Obama, Oil and Politics as Usual

The primaries have come to NC, and I have to tell you, I never thought I’d pull for a Clinton, but if I weren’t for McCain I’d have to vote for Hillary. Obama is slick, inexperienced and elitist. He’s like one of those infuriating Sprite commercials that tell you “Image is nothing” while using the image of sports stars to sell it to you.

He models “politics as usual” with his empty rhetoric of “run against Washington,” and “vote for change” that uses sound bytes, charm and slogans to pander to voters who think a president can solve all their problems. (Frankly, I already have a Messiah. )

Let’s look at oil, for example. One of his ads claims:

“Since the gas lines of the ’70s, Democrats and Republicans have talked about energy independence but nothing’s changed — except now Exxon’s making $40 billion a year and we’re paying $3.50 for gas. I’m Barack Obama. I don’t take money from oil companies or Washington lobbyists, and I won’t let them block change anymore.”

As reported at the “Chicago Tribune’s” blog this “ad is factually correct. He does not take money from oil companies. A 1907 federal law bars all corporations from giving money to political candidates. However, oil company employees can make donations.” Further, “Obama has taken at least $263,000 from oil company executives, family members and employees since entering the presidential race last year, including $46,000 last month. At least $140,000 has come in chunks of between $1,000 and $2,300, the maximum permitted under federal law.”

He is perfectly willing to take oil money and then dumb down the debate about energy while attacking an easy corporate target. This is the worst sort of political maneuvering. He points to an “enemy,” grossly oversimplifies and distorts the issue and says “They are to blame for your problems, and I am the solution.”

I am not a fan of giant multinational corporations. I am way more Paleo-conservative than neo-conservative, but the oil companies are not responsible for the high cost of gasoline at the moment. Anyone who really wants to education himself on the subject should visit the Energy Information Administration, and especially read their Primer on Gasoline Prices.

According to professor of economics, Mark J. Perry, oil companies only receive about 10% profit per gallon, and he says that figure comes from the EIA itself . By contrast, the government received about 20% in taxes. According to economist Thomas Sowell “The government collects far more in taxes on every gallon of gasoline than the oil companies collect in profits. If oil company profits are ‘obscene, as some politicians claim, are the government’s taxes PG-13?”

Another “lie” by misrepresentation is the unquestioned assumption that oil companies make all their profits from the sale of gasoline. The fact is that gas profits are not “windfall” or out of balance with profits by other industries. The factors that really drive the cost of gasoline, like increased demand, global turmoil, commodity speculation and supply are mostly outside of any one government’s control.

To the extent that our government has any influence, Congress has the greatest, but that body is currently controlled by Democrats hoping to get a Democrat elected President. If you listen to the House Energy Independence & Global Warming Committee’s ” Hearing on Oil CEOs and Price Issues,” you’ll get a real feel for the complexity of the issue and the limitations of government. Even so, Congress still has a bigger role. They are participating in Obama’s “politics as usual,” though, and sitting on their hands to help him win the election.

Imagine for a moment that oil prices became stable overnight. Imagine further that oil companies began selling gas at cost. How long would it take them to be broke? If you look at the EIA’s page for petroleum, Americans probably consume about 400 million gallons of gas a day. That’s 146 billion gallons a year. That’s 14.6 billion dollars in profit, from gasoline sales.

If, suddendly, they did not have that revenue, and did not try to recover it by increasing prices on other products, in about 10 years or so, there would be no oil companies, besides OPEC. In the meantime there’d also be no R&D, no investment in refining capacity, no exploration for new supplies and no investment in alternative energy, all things oil companies spend profits on.

The point of this is that the oil companies are not Satan and Obama is not Jesus Christ. By acting as if this issue is really very simple and characterizing the oil companies as the “enemy” Obama is engaging in the worst sort of typical election-cycle pandering.

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