Saturday, December 20, 2014

Obama on "Canadian" Oil, Global Markets and Consumer Benefits ..... In Politics, Stupid Is as Stupid Does

The price of oil has decreased by more than 50% in recent months. The decline isn't over. Less than $2 per gallon of gas has either arrived or is on its way to a gas station near you.

Yet all this good news on the energy front has happened with zero help from President Obama. In fact, his administration has consistently and repeatedly opposed all steps to increase American energy independence during his 'reign.' The Keystone XL Pipeline delay is clearly exhibit #1.

Yesterday he lectured us on why the approval of the pipeline won't help American consumers, He said that since the oil originates in Canada, it won't benefit American consumers. Who's stupid?

He neglected to mention that North Dakota is not part of Canada, that the Canadians are our friends and allies, or that transporting oil by pipeline is far safer than movement by rail. Or that building a pipeline will provide Americans with needed high paying jobs. And so on.

My hope is that his 'stupid' attempt to fool us on this one will be recognized for what it is --- another effort to appease the greenies that will be seen by Americans as just another political stunt. And that even his jobs seeking union supporters will see through this rather feeble and transparent effort to once again distort reality.

My further guess is that the pipeline will be approved and built, albeit many years later and at a cost many billions of dollars higher than should have been the case. 

As an economist, President Obama is proving himself to be as inept as the constitutional lawyer he purports to be. The only real expertise he's ever demonstrated is political, and that is something we need less of -- much less, in fact.

Responsible leadership and the willingness to do the right thing for all Americans have long been the missing ingredients of this presidency.

Obama on Oil Markets is subtitled 'Supply and demand seem to be elusive concepts:'

"President Obama was trained in law, not economics, but we’d have thought he’d have picked up at least some basic knowledge about the dismal science in his six years in the White House. It sure didn’t sound like it based on his soliloquy about oil markets in his end-of-year Friday press conference.

The President was asked what he might do if the new Congress sends him a bill approving the Keystone XL pipeline. Mr. Obama dodged that one. But he did ruminate at length on the market impact of “Canadian oil” that he said would be the only oil flowing through the pipeline. “At issue in Keystone is not American oil,” he said, conveniently omitting that American oil from the Bakken Shale in North Dakota will also flow via the pipeline. But let’s be generous and assume he’s misinformed.

Mr. Obama’s market analysis is more remarkable and worth quoting at length: “So there’s no—I won’t say ‘no’—there is very little impact, nominal impact, on U.S. gas prices—what the average American consumer cares about—by having this pipeline come through. And sometimes the way this gets sold is, let’s get this oil and it’s going to come here. And the implication is, is that’s going to lower gas prices here in the United States. It’s not. There’s a global oil market. It’s very good for Canadian oil companies and it’s good for the Canadian oil industry, but it’s not going to be a huge benefit to U.S. consumers. It’s not even going to be a nominal benefit to U.S. consumers.”

Let’s break that down. The oil market is global, but somehow adding to the global supply of oil via the pipeline is not going to affect the global price for oil, so it won’t affect American gasoline prices. That doesn’t seem to pass the basic supply-demand test.

But it also overlooks that refiners on the Gulf Coast can handle Canada’s heavy crude, which means more lighter crude from the Bakken and Eagle Ford Shales would be available to export onto the global oil market. If global supplies increase, all other things being equal, the global oil price would fall for everyone—including American consumers."

Summing Up

I've long believed that politics sucks and believe it even more with each passing day.

During the Obama 'reign,' the American people --- all of us --- are needlessly suffering while the sick political games continue uniterrupted in Washington.

Let's "help" the politicians understand that We the People are united and sick and tired of paying to watch them play their self interested games. Together we can cause them to begin doing what they were elected to do --- the people's work.

That's my take.

Thanks. Bob.

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