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The claim that won’t die: Did Obama want higher gas prices?

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J. Scott Applewhite — AP

“President Obama said he would prefer a gradual adjustment to near $4 a gallon gasoline. President Obama said that. And, unfortunately, the president has put policies in place that have gotten us now to $4 a gallon, or almost, in gasoline prices. We’ve seen it. It was $1.83 when he started as president; it’s over $3.70 now. So the president’s got his wish, and people are furious about it.” — Rep. Steve Scalise (R-La.) during hearing of House energy committee, March 8, 2012

Louisiana Congressman Steve Scalise is toeing the Republican Party line here, accusing the president of consciously trying to raise gas prices to wean Americans off carbon fuels. Earlier this month, we determined that Indiana’s Gov. Mitch Daniels deserved three Pinocchios for making similar claims.

We mentioned in our previous column that we hadn’t found a single instance in which President Obama advocated higher gas prices. A reader later mentioned that he’d found an example, pointing out a June 2008 interview in which then-Sen. Obama discussed energy policy on CNBC. The trading and investment blog TownHallFinance.com used that same video to suggest we’d missed the mark with our analysis of Daniels’s remarks.

We reviewed the 2008 interview (which you can view below) and took yet another look at the current state of U.S. oil production to determine whether anything should change about our previous determination. If not, Scalise would deserve just as many Pinocchios as Daniels.

The Facts

First, we’ll discuss the interview between then-Sen. Obama and CNBC’s John Harwood. Here’s an exchange from that meeting:

Obama: I think that we have been slow to move in a better direction when it comes to energy usage, and the president frankly hasn’t had an energy policy. As a consequence, we’ve been consuming energy as if it’s infinite. We now know that our demand is badly outstripping supply with China and India growing as rapidly as they are.
Harwood: So, could these high prices help us?
Obama: I think that I would have preferred a gradual adjustment. The fact that this is such a shock to American pocketbooks is not a good thing. But if we take some steps to help people make the adjustment, first of all by putting more money into their pockets, but also by encouraging the market to adapt to these new circumstances more quickly, particularly U.S. automakers, then I think, ultimately, we can come out of this stronger and have a more efficient energy policy than we do right now.

You’ll notice Obama doesn’t expressly state that he opposes high gas prices but says he doesn’t think cost hikes should happen suddenly or dramatically. This is what the president’s critics cite as damning evidence of his true intentions.

But these comments deserve some context. (View the entire transcript here). Obama was discussing gas prices that had already hit about $4 per gallon. He proposed a holistic solution that would include investments in alternative fuels and higher auto-efficiency standards, complemented by immediate financial relief through temporary tax cuts.

Does that mean the president thinks higher gas prices make good energy policy? He didn’t exactly answer directly during the CNBC interview, even though Harwood asked the question twice. But Obama made his position perfectly clear on March 6, when he faced a similar question during a White House press conference.

Here’s what the president said:

“Look, here’s the bottom line with respect to gas prices. I want gas prices lower because they hurt families, because I meet folks every day who have to drive a long way to get to work. And then filling up this gas tank gets more and more painful, and it’s a tax out of their pocketbooks, out of their paychecks. And a lot of folks are already operating on the margins right now.
And it’s not good for the overall economy because when gas prices go up, consumer spending oftentimes pulls back.
And we’re in the midst right now of a recovery that is starting to build up steam, and we don’t want to reverse it.”

In both instances we’ve cited, Obama suggested he’s averse to letting gas prices shock families’ finances. In his White House remarks, he said point blank: “I want gas prices lower.”

Has the president taken adequate steps to make that happen?

It’s hard to know yet without a crystal ball. That’s because presidents don’t have a ton of control over the price of gas while during their first terms in office, as an article in Tuesday’s Washington Post explains. Take drilling for example. The Department of the Interior works with five-year lease plans for extraction, and the last plan from President George W. Bush ended just this year.

That’s not to disparage Bush over today’s prices. According to Jay Hakes, a former Energy Information Administration official interviewed for the Washington Post article, Bush deserves credit for signing 2007 legislation that has kept the current situation from being worse.

