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Symbolism and sympathy: Obama’s risky gasoline strategy

Sun, May 1st, 2011 8:09 pm BdST

WASHINGTON, May 1 ( – The White House is using mostly symbolic measures to address soaring gasoline prices, but the strategy is failing to resonate with frustrated American voters.

President Barack Obama, whose 2012 re-election bid may be complicated by the high gasoline prices, says he has no simple solution to drive down fuel costs, and his aversion to “quick fix” policy moves reflects that.

His administration has neither tapped strategic oil reserves nor advocated a major increase in domestic drilling, and has not offered to trim taxes for drivers.

Instead, Obama and his advisers have blamed market speculators for pushing up prices, criticized oil companies for reaping record profits, expressed sympathy for consumers and called on world oil producers to raise output — all while advocating longer-term solutions involving renewable energy and conservation.

“The most important thing we can do is have a long-term strategy to make sure we don’t end up here again,” Heather Zichal, Obama’s top energy adviser, said in an interview.

That strategy includes a push to reduce U.S. oil imports by a third over a decade by increasing domestic production, making cars and trucks more efficient, and fostering biofuels and natural gas.

But focusing on long-term goals holds political risks for Obama as he seeks re-election. He already is seeing his support drop in opinion polls on his handling of the economy.

In a Washington Post-ABC News poll of 1,001 U.S. adults published last week, 71 percent of those surveyed said gasoline prices are causing them serious financial hardship and 57 percent disapproved of the way Obama is handling the economy.

While Obama’s ability to control gasoline costs could impact his chances of re-election, demand for oil from fast-growing countries such as China and India makes it nearly impossible for him to talk market prices down.

“There’s going to be a lot of political wordsmithing over the next few months, and ultimately I don’t think it’s going to work,” said Ken Medlock, an energy expert at Rice University’s Baker Institute in Houston. “I don’t see … any relief in sight.”

Republicans and the oil industry lobby contend that there is something that can work right away, which they say the Obama administration has thwarted: more drilling.

“We’re the third-largest producer in the world, and yet the signal that this administration is sending is that we’re not interested in producing oil and gas in this country,” said Thomas Pyle, president of the Washington-based Institute for Energy Research, a group that typically promotes the conventional energy industry, including more drilling.

Republicans plan to bring to a vote at least one bill this week in the House of Representatives aimed at bolstering domestic energy production.


The White House argues that drilling is not a panacea for high energy costs, a contention backed up by industry analysts. Obama has called for lawmakers to get rid of $4 billion in subsidies for oil and gas companies, putting that money instead toward renewable energy research and deficit reduction.

White House officials say their short-term approach to the price problem is multi-pronged.

This includes investigating potential price gouging through a group set up by Attorney General Eric Holder, speaking to the public about reducing consumption through “town hall” meetings with Obama, and dangling the possibility of tapping the Strategic Petroleum Reserve.

“We’ve been clear that it is a tool that we have available at our disposal. We are monitoring the situation,” Zichal said of the Strategic Petroleum Reserve, the largest stockpile of government-owned emergency crude oil in the world.

With unrest in the Middle East and North Africa having an effect on oil markets, foreign policy is another instrument in Obama’s toolbox that could be used to affect prices hitting consumers at home.

“Communicating a vision for what (is) America’s policy in the Middle East more clearly, particularly regarding large oil producing states, would help create some more certainty in the markets,” said Trevor Houser, director of energy and climate at the Rhodium Group, which does research for private companies.

Obama said last week that his administration is talking to producer countries about increasing crude output, an echo of the Bush administration, which was not averse to pressuring OPEC into producing more oil.

Pyle and most Republicans say the administration should turn its focus toward boosting deepwater drilling in the Gulf of Mexico, encouraging exploration in Alaska, and approving a new pipeline from Canada.

The White House says activity in the Gulf is continuing, with 23 deepwater permits approved for 12 unique wells since new safety standards were set up after the 2010 BP oil spill.

