative energy. Notice, though, that he never says this action will lower gas prices. Because it won’t. Oil fuels, among other things, our transportation needs, while solar and wind are electricity-generating energy sources. An affordable electric-only car simply does not exist on the market today.

    While the President may want to spend billions of dollars subsidizing the costly solar and wind industry, it will not even slightly impact high gas prices. Having an idealistic vision of our energy future is not a short-term solution to the economic pain Americans are feeling.

    Several weeks ago, President Obama mocked a man for having 10 kids and told him he needed to buy a (non-existent in the U.S. market) hybrid van. Since that revealing misstep, Obama has backtracked, acknowledging that most Americans cannot afford a new $40,000 vehicle.

    Busted.

    Myth #4: The President Wants Lower Gas Prices

    If we are to take President Obama and Energy Secretary Steven Chu at their word, they desire higher gas prices in order to wean Americans off of oil. In September 2008, Chu told The Wall Street Journal: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” which are currently nearly double the price in America. Two months later, the President chose him to be his Energy Secretary.

    In June 2008, President Obama was asked by CNBC’s John Harwood if high oil prices “could help us.” Then-candidate Obama responded: “I think that I would have preferred a gradual adjustment.” In other words, prices need to get higher, but not so fast that it causes political problems.

    Busted.

    Myth #5: More Biofuels Will Solve the Problem

    The President has called for increased biofuel production. As Loris again points out: “The most popular subsidized biofuel, ethanol, produces less energy per unit volume than does gasoline, contributes to food price increases, costs taxpayers billions of dollars, and has dubious environmental effects.” In fact, a few large oil rigs in the Gulf would replace all of the energy produced by biofuels. The President also fails to mention the 54-cent tariff imposed on cheaper and more environmentally friendly Brazilian ethanol.

    Busted.

    Myth #6: There Is Nothing President Obama Can Do About Gas Prices

    On April 6, President Obama told an audience, “I’m just going to be honest with you. There’s not much we can do next week or two weeks from now.” There is actually plenty President Obama can do immediately.

    He can start issuing drilling permits in the Gulf. Obama’s Department of Interior went nearly a year without issuing a new permit, to the point that a federal judge held them in contempt of court. Obama’s Energy Information Agency projects that these permitting delays are costing us 240,000 fewer barrels of oil a day, along with the billions of dollars in government revenue in royalties. A Louisiana State University study found that at least 19,000 jobs across the nation were destroyed just by the Obama drilling “permitorium.”

    He can stop the EPA from imposing costly new regulations on refiners. He can reverse the political EPA decision to stop Shell from tapping into 27 billion barrels of oil in the Arctic Ocean. Simply put, he can send a strong signal to the markets and oil cartels that the U.S. oil industry is back open for business.

    As Congressman Dan Boren (D–OK) recently said: “President Obama is completely uninformed about the oil and gas industry. The industry is not made up of just major companies. … For every CEO of a major company, there are literally thousands of blue collar jobs that are affected by his administration’s energy policy. It is a policy that is very inadequate and has left so many on the gulf coast unemployed. Americans are tired of empty rhetoric on both sides and want a real plan. If the President doesn’t want to stand up and be a leader, then his silence would be appreciated from people who are trying to find solutions.”

    Busted.

    Posted in Energy [slideshow_deploy]

    20 Responses to Obama's Top Six Gas Price Myths Busted

    1. Wildcat from Dallast says:

      Thanks to Heritage Foundation for busting these myths routinely given as gospel truth by Obama and his administration concerning the excuses they give for not actually attacking the problem rather than enflaming the symptoms. Too bad this kind of cogent reasoning and presentation of the facts can’t be consistently blasted on ALL the media outlets.

      One of common sense aspects is to eliminate those items which have no bearing on countering rising gas prices. Wind and solar come to mind at first, however, many may have forgotten what candidate Obama said about the price of gas (and energy in general) during his campaign which was also echoed by now energy secretary Chu concerning his desire to get gas prices equal to that in Europe in order to force American’s off foreign oil. It is a total myth that Obama wants cheaper gas prices. He wants the opposite to be true as does is Secretary of Energy.

