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Home Publications Blogs Beat the Press Reducing Oil Imports to Lower Prices: Is President Obama a Neanderthal Protectionist?

Reducing Oil Imports to Lower Prices: Is President Obama a Neanderthal Protectionist?

Thursday, 31 March 2011 05:14

The description of his strategy in a Washington Post article suggests that he is. According to the article, President Obama wants the United States to reduce its dependence on foreign oil because the price is high.

This strategy makes no sense in the current context because there is a world market for oil. Increased production of oil in the Gulf of Mexico or Alaska has no more impact on the price that people in the United States pay for their gas than increased production in Venezuela or Saudi Arabia. The only way that focusing more on domestic production would substantially reduce the price of oil relative to the rest of the world would be if President Obama plans to put export restrictions on U.S. oil.

Of course since the U.S. doesn't have enough oil to ever be close to self-sufficient, this would be impossible in any case. The Post should have pointed out to its readers that President Obama's strategy for reducing the cost of oil does not make sense.

Comments (11)Add Comment
written by izzatzo, March 31, 2011 5:47
Exactly. It even says right on his birth certificate that Obama was born in Neanderthal where hunters were protected from gatherers and vice versa under the Obama Competition Suppression Program becauses economists back then knew the difference between substitutes and complements.
Jobs, jobs, jobs
written by Jorge, March 31, 2011 8:12

If it can restore jobs for people in the Gulf, that's one good thing. That's assuming there will be more jobs in oilwell accident-prevention, too.
written by MB, March 31, 2011 8:57
Morning Edition pitched this story today as an example of Obama being an environmentalist. But if they were increasing use of solar or wind power to reduce oil imports, that would make more sense environmentally than using the media to make it sound like the administration has to force the hand of the industry to increase domestic drilling. Question, is there a game over leased land that isn't drilled? Like for example, do they get tax advantages for holding the leases but not using them? Or do they trade the leases and create revenue that way? Meaning, is it part of a game that leases are acquired even if there is no real probability that drilling would ever be high yield?

Early morning is not always the best time of day for me to be a critical thinker so that might be why it sounded confusing. But in general it's becoming a lot of work to follow the news.

March 31, 2011
President Obama is calling for reducing oil imports by a third over the next decade. Environmental groups have long complained the oil industry isn't developing leases that it already holds on public land and offshore.
written by eric, March 31, 2011 9:14
BTP: "President Obama wants the United States to reduce its dependence on foreign oil because the price is high... This strategy makes no sense"

It does make sense. If something costs a lot, you should figure out how you can start using less of it. For instance, if you heat your house more efficiently you can spend less on energy and have more to spend on other stuff. The same goes for our country, and since the price of oil is likely to remain far from its supercheap 1990s levels, Obama's plan is prudent. OTOH, every president since the seventies has said the same thing...
Come on, Dean
written by Jeremy Bentham, March 31, 2011 10:01
Or could it be about reducing the trade deficit, like he's been talking about for some time?
You can fool the median voter most of the time
written by Floccina, April 01, 2011 10:41
It just goes to show that you can fool teh median voter most of the time and that is a a lot of what we select politicians for.

BTW have you all seem the MPG rating on the Chevy Cruse Eco? It is wonderful.
Sorry Dean you're forgetting something
written by Natequist, April 01, 2011 3:11
Obama's report sums it up for you:

"The recent crude oil price increases, which translate into higher prices at the pump, have many causes, including the global economic recovery and unrest in the Middle East. But a major cause of the recent price rise is the concern that global oil demand will outpace supply over the next few years. The dependence of the global vehicle fleet on oil makes this problem especially acute."

This is an oil supply problem. The world needs more supply, and its going to have to come from everywhere. Including the US.
What about oil futures markets?
written by NewsFromAnnArbor, April 02, 2011 2:55
There is not support for the argument that current demand exceeds supply, so why the run-up in oil costs? If oil markets are working the way they should, oil prices should not go up until an actual shortage appears, not in anticipation of one! Obama should instead be looking at how oil future markets are working, or more likely not working. The last time oil peaked, it was driven by global futures markets, not demand fundamentals. It is no secret that Obama is a stooge of Goldman Sacks, who by the way, happens to have significant investments in oil futures markets.
Could help the trade deficit
written by Patrick Tchou, April 02, 2011 8:17
While domestic production would not change oil pricing as our production would add a tiny amount to the world oil supply, it could put a small dent into our trade deficit. This is the deficit we need to most concerned with, not the federal deficit. This is the deficit that is closely tied in to our job loss and the lack of ability to generate new jobs with our current "recovery".
written by Steve Athearn, April 02, 2011 3:16
The problem is not prices, but physical limits which render mathematically impossible current levels of industrialization.

Dean recognizes an important half-truth that "the U.S. doesn't have enough oil to ever be close to self-sufficient," but not the other half: that the world doesn't have enough oil to long make up the difference, so that the end result must be self-sufficiency (at a lower level of population and economic activity).

For one source of non-insane insights into our energy predicament, see:

written by Steve Athearn, April 02, 2011 11:02
I had just read Sharon Astyk's column, but Gail Tverberg's article "What President Obama should have said regarding energy policy," is even more apropos:

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.