The recent rise in gas prices has unsurprisingly become a salient issue this election season. Republicans are predictably haranguing the Obama administration’s “outrageously anti-American” energy policy, as the national average price of gas nears $4 per gallon and oil trades above $100 per barrel. Political economists and energy experts have warned that higher gas prices could curtail the already anemic economic recovery, as beleaguered consumers endure diminished purchasing power and trim household spending in other areas, reducing aggregate demand and inducing further economic contraction. Businesses that depend heavily on transport have also had to reduce expenses due to persistent price volatility, typically to the detriment of their workers.
Part of the problem is that rather than recasting the national “energy security” issue as part of the much larger and longer-term problem of climate change, politicians have opted instead to feather their own nests. House Minority Leader Nancy Pelosi has insisted that “Wall Street profiteering, not oil shortages, is the cause of the price spike,” referring to the financial speculators in the commodity futures market, the analysts and investors who now manage approximately 70 percent of oil traded worldwide, up 40 percent from just over a decade ago. Geopolitical tensions in oil-producing countries like Iran, Libya, Syria, Nigeria, and South Sudan, as well as steadily diminishing global refining capacity, present opportunities to fear monger over supply-side concerns and reap considerable profits.
Under pressure to act, the White House announced last Tuesday that it would crack down on speculation contributing to high gas prices. But this simply reaffirms a previous broken promise. The Oil and Gas Price Fraud Working Group that the administration formed a year ago to investigate and prosecute financial chicanery in oil markets has, as George Zornick of the Nation reports, held only a few meetings during its tenure and has nothing to show for its efforts (it never issued a report to the public). This shouldn’t come as much of a surprise, since the oil speculators in question look much like the Goldman Sachs, J.P. Morgan Chase, and Citigroup financiers who occupy the President’s gilded administration.
But that’s not the crux of the matter. The problem is that no U.S. politician on either side of the aisle would dare to publicly praise the spike in gas prices. That would be a political death sentence, causing a popular backlash and further validating the public perception that politicians appease the interests of capital and producers, not labor and consumers.
But extolling high gas prices is precisely what’s needed. Artificially low gas prices spur wasteful consumption and are a disincentive to green research, development, and deployment. In Venezuela, where low gas prices are ensured by generous government subsidies, a driver can fill up a thirty-two-gallon tank of a Hummer for roughly $3. No electric vehicle manufacturer, high-speed rail project, or clean energy alternative on the planet can compete with that. Artificially low gas prices also produce unreasonable expectations about the cost of energy, as evidenced by the recent violence in Nigeria after the government repealed similar federal gas subsidies.
The higher the national average price of gas (and the better the government policies to reduce the costs of renewables), the sooner an economy reaches “grid parity,” or the point at which the average market price of renewable energy sources becomes equal to or cheaper than fossil fuels. This would allow clean energy start-ups to meaningfully compete with fossil fuel monopolies for market control. Some countries, like Italy, Australia, Japan, Spain, Germany, and Denmark, are well on their way to achieving grid parity. The contribution of renewables to their total energy supply has more than doubled in the past decade. In the United States, by contrast, the high price of gas and other fossil fuels is little more than a headache-inducing re-election concern.
THE PRESIDENT outlined his “all of the above” energy plan in his January 2012 State of the Union address, fleshed out in greater detail in the White House’s FY 2013 budget proposal. The document promises oil magnates unfettered access to 70 percent of U.S. coasts for exploratory offshore drilling, even though the United States harbors less than 2 percent of the world’s crude oil reserves. In fact, the number of drilling rigs in U.S. oil fields has more than quadrupledsince Obama took office. But the most troubling part is that President Obama’s appeasement to Big Oil didn’t even need to go so far: the Senate Committee on Energy and Natural Resources and the House Committee on Natural Resources are already institutionally designed to ensure these kinds of outrageous land grabs take place without any public scrutiny.