      One fact about higher fuel prices that also has somewhat of a tendency to get lost is its effect on the dramatic increase in prices of all other commodities that are trucked (or transported by some means) from producer to marketer. We will be paying more for everything as this cost of doing business is passed along to the consumers. Even freight handlers at FedEx can see the difference in customers’ shipping choice go from their more expensive First Overnight and Priority Overnight services to the more affordable Standard Overnight and even their two day delivery service of Express Service. As the price of diesel goes up the package volume levels move down the slide from the most expensive to the most affordable. Maybe Heritage or a news agency like Fox News Channel could do a story about this aspect of higher fuel prices enhanced by video actually demonstrating the unloading and sorting of freight at a FedEx facility to demonstrate how the consumer makes such purchasing choices. They would also have historical facts and figures to demonstrate what the distribution of packages was when fuel was more affordable versus the higher spikes in fuel prices. Then do that for things we consistently buy like specific food items that are transported around to see the cost difference in doing business to historical prices when fuel was more affordable and when it spikes.

    2. Dan says:

      Also, why is there almost no mention that oil is purchased in dollars and the Obama administration has tanked the value of the dollar…thus oil costs more dollars per barrel.

    3. dave watkins, cheste says:

      People need to stop calling it the Gulf Oil Spill because it takes blame away from BP, some marketing scammer came up with that idea. CALL IT BP's OIL SPILL!!!!

    4. Bruce Hague says:

      There ARE some conservative news media. Why are they not spreading the truth?

    5. Pingback: Obama’s top six gas price myths busted « OBX Tea Party News

    6. Tom, Mineola TX says:

      Why is there no mention of the Fed pumping money into the system, inflating the dollar? Oil is currently based on the dollar, so when a dollar is worth less a barrel of oil costs more. The conservative talking heads keep harping on this but the question does not seem to get presented to the president. BLAME THE FED.

    7. Pingback: Obama High Gas Price Myths Debunked « That Mr. G Guy's Blog

    8. George Colgrove VA says:

      Tom, Mineola TX,

      You are absolutely right. This is the primary reason gas prices are on the rise. Quantitative Easing is being used by the feds to reduce the value of the dollar – to make the debt easier to pay off. If you do not want to cut federal spending and tax increases are out of the question, you make the debt smaller by shrinking the value of the dollar. However, the people end up paying for it anyways, because gas prices will climb, milk prices will climb, everything will climb. People’s salaries however either will stay the same (in numbers) or because of cost cutting may go down (in numbers). Nevertheless, even if your salary stays the same it is worth less, because the dollar is worth less.

      What the fed is doing by QE is making the people who did not mount the federal debt, pay for it while they continue to spend at egregious levels.

      Obama is also now considering raising taxes on oil companies. With gas prices on the rise, he is hoping that we will not notice the increase of prices due to the oil companies passing that tax onto us. What Obama and his federal workforce will do is blame the higher prices on the companies – and not his policies.

      This is a perfect storm of federal deceit if we the people do not pay attention. The federal government for the last five years has accelerated the destruction of this country – for their gain. Moreover, they have orchestrated the destruction to make it look like capitalism is doing it. Though more people are seeing the disaster, what is dangerous is that a growing number of people are now feeling capitalism is to blame for it all – including a really good friend of mine who for the longest time was conservative.

    9. Jill, California says:

      Obama made it clear before the elections that he wanted energy prices to "necessarily skyrocket." Rising gas prices are all part of his plan to destroy America.

    10. Wayne, Chandler, AZ says:

      Ref #6 in relation to #1. If the President established a strong bias towards increasing domestic production and (just as importantly) refining capacity, any "speculator" caused bubble bursts overnight.

      This guy doesn't understand markets though. He doesn't like them and has a bias against allowing them to function without interference. He thinks that the only way they can work correctly is if the government controls every aspect of the supply line and pricing.

