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Lawrence Kudlow
Lawrence Kudlow
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King Dollar Will Cut Oil Prices

Comment

No matter how much President Obama protests, the simple fact is that he continues to oppose and mock and disparage oil and gas drilling. He is a prisoner of the environmental left, and he remains on the wrong side of energy history.

And that's exactly why he has a 59 percent negative rating on the economy, according to a recent poll, even though jobs and other indicators have actually picked up. It's about $4 or higher gas at the pump. Polls overwhelmingly show that Americans want drilling in ANWR and offshore, and that they want hydraulic fracturing of shale for oil and gas. They also overwhelmingly want the Keystone Pipeline (by roughly 70 percent). And they believe the government can act quickly to lower gas prices in the short run.

But the president scoffs at all this. In his energy speech this week, he suggested that the drill, drill, drill crowd (of which I have long been a member) would have founded the Flat Earth Society. He says we might even have sided with 19th-century President Rutherford B. Hayes.

Ha, ha, ha. Very funny.

But the reality is oil, gas and coal — not wind, solar, geothermal and algae — are going to be crucial to America's transportation, electricity and economic growth for many decades to come.

What's particularly galling about Obama's riff is his constant use of a false statistic. The president argues that America uses more than 20 percent of the world's oil, although "even if we drill in every square inch of this country, we still only have 2 percent of the world's known oil reserves."

This is just patently untrue. According to the Institute for Energy Research, when you include oil shale, the U.S. has 1.4 trillion barrels of technically recoverable oil. That is enough to meet all U.S. oil needs for about the next 200 years, without any imports.

With the technology revolution in the energy business, including horizontal drilling and hydraulic fracking, the old idea of proved oil reserves that Obama keeps using is replaced with the new concept of recoverable resources.

Many thanks to Investor's Business Daily for its story that the U.S. now has 60 times more recoverable oil reserves than Obama claims. And that doesn't even include the natural-gas shale revolution, which has already slashed electricity prices for homes and businesses and will eventually be used more and more in transportation.

And then there's the EPA, which is holding up oil and gas exploration in the Outer Continental Shelf, Alaska's North Slope, ANWR, Utah tar sands, and the whole Green River Formation in Wyoming and neighboring states. Energy development on private lands is leading to greater development and production. But the Obama administration is still way behind on permits for drilling on federal land or offshore.

Steps could in fact be taken to lower gas prices in the short run. EPA mandates for boutique gasoline supplies and ethanol mixtures could be eased, perhaps saving 50 cents a gallon — without sacrificing clean air.

But the best idea I've heard to ease gasoline prices comes from Joint Economic Committee Vice Chairman Kevin Brady, a Texas Republican. He has proposed the Sound Dollar Act, which would require the Fed to monitor gold and the foreign-exchange value of the dollar. He would also replace the Fed's dual mandate with a single mandate for price stability.

A stronger dollar is key. The Joint Economic Committee just put out a study showing that a 10 to 15 percent appreciation of the greenback to pre-recession levels (before the Fed launched its massive dollar-creation, pump-priming campaign) would lower gasoline prices by 43 cents. So if the Treasury and the Federal Reserve strengthened the value of the dollar, oil and gasoline prices would decline.

It's an excellent idea. The best one out there. A return to King Dollar would boost consumer real incomes, attract capital from all over the world and grow the economy at a faster rate.

So there is an action plan on energy. The laws of supply and demand will work to hold back prices. So will a strong dollar. So will easier regulatory mandates. And if market forces generate clean-energy alternatives, then fine. But a true all-of-the-above strategy would take the handcuffs and the sarcasm off of fossil-fuel drilling.

Rutherford B. Hayes can't do it because he's dead. But Obama could. Or more likely, a new White House occupant will.

To find out more about Lawrence Kudlow and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2012 CREATORS.COM



Comments

5 Comments | Post Comment
So if Obama is so opposed to oil production why are we producing more per year now than at any time in the Bush administration?
Comment: #1
Posted by: Nathan
Fri Mar 16, 2012 7:27 PM
Or we could ban speculation, end the free trade zone in Texas, tax every gallon exported, let India and China pay our gas tax, end domestic gas tax for US citizens.
Comment: #2
Posted by: demecra zydeem
Sat Mar 17, 2012 8:22 AM
Re: demecra zydeem

Right demecra, our oil, and oil fututres are already sold to foreign countries. We can drill on our land and we will not see a drop in prices. We wanted capitalism, the oil companies are providing what we asked for, and we are paying. Obama does not set oil prices, what part of that don't these people get?+
Comment: #3
Posted by: Bloom Hilda
Wed Mar 21, 2012 6:50 PM
Re: demecra zydeem

Most of gas prices probably do not have to do with the federal government. But when the government tries to fix probalems the usual result is it either compounds the problem or creates a bunch more problems that require even more government solutionsThis cycle will go on and on until we live in Orwell's 1984. Also, I though you social progressives were eco firendly? Wont this reduce the use of polluting cars? I bet there alot more people taking avatage of publlic transportation. Also, the "speculation" is just people buying and selling oil contracts. Its no different than people buying collectibles because they think it will go up in value one day.
Comment: #4
Posted by: SCOTT
Mon Apr 16, 2012 4:17 AM
Re: Bloom Hilda

The oil export tax and ending domestic gas tax is a good idea.
Comment: #5
Posted by: SCOTT
Mon Apr 16, 2012 4:19 AM
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