The back-door, lobbyist-filled deliberation process that determines which bills get past the committee stage is largely unknown to the public, since mainstream media reporters rarely cover it. But we have seen the recent results: in January 2011 Congress destroyed the Select Committee on Energy Independence and Global Warming after its three-year stint. That year, Congress managed to win the award for “Worst Environmental Record of Any Congress”: out of a total of 770 legislative roll call votes, more than 20 percent were anti-environment, with 114 anti-EPA votes, twenty-seven to block action on climate change, 105 to block clean air and water protections, and forty-seven to weaken protections of public lands and coastal waters.
President Obama will have you believe, therefore, that Congress is the culprit, and he has a point. But the relevant regulatory body within the White House, the little-known Office of Information and Regulatory Affairs (OIRA), has, during more than 500 interest group meetings under Obama’s watch, watered down, delayed, or eliminated more than 80 percent of the EPA’s emissions regulations at the request of fossil-fuel influence peddlers. Moreover, the U.S. General Services Administration (GSA), responsible for supporting the basic functioning of all other federal agencies, reduced its purchase of hybrid and electric cars last year by 59 percent, despite President Obama’s 2011 speech tour touting new efficiency standards for automobiles, an increase in the purchase of alternative-fuel cars, and the goal of adding 1 million electric cars to the country’s roads by 2015.
Perhaps most tellingly, President Obama’s performance at international climate negotiations has been dismal. At both Copenhagen and Durban, Obama arrived with embarrassingly low emissions targets compared to other countries, effectively destroying the Kyoto Protocol, and repeatedly dismissed calls to place a deadline to establish a global, binding deal on climate change. The president’s ostensible detachment prompted more than a dozen environmental groups and over 1,200 business leaders and activists to endorse a letter arguing that, with his lack of leadership on the issue, “America risks being viewed not as a global leader on climate change, but as a major obstacle to progress.”
On the domestic front, Obama has intimated that he might be willing to eventually concede approval for the Keystone XL pipeline, even as environmentalists saw the delayed decision as a major victory. He has already established that TransCanada may reapply for the permit after accepting an alternative pipeline route. As a Cornell study has persuasively shown, Keystone XL is chiefly designed to boost export trade from the Gulf of Mexico and yield enormous profits for oil companies and their financial subsidiaries, not create jobs or reduce our dependence on foreign oil.
According to a comprehensive Brown University report, there has been a demonstrable shift in President Obama’s rhetoric since taking office regarding “climate change” and “global warming.” “These terms are stunningly absent from the political arena,” writes Graciela Kincaid, a co-author of the study. President Obama simply refuses to throw any red meat to the Republicans, though they always manage to find some to devour anyway.
WE SHOULD, to be fair, at least look at the more agreeable stipulations in the president’s budget plan. One might point to the $2.3 billion it allocates to the Office of Energy Efficiency and Renewable Energy (EERE) and the $350 million for the Advanced Research Projects Agency-Energy (ARPA-E) initiative. Or one might highlight the proposed $4 billion in eliminated fossil fuel subsidies and the six-year, $47 billion plan to develop our long-overdue high-speed passenger rail corridors. These are certainly bold and commendable ideas in dire need of implementation.
But the president’s energy budget plan is pure electioneering. The administration knows very well that it will never pass Congress. As President Obama admitted fatalistically in the State of the Union, “The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change.” In the meantime the Democratic political elite feel they can string along the environmentalist base with their seemingly good intentions. It seems to be working: most liberals continue to buy into the myth that the administration has been bereft of spine on climate change simply due to unforeseeable and unavoidable beltway gridlock.
President Obama’s overzealous supporters are not doing him any favors. Steadfast apologists accept the doctrine of diminished expectations and condescendingly belittle those who don’t, especially when re-election concerns are paramount. The intolerable game of bait-and-switch becomes the norm for presidential contenders. But environmentalists should not apologize for a president that speaks with a forked tongue on climate change each election year. As Obama said back in 2008, “Delay is no longer an option. Denial is no longer an acceptable response. The stakes are too high. The consequences too serious.”
If the more militant wing of the environmental movement starts to gain more global traction, it’ll be because those in power have been forced to eat their own words by a political system in dire need of overhaul.
Dissent is a quarterly, left-liberal magazine of politics and culture.