    11. Pingback: Will Leon Panetta Ensure That America Is Defended? | The Foundry

    12. Andrew, California says:

      There are so many untruths in this piece that its astonishing. And no specifics about what really can be down to lower the price of gas at the pump. Hollow partisan rehtoric. Give me real solutions please and get your facts right!

    13. Pingback: What is Environmental impact between making a Hybrid Car and a Gas Car?

    14. Lt Col Charles Henth says:

      As a candidate for the US Senate next year, the current price of gas is not a surprise. The Pres. stated many times, the nation needs much higher energy prices and sure enough they are here and we have only started this ascension into higher oil prices. Much more to come, he has or is creating havoc with the US Dollar, he refuses to allow drilling any where in US territory, he has and continues to shut down mining of coal, etc. Alteritive energies will not be here for many years, we must stop the EPA, we must drill everywhere we can, we must mine coal, we must develop shale oil production, we must develop more necular energy. Our current ability to defend ourselves has deminished dramatically. Wake up America, we are extremely weak and going down hill rapidly. This is where the Pres. wants this nation and we must move and move with deliberate intent to improve our energy situation in order to keep our nation free from aggressive governments and rogue, phanatical movements within our own nation.

      Remember I have sworn to defend our nation against all enimies, both foreign and domestic. This is an oath I take very seriously and will honor this oath until I am no longer on this earth. I beleive in our Juedo – Christian values and strongly beleive our nation remains a country who's foundation is based on Juedo – Christian Values.

    15. Nance, NE Michigan says:

      I completely agree with Jill in California. One thing Obama has been transparent about, especially in his actions, is the fact that he wants the Country he is president of and is sworn to protect and defend to slide down a rathole…somehow having the US become a third world country fulfills some socialistic agendaof his and that of his "czars" (hmmmm…interesting choice of labels). Like paying 10 bucks for gas…if you can get it…your trees, the squirrels and fish being represented by lawyers in our courts, having your health care rationed, told what you can and cannot eat, what games your children can and cannot play, homosexuality promoted in elementary schools, and unions deciding who can and cannot earn a living? Then be a sheep and vote for more "hope and change" in 2012. Baaaaaaaaa….

    16. Steve, Arkansas says:

      A nice republican biased slant on the gas problem. What's next? Blame the ozone problem on Obama passing gas.

    17. DIANE says:

      This man and his czar's are destroying this country! It make's me sick that the lapdog press continue to give him a pass, after they persecuted Bush and Chaney. They are such hypocrites!!!!!!!!

    18. Mitch, Grand Rapids, says:

      It's amazing how all the comments published are in support of this article. No dissenting voices? Wow, what are the chances? What's more, there is no journalistic integrity taking place in this propaganda piece made to look like an news article. You've fooled some, but you didn't fool me.

    19. James Miller says:

      This is a depressing article. Let's look at one fat fact, U S oil production peaked in the 70's and has dropped ever since, no matter whether the conservatives or liberals ran the government. Despite improved technolgy, newly discovered fields, production continues to decrease, We need new thinking, No matter what one wishes, This is the beginning of the end of the age of oil.

    20. Dave, CT says:

      1. None of these "myths" can be attributed to Obama as they have all been around far longer than he has even been a public servant. 1973 anyone?

      2. There isn't a single point here that isn't an opinion… writing opinion guised as fact doesn't make it so.

      What really worries me is how some sheep gobble this dribble up… Myth 1 and 2 are amazing. It's a fact that oil prices are driven by speculators. Otherwise it would be a supply and demand system. Anyone with a high school level of economics understanding could see this. It's also a fact that price gouging occurs. Don't take my word for it though… go to your local Mobil gas station and then drive to the next town and compare the prices. Anyone with the slightest amount of education could figure this one out. All you’d need to know is how to count. I won’t bother with myths 3 through 6 because they are so open to speculation that’s it irresponsible enough to post them in an article like this let alone respond to them.

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