White House Chronicle

News Analysis With a Sense of Humor

  • Home
  • King’s Commentaries
  • Random Features
  • Photos
  • Public Speaker
  • WHC Episodes
  • About WHC
  • Carrying Stations
  • ME/CFS Alert
  • Contact Us

Obama and Energy: What He Can and Can’t Do

March 26, 2012 by White House Chronicle Leave a Comment

 

When the Obama administration seeks to explain its oil policy, it changes the subject mid-sentence.
 
The most frequent practitioner of this verbal contortion is the president's press secretary, Jay Carney. It is as though he's a magician who has promised to pull a live rabbit from his top hat. This conjurer stands before his audience, recites some incantations and, poof, retrieves not a live rabbit, but a dead chicken.
 
Carney, like others in the administration, starts talking about oil and switches to talking about "alternatives." The alternatives, with the exception of the nettlesome subject of biofuels (nettlesome because they produce little or no energy above what's invested in producing them), are ways of making electricity.
 
The administration is adept at confusing these almost unrelated subjects.
 
Oil is the stubborn problem. It affects every aspect of life and prosperity, from the balance of payments to war planning, from economic growth to our relationship with China. Worse, it may be in constrained supply for the rest of time, as the BRIC countries – Brazil, Russia, India, and China – continue to suck up the precious commodity.
 
New finds and technology relieve the gloom for a while, but as demand rises and supply struggles to adjust, the problem remains – even though conservative think tanks and trade groups fight the notion of structural shortage.
 
But the United States isn't short of electricity and has no need ever to be. The electricity problem, if there is one, is environmental. Do we continue to burn coal on a massive scale while we search for an environmental fix? Or do we go wholeheartedly for nuclear – even though the Obama administration has abandoned the Yucca Mountain nuclear-waste repository in Nevada?
 
Solar, wind, geothermal, wave, and even biomass energy come under the rubric of "alternatives" – and they're all electricity technologies.
Then there's natural gas, thought to be exhausted in the United States, but now in abundance as a result of sophisticated technologies. That's another electricity fuel.
 
It's enthusiasm for alternatives (a longtime love affair on the left) that has encouraged the confusing White House utterances about a policy of "all of the above." It's this that has spread the public perception that the president can do something about the price of gasoline. And it's this that makes him vulnerable to scorn over debacles like the loan guarantees to the solar-array manufacturer Solyndra.
 
If Obama's reelection hopes aren't to be extinguished at the gas pump this November, he needs to separate oil from electricity – and the future from the present. He can't affect world oil prices, and he can't drill enough holes in the United States to change the world oil market.
 
But he can change the debate, and push down the price somewhat, by taking up arms not against the oil producers, but rather against the oil traders, who are the market movers. They are concentrated in the New York Mercantile Exchange, where they daily bid up the price in a spiral that is unrelated to cost. The price of oil is set by traders, who use rumor, fear, and the knowledge that producers will be silent partners to jack it up.
 
They aren't phantoms. They are real, flesh-and-blood people who manipulate the markets daily. What's happening to oil in the New York Mercantile Exchange is what happened to electricity prices in California when Enron's traders were running wild.
 
There have even been shenanigans at the Cushing tank farm in Oklahoma, the installation that President Obama toured on Thursday. He might do well to read Leah McGrath Goodman's Fortune magazine article this month, on how ConocoPhillips warehoused oil at Cushing. That oil came in by the same pipeline that the new owners have now reversed, she writes, and it's now flowing to refineries by the very route it came in, but at higher prices.
 
Goodman knows what she's talking about. The former Wall Street Journal reporter wrote The Asylum, the definitive book about the New York Mercantile Exchange and the madness of oil trading.
 
Obama could jawbone the traders while providing more resources and moral support to the Commodity Futures Trading Commission – the poodle trying to do a pit bull's work.

Filed Under: King's Commentaries Tagged With: alternative energy, ConocoPhillips, Cushing tank farm, electricity, energy, Leah McGrath Goodman, New York Mercantile Exchange, oil, President Obama

White House Chronicle on Social

  • Facebook
  • Twitter
  • Vimeo
  • YouTube
The U.S. Commands the Heights of Science — for Now

The U.S. Commands the Heights of Science — for Now

Llewellyn King

Pull up the drawbridge, flood the moat and drop the portcullis. That, it would seem, is the science and research policy of the United States circa 2025. The problem with a siege policy is that eventually the inhabitants in the castle will starve. Current actions across the board suggest that starvation may become the fate […]

This Isn’t the Time To Politicize Electricity Again

This Isn’t the Time To Politicize Electricity Again

Llewellyn King

The future of electricity is being discussed in terms of how we make it: whether it should be generated by nuclear, wind and solar or by coal and natural gas. Nuclear is favored by the utilities and the Trump administration, but it will take decades and untold billions of dollars to build up a sizable […]

The Stateless in America Would Face a Kind of Damnation

The Stateless in America Would Face a Kind of Damnation

Llewellyn King

I have only known one stateless person. You don’t get a medal for it or wear a lapel pin. The stateless are the hapless who live in the shadows, in fear. They don’t know where the next misadventure will come from: It could be deportation, imprisonment or an enslavement of the kind the late Johnny […]

How the Special Relationship Became the Odd Couple

How the Special Relationship Became the Odd Couple

Llewellyn King

Through two world wars, it has been the special relationship: the linkage between the United States and Britain. It is a linkage forged in a common language, a common culture, a common history and a common aspiration to peace and prosperity. The relationship, always strong, was burnished by President Ronald Reagan and Prime Minister Margaret […]

Copyright © 2025 · White House Chronicle Theme on Genesis Framework · WordPress · Log in