March 16, 2012
Charles Krauthammer is angry at President Obama for not allowing more oil drilling and delaying the Keystone Pipeline. He suspects that he doesn’t like fossil fuels. (There’s something called “global warming,” which could lead to hundreds of millions of deaths due to floods and droughts, but hey, we don’t talk about that here.)
Anyhow, Krauthammer is upset that President Obama keeps saying that drilling everywhere all the time will not bring down the price of oil. Of course this happens to be true.
Even if we told BP and the other oil companies we don’t care how many people they kill in the process (11 workers died in the Deepwater Horizon explosion) and whose land and beaches they destroy (in other words, no respect for private property) they could at most increase production by 1-2 million barrels a day, and even this increase would take years to bring about.
That would increase would supplies by around 2 percent, perhaps leading to a reduction in price on the order of 5 percent. If Krauthammer has research that shows something different, he should share it with readers.
The Keystone pipeline would mostly have the effect of redistributing gas within the U.S. It would lead to higher prices in the Midwest and somewhat lower prices on the East Coast.
Krauthammer also criticizes Obama for claiming that reduced demand will lower prices. While Obama is wrong if he literally meant that reduced demand would mean lower gas prices, if he meant that increased efficiency would lower energy costs, then he is absolutely right. It costs half as much to drive a car a mile if it gets 40 miles a gallon than if it gets 20 miles a gallon.
One last point, Krauthammer is upset that President Obama is spending 0.0004 percent of the federal budget on research into using algae as a fuel source. If we cut this spending, that apparently Krauthammer knows to be foolish, we could rebate 5 cents to every person in the country.
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