It's Oil Lies I Tell You

This week's mid-week rant is late, (and will probably be a bit short) for good reason, in that my health has been suffering for a couple of days.  Just as I get back into the swing of things however, I find that the truth is suffering far more than I have while I have been regaining my strength.  It's campaign season after all, and whether you're running for a nomination, or already running for the highest office in the land, it seems to be a requirement for the truth to take far more of a beating than my tired old carcass has taken this week.

The same president who refused to let the Keystone XL pipeline become part of a Congressional bill a couple of months ago and deferred approval to 2013, now has the political temerity to stand in front of a pile of pipe in Oklahoma and say that he's trying to expedite the process.  In typical campaign fashion, he blamed political opponents for attempting to circumvent a process that he felt needed more time three months ago; while now telling applauding audiences that he will cut regulatory red tape (that his Administration created) to speed the process up.       

Note:  The president and candidates for office are likely to see much more in the way of applauding audiences this year, since recently passed legislation makes it illegal to protest in the presence of someone guarded by the Secret Service ... like the president and presidential candidates.

He went on to say that he's going to order federal agencies to expedite the approval process that he once delayed (after all, the project has only been under review for three years).  Curiously, few in the media seem ready to point out that President Obama has no dog in this hunt, as the section of pipeline being built does not require federal approval; and none seem ready to use the term 'flip-flop' in discussing the President's restatement of his previous strongly held position, one which greatly appealed to his core constituencies in the environmental movement.

In a CNN piece offered today, he also said "Anyone who says that we're somehow suppressing domestic oil production isn't paying attention".  Now for those of you not paying attention, this is one of the lies by omission.  Oil production is not being suppressed by the Administration, since it comes from wells whose drilling began long before the President took office.  Fewer permits are being issued for new exploration however, and vast tracts of land have been placed out of reach for exploration by this Administration.  This bodes ill for future long-term domestic production. 

There was more 'creative truth' forthcoming in the Oklahoma speech, when the president said "the price of oil is set by the global market", going on to blame unrest in the Middle East for the higher prices.  Curious then, that the price of oil is higher now than during the Arab Spring or the Iraq War; nor did they reach current pricing levels even during Egypt's popular uprising and the uncertainty of its ability to control the Suez Canal.  

What wasn't mentioned in the speech however, is that oil is traded in US dollars; and that as our unaddressed national debt continues to go up faster than a 'shovel ready project' and the government printing presses held by the Federal Reserve continuing printing this fiat currency at a record pace, the value of those dollars continues to diminish in value for real goods like gold, silver, and OIL.  Hence this inflated currency will not buy as much oil as it used to, and prices effectively go up. 

It's not all lies however. Some is merely a misleading way of telling the truth.  For example, the President said in a speech in Columbus later today that, "America's dependence on foreign oil has gone down every single year." (since he took office in 2009) This statement has some truth to it, if you use the excuse that the current floundering economy requires less oil to fuel it, and therefore depends less on foreign production.  This however, is like saying 'My out of pocket expenses were down this year, because I was dead'.    

Now before those of you flying your Republican flags dislocate your arms by patting yourself on the back, try and remember that none of your candidates has yet to put together a cohesive energy policy.  They remain content to castigate the man in the Oval Office, while presenting no alternatives other than 'Drill baby, drill'.  Newt Gingrich, mostly irrelevant now in the process anyway, has gone so far as to make $2.50 gas part of his stump speech; as if his wishing it were so will make it so.  

How then will he achieve this objective? More drilling would certainly bring up production and reduce prices, but as we've been reminded far too often, it take 5-7 years to bring a well into production; long after the first term of an Obama replacement were to end.  Oh sure, price controls mandating $2.50 per gallon for gas could be instituted, but not only would this have a negative impact on future drilling; but it hardly seems the reaction of someone who calls himself a  Capitalist and small government Conservative.

Rick Santorum is calling the current Administration policy that of "N-O", but this seems a strange attack from another supposed small government candidate who is already talking about calling out a new morality police to end pornography.  He also has failed to produce what anyone would even laughingly call an energy policy as part of his bid for the highest office in the land, being too concerned with winning the religious right instead of the fiscal right; something that's long been his Achilles heel.

The Republican frontrunner Romney is quick to slap the Administration around on what it's doing, inferring that this is about making gas on par with an alternative energy agenda that they've been pushing (which may the only truth being spoken here), but is much slower on the draw in describing what he'd do instead.  Perhaps this former business executive (and not career politician) thinks that this is situation is like what we were told about the now two year-old Patients Affordable Health Care law (Obamacare) that might be his opponent's largest achievement in office.  It's a situation where we should vote for him before we learn what his energy policy is.

The truth of the matter is that 75% of the potential Republican nominees energy position amounts to little more than, 'The other guy is a bad man, doing bad things'.  (I thought about using 'The other guy's a bad man and a doo-doo head'; but didn't want to slander the President for fear that I would quickly find myself doing an interview with the Secret Service.) 

I won't go into Ron Paul's position in great detail, in spite of the fact that it agrees with mine (or is it vice versa).  He believes that the real culprit in the oil crisis is inflation.  He in fact went on "The Tonight Show" earlier in the week (no, I don't watch Jay Leno, but read about it after the fact here), and described the problem rather succinctly.  Holding up a silver dime, he went on to explain that based on the current value of silver (approx $30 per ounce) that you could buy a gallon of gas (even at its current price) for the precious metal value of the weight of this 10 cent coin.  The cost of everything unfortunately, goes up when our currency is no longer based on the real value of real things, and when we allow the Federal Reserve and the Federal government to play games with the value of currency and the credit rating of the nation.  (But of course Ron Paul's opinions are crazy.)

The bottom line here is that with this one rare exception, everything that you're being told about the price of oil, and the subsequent price of a gallon of gas ... is Oil Lies.