April 29, 2011

Obama Tilting at Oil Companies, Propping Up Windmills

FROM-Center for Individual Freedom


In Cervantes’ Don Quixote, the title character repeatedly makes a fool of himself with well-meaning crusades against common sense. With U.S. Attorney General Eric Holder riding along as Sancho Panza, President Barack Obama is mounting his own quixotic quest: lowering gas prices by increasing the cost of doing business.

One of Don Quixote’s most infamous escapades was declaring battle against a windmill, then one of the greatest engines of economic progress. Today, President Barack Obama is trying to wage war against economic reality by threatening to prosecute oil companies for pricing gasoline according to the rules of supply and demand.

At least Don Quixote could claim ignorance. President Obama cannot. He knows all too well that the American economy runs on oil, consuming 15.3 million barrels a day. Of that, imports supply 9.5 million barrels a day while domestic producers contribute 5.8 million a day.

And though trained as a public-interest lawyer and employed as a non-profit community organizer, a president smart enough to graduate from Columbia and Harvard Law School should know that his idea to strip away tax incentives to oil companies raises their price of doing business. It doesn’t take much calculating to conclude that the end result is more expensive gasoline for every consumer.

Yet in his ongoing quest to create a green utopia where only politically correct energy flourishes, President Obama won’t acknowledge reality. He won’t admit that two days prior to forming his Oil and Gas Price Fraud Working Group, another federal agency confirmed there is no fraud to prosecute. Concluding its own investigation into allegations of market manipulation, the U.S. Federal Trade Commission (FTC) “determined that none of the complaints involved conduct that violated” FTC rules.

The FTC report confirms a 2008 study by the Commodity Futures Trading Commission (CFTC) that found price surges of up to $140 a barrel and $4 a gallon that year did “not support the proposition that speculative activity has systematically driven changes in oil prices.”

Contrary to liberal conspiracy theories, the CFTC reasoned that increases in oil prices were “largely due to fundamental supply and demand factors.”

Undeterred, the president’s Sancho Panza – U.S. Attorney General Eric Holder – assured confused onlookers that the Department of Justice would press on anyway. Without citing specifics, Holder said there are “at least a couple of things” that are “disturbing” about energy markets.

Here’s one. The Environmental Protection Agency’s appeals board recently killed Shell Oil’s drilling project in Alaska after the company spent $4 billion preparing the site. The weapon was a dubious ruling that an ice-cutting vessel used by Shell would emit greenhouse gases harmful to a nearby village of native Alaskans. Population: 245. Proximity to Shell’s site: 70 miles. Likelihood of being the real reason the environmentalists on the board voted against Shell: zero.

Despite this kind of catastrophic economic loss, President Obama wants to end some tax incentives to oil companies like Shell because their profits increase when consumers drive more (as do their taxes). If the tax incentives are ended, will he also promise to reimburse Shell and others for job-killing rulings like the EPA’s surprise decision?

Of course not.

Like Don Quixote, President Obama lives in a world of make believe, in which the engines of economic progress are the enemies of right-thinking men. As with ObamaCare, the president is dutifully mounting another assault against the interests of his neighbors. He isn’t content with putting America on a forced march to socialized medicine; now we’ll also have to get there in electric cars with less horsepower.

Don Quixote charged windmills because he thought they were giants harassing the land. President Barack Obama wants to increase costs for oil companies to lower gasoline prices. Unfortunately, only one of these stories is fictional.

Ironically, there is at least one likely beneficiary of Obama’s subsidy switch from “old” energy like oil to “renewable” sources: makers of windmills.

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