President Obama took his weekly radio address to speak towards the growing gas prices across the country and offered a variety of solutions. The common denominator of most of his solutions however, was the direction of, funding from, and oversight by the federal government.
At the onset, President Obama announced the creation of a task force to search and destroy “manipulations in the market that might affect gas prices” with particular focus on speculators. Speculators have been the go-to escape goat on oil prices by both the left and right. Unfortunately, the President’s efforts are misguided. Speculators are those trained individuals who — with advanced knowledge of supply, demand, and the effects on each by current events — buy and sell oil at risk to themselves. If they speculate that in light of a new fervent uprising in Iraq or Nigeria will shake the production of oil, they will buy oil, increasing its price. If an oil company strikes a new bountiful oil well, they will sell, and prices will decrease. We rely on speculators’ insight and knowledge of the oil market to give us oil at its market price.
President Obama seems to view things differently. Such high gas prices shouldn’t be so, facts or market signals be damned. Instead, he seeks to root out, regulate, or annihilate the very components of the oil market that make it tick. Just as a contractor has the experience and know-how to complete a project on time and on budget, so too do speculators have the skill to buy and sell oil based on the facts of production. To assume the federal government could “resolve” anything related to speculation is an insulting irony.
Secondly, Obama seeks to expand domestic oil production, a step forward, but caveats such production with more regulation and misguided incentives, two steps backwards. The President wants to unleash new permits to oil companies for drilling off the coast of Alaska, but says in order to make the process streamlined, a new government organization is required. Such logic seems counterintuitive; how is it that more government bureaucrats and red tape will quicken leasing and not in fact slow it down? Moreover, the President wants to incentivize companies to drill in unused leases — leases that do not have production-worthy quantities of oil or gas. So while the president pushes for the end of oil subsidies, he’s more than willing to subsidize unproductive oil wells. Seems a little two-faced. The only thing different between “incentives” and “subsidies” is the name. The money still comes from you and me.
The President has taken a statist approach to solving the “problem” of high gas prices. Yes, gas prices are high, but oil is a limited resource subject to an infinite array of market conditions, current events, weather, and simple luck of the draw in drilling. To demand a set price based on nothing but wishes is anti-capitalist speak. Dictating prices didn’t work for Stalin, Lenin, or Brezhnev; it wont work for Obama.