Barbour on Energy (and Salazar's Puzzling Reponse)

On Wednesday, Mississippi Governor Haley Barbour spoke to the U.S. Chamber of Commerce on energy policy:

Barbour says Obama cheers for higher gas price

“This administration’s policies have been designed to drive up the cost of energy in the name of reducing pollution, in the name of making very expensive alternative fuels more economically competitive,” Barbour said…


Barbour cited a statement by Nobel laureate Steven Chu regarding his attitude toward energy prices: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” That was in 2008, before Chu was named President Obama’s Secretary of Energy; Obama’s supporters and apologists maintain the comment does not reveal Administration policy.

But consider this current comment by a high Administration official:

Interior Secretary Ken Salazar, when asked about Barbour’s comments Wednesday, said “nothing could be further from the truth.”

“We are doing what we can in terms of domestic production,” Salazar said. But “at end of the day … what we can produce domestically will not have an impact in terms of the price of oil because it is set on the world market.”

Oh, really, Mr. Salazar?

With all the talk about imports and dwindling reserves, we sometimes forget that the U.S. is still the #3 producer of oil in the world. Global oil production is about 85 million barrels per day; in the U.S. we make 5 million barrels or so, plus a couple million barrels of natural gas condensate and other liquids.


The U.S. is also the #1 consumer of oil, about 19 million barrels per day.

The price of a barrel of oil is set on the world market according to the laws of supply and demand. As has been discussed previously, oil is said to be a price inelastic commodity. Increases in price do little to dampen demand. In a supply shortfall, competitive buyers quickly bid up the value of each available barrel.

So a shortfall in domestic production means that we’ll have to import more, which, absent a significant excess supply overhanging the market, will directly and immediately increase prices. Conversely, any new domestic oil we bring to market should ease that price pressure.

It’s one thing for a bureaucrat to be misinformed, but Salazar is the Secretary of the Interior. As such he is the chief policymaker for the Federal Offshore. The Gulf of Mexico alone accounts for some 30% of domestic oil and 15% of natural gas production. In addition, the DOI oversees the vast, mineral-rich Federal holdings in the Mountain West.

The Secretary of the Interior has more impact on the price of oil than any other single individual in the nation.

A stroke of Salazar’s pen could put 15-20 rigs to work in the Gulf of Mexico almost immediately. A stroke of Salazar’s pen could open up leasing in the Mountain West. A stroke of Salazar’s pen could set our energy industry free from the government-mandated navel-gazing of the last 10 months.


Gov. Barbour is right: high energy prices were always part of the Obama Administration’s vision for the green energy future. Gasoline prices are headed north. We could do something to improve our situation, creating real jobs in the process, but instead the current regime continues to act as though they are powerless in the face of world events.

Cross-posted at VladEnBlog.

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