To ease voter angst, analysts said Obama has to show his concern — a feeling the White House is eager to project — even though his options are limited.

“What you try to do is basically show that, hey, I’ve noticed,” said Mark Hansen, a political science professor at the University of Chicago.

“It’s largely symbolic. It’s more an expression of concern than anything that’s going to have a substantive effect on prices that people are paying at the pump.”

Original Article

Domestic oil production could solve energy woes

By Kay Bailey Hutchison

Published 12:02 a.m., Thursday, April 14, 2011

The sudden spike in oil prices set off by political instability half a world away is causing energy costs to surge to record levels in America. With gas hovering around $3.50 on average, Texas families are spending $40, $50, $60 or more to fill up their cars and trucks.

As a possible “solution” to soaring gas prices, the administration is considering tapping into the Strategic Petroleum Reserve (SPR), our nation’s emergency source of oil. This has only been done twice before, once during Operation Desert Storm in 1991 and another time after Hurricane Katrina in 2005.

Those were true emergency situations. Consequently, I believe it would be misguided to authorize emergency sales from the SPR when there are ways available to decrease costs to consumers by increasing domestic energy production. Depleting our reserves would make our economy more vulnerable if a natural or man-made disaster occurs.

Instead, we should be expanding and expediting domestic oil production to help increase the supply of fuel and lower prices for consumers. Fully leveraging our vast domestic resources would prevent us from being beholden to foreign regimes for energy when there is instability in oil producing regions of the world.

The Gulf of Mexico accounts for 30 percent of total U.S. oil production and 13 percent of total U.S. natural gas production. Unfortunately, bureaucratic barriers have prevented oil and gas producers, and thousands of American workers, from getting back to work in the aftermath of the BP oil spill.

In the wake of the BP accident, energy production virtually shut down in the Gulf of Mexico and moratoria were placed on drilling. The shallow water moratorium was “officially” lifted on May 28, 2010, but since then, only 37 new shallow water permits have been issued. Prior to the Gulf Coast oil spill, the shallow water permit approval average was 10 to 15 permits per month.

Energy producers operating in the deep waters off our coasts have faced similar challenges. The industry is working to ensure that the most stringent environmental and safety standards are always followed, and the administration lifted the moratorium on deepwater drilling last October.

But more bureaucratic delays and confusing regulations have left deepwater rigs sitting idle. In fact, only one new deepwater permit has been approved in a year. This “permitorium” is placing our natural resources out of reach when we need them most. What’s worse, they are sending American jobs overseas as energy producers move their operations elsewhere.

Gas exploration activities have also been impacted. The Department of Interior (DOI) ordered drilling lease holders in the Gulf of Mexico to halt all exploration drilling operations after the BP accident. At the time, 33 leaseholders were conducting exploration drilling, while thousands of leaseholders were in the earlier stages of exploration.

While the moratoria were in place all of the leaseholders continued to pay “rent” as time ticked away on the length of each lease. To address this issue, I recently introduced the Lease Extension and Secure Energy (LEASE) Act of 2011 which will grant a one year extension on all exploration leases in the Gulf impacted by the DOI’s drilling moratoria.

The LEASE Act provides a fair and reasonable restoration of the time lost. Allowing leaseholders to use the full length of their lease provides them with the certainty needed to plan for the future, including investing in the local workforce and protecting American jobs.

The offshore industry’s domestic energy production is not only vital to our energy independence — it is also vital to our economic security. More than 400,000 jobs along the Gulf of Mexico are tied to the oil and gas industry, in 2009 accounting for $70 billion in economic value and providing roughly $20 billion in revenue to federal, state and local governments.

Keeping energy prices low and stable are critical for economic recovery and growth. We must not allow the instability of foreign governments and the inaction of our own to place our energy and economic security at risk.

Kay Bailey Hutchison is the senior U.S. senator from Texas.

( Original Article )

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