By Chris Nelder

 

Election-year politics have bombarded the American public with conflicting stories about President Obama’s energy policies. The president takes credit for increasing fossil fuel production under his administration, while the fossil fuel industry blames him for falling production. So what’s the truth?

As always, I’ll begin with the data.

Consider this chart of U.S. fossil fuel production from 2003 through 2011:

Most of our domestic fossil fuel production is on private and state lands, however. Federal regulations do affect production on private lands to a limited extent, but on the whole that production is the result of market demand for those fuels.

Where federal policies have more influence is on production from federal lands, which is what draws most of the criticism about the president’s policies. Here’s a chart of production on federal and Indian lands:

Of that production, the vast majority is oil, and nearly all of it comes from offshore:

 

 

 

Of that production, the vast majority is oil, and nearly all of it comes from offshore:

With those charts in mind, let’s score the rhetoric about the president’s policies.

President Obama’s rhetoric

As an example of President Obama’s rhetoric, I’ll use his weekly address to the nation on March 17.

“The truth is, the price of gas depends on a lot of factors that are often beyond our control. Unrest in the Middle East can tighten global oil supply.”

True. There is no real dispute there.

“Growing nations like China or India, adding cars to the road, increases demand.”

True. I explored the data on this issue two weeks ago.

The president then went on to discuss the influence of speculators on the price of oil. While speculators do influence the oil market, they are probably responsible for only the last 10 to 15 percent of the price in an upward or a downward spike, as I explained three weeks ago. Speculators do not completely control the oil markets; they only come in when there is a tradable opportunity, and they are probably seeing one now as spare capacity has fallen to critically low levels. However, regulators have been extremely tentative about implementing restrictions on speculation even in the aftermath of the crushing volatility of 2008. Despite the president’s boasts about implementing policies to “bring energy markets out of the shadows and under real oversight,” they have hardly closed the door on speculators. On the other hand, I agree with the president that rolling back his reforms would be a mistake. I’ll score the point about speculators as Political Pandering — not false, but not entirely true, nor particularly relevant.

The president next discussed his ambition to eliminate the $4 billion in annual subsidies to the oil and gas industry. I support this initiative. An industry that’s been around for 150 years should be able to stand on its own two feet and compete without any public support. However, those subsidies are really rather irrelevant. As I explained in October, that $4 billion is barely a rounding error on the structural subsidy the oil industry receives by virtue of our commitment to a transportation regime based on cars and roads. Real reform would be transitioning transportation to rail. I’ll score this point as Valid, but Political Pandering.

To be continued