President Obama Looks at World Through Green-colored Glasses

President Obama has been telling Americans that an increase in the supply of oil will not affect the price of oil.

Compare that to what the Associated press recently reported about the supply of natural gas affecting the price of natural gas. Then draw your own conclusions. Is somebody an economic nit-wit? Obfuscating?

Over the course of the past few months, we have seen President Obama say the following concerning oil prices.

-- "There are no quick fixes to this problem."

-- "The U.S. can't drill its way out of high prices."

-- "The Republican mantra is that we need to 'drill baby drill.' This slogan may sound good, but it's based on complete fiction."

-- "No matter how much we drill, our gasoline prices are going to rise if there's a crisis in the Middle East, labor unrest in Nigeria."

-- "The only solution to the challenge (is that) we start using less. That lowers the demand, prices come down."

When President Obama's quotes are taken together in context, this is what we get. "The U.S. can't drill its way out of high prices. The Republicans' simplistic solution is 'drill, baby, drill.' If there is unrest anywhere in the world, no matter how much we drill, gasoline prices are still going to rise. We can't lower prices by increasing supply -- by drilling. The only solution is to reduce demand -- to start using less."

On April 9, The Dispatch/Argus ran excerpts from a New York datelined AP piece headlined, "Too much natural gas?":

"So much natural gas is being produced that soon there may be nowhere left to put the country's swelling surplus..

"U.S. natural gas production has boomed in recent years as a result of new drilling techniques that allow companies to unlock fuel trapped in shale formations. Last year, the U.S. produced an average of 63 billion cubic feet of natural gas per day, a 24 percent increase from 2006. But over that period consumption has grown half as fast.

"The glut has benefited businesses and homeowners that use natural gas.

"But with natural gas prices at a 10-year low -- and falling -- companies that produce the fuel are becoming victims of their drilling successes. Their stock prices are falling in anticipation of declining profits and scaled-back growth plans.

'There hasn't been enough demand to use up all the supply being pushed into the market.'

"So far, efforts to limit production have barely made a dent. Unless the pace of production declines sharply or demand picks up significantly this summer, analysts say the nation's storage facilities could reach their limits by fall.

"That would cause the price of natural gas, which has been halved over the past year, to nosedive. Citigroup ... says the price of natural gas -- now $2.08 per 1,000 cubic feet -- could briefly fall below $1."

Compare what the president has said on oil to what the AP says on natural gas.

While the president tells the American public that only a reduction of demand -- and not an increase in supply -- can reduce the price of oil, the AP story says that the "new drilling technologies" have produced an over supply of natural gas and have driven the price to a 10-year low -- to $2.08 per 1,000 cubic feet, and that the price may well fall below $1.

Why does the law of supply and demand govern the price of natural gas, but not the price of oil?

What has happened with natural gas is economic fact. What the president tells us will happen with oil, is the product of a man looking at the world through green-colored glasses.

When a president continues to try to tell the American public that there is no law of supply and demand at work in the realm of oil, while ignoring the incontrovertible evidence that the same law is clearly at work in the realm of natural gas, one can only wonder whether Mr. Obama is economically challenged or oblivious to the truth!

If we can become as oil self-sufficient as we are natural gas self-sufficient, then all the unrest in Nigeria, or Iran will have far less effect, if any, on our prices.

Perhaps the president should have studied economics instead of constitutional law.

That's where you learn about the law of supply and demand.

Posted Online: April 20, 2012, 1:25  pm - Quad-Cities Online

by John Donald O'Shea
Copyright 2012, John Donald O'Shea