Hakes also said Obama “is on a good path to ease future markets” because of his decision to open new areas for exploration and development -- particularly offshore along Alaska’s Arctic coasts -- and to implement stricter fuel-efficiency standards.

It’s hard to deny that the Obama administration has tried to control costs to some degree, even if it’s with an eye toward the future. The White House on Monday released a report from various federal agencies that laid out steps taken to achieve greater energy independence and affordability. Among the accomplishments: new fuel-efficiency standards, an increase of 120,000 barrels per day in domestic oil production last year, and the approval of dozens of renewable energy projects.

The report also notes that domestic oil production has risen each year that Obama has been in the White House, that the United States is importing about 24 percent less oil each day compared to when the president first took office, and that the nation has led the world in natural-gas production since that same time.

Republicans contend that the administration still hasn’t done enough, pointing out that it rejected the Keystone XL pipeline project -- at least for now -- and resisted new drilling on federal lands.

Obama had his reasons for that decision. Critics say he was pandering to environmentalists in preparation for the 2012 election. The president himself claims he could not approve the pipeline until the firm hoping to build it developed a route circumventing environmentally sensitive sandhills in Nebraska.

Obama lately has touted rising domestic oil and gas production as proof that his administration is taking steps to control energy prices. Critics argue that most of the increase has come from drilling on private rather than federal lands. We question whether that really matters so long as production is up, especially when many oil and gas companies are sitting on existing leases.

A March 2011 report from the Department of the Interior showed that the oil and gas industry was not using half of its onshore federal leases at the time. Industry advocates say that isn’t the case any more, since high prices have made drilling more lucrative. They argue that the government should open up new lands to prepare for future spikes.

Scalise spokesman Stephen Bell says the Obama administration has hampered oil and gas production in ways beyond drilling policies, for example by “attempting to restrict hydraulic fracturing.”

The president rejected a moratorium on so-called “fracking” in 2010, suggesting he’s relatively lax toward the industry to date. And although his administration has considered new regulations, many Republicans have called for the same, especially when the hydraulic fracturing operations would take place in their home states.

Bell also claims the Obama administration has restricted off-shore oil exploration, but that’s a dubious claim. The DOI has proposed opening more than 75 percent of “undiscovered technically recoverable” off-shore oil and gas resources for lease.

The American Petroleum Institute claims that the 75-percent figure is misleading because it excludes areas where the industry wants to do more exploration. A fact sheet from the industry advocate states: “If the administration would allow leasing in these areas, exploratory work would proceed, and we would have a better sense of what’s out there (probably more than the administration assumes).”

That claim rings somewhat hollow considering that oil companies haven’t always swooped up leases when they’re available. In December, the DOI made available 21 million off-shore acres in the Gulf of Mexico (thought to have the richest reserves of any U.S. coast), but the industry grabbed only 1 million acres.

DOI spokeswoman Melissa Schwartz said the claims of off-shore drilling restrictions are misleading. “The administration continues to offer more acres for lease than industry chooses to purchase,” she said.

The Pinocchio Test

Some of Obama’s comments from 2008 suggest that he thinks there’s a silver lining to higher prices, but they also indicate that he doesn’t want energy prices to affect the pocketbooks of working families. Critics say the president’s policies have caused the recent price hike, but experts suggest he has less control over the current cost of oil than people generally think. With that in mind, he probably deserves less blame for existing pain at the pump, as well as less credit for the increased production he likes to brag about.

As for Obama’s regulatory policies, they show that the president is willing to cite environmental and public-safety concerns when it comes to energy, whether it’s in terms of production and emissions. He has also proposed killing tax breaks for oil companies. One could argue, as some Republicans have, that some of these policies put upward pressure on prices, but that’s different than consciously trying to raise prices -- as though Obama is secretly smiling about the cost hikes.

Our earlier ruling stands. Scalise earns three Pinocchios for suggesting that the president “got his wish” with $4-per-gallon gasoline.

Three Pinocchios




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