Domestic Drilling, Barack Obama, and Executive Orders

Executive Orders are a favorite tool of Presidents to promote their political agenda. Some times they actually alter policy because they address issues that have no specific legislative limitations. In other cases, they are a form of protest or persuasion, because they go against the current law of the land. An example of this was President Bush's Executive Order to lift some of the restrictions on domestic drilling. Congress had prohibited the areas the order covered, but Bush wanted to make it clear that the Executive Branch supported such. That protest and the outcry of millions of Americans finally led to Congressional action in which they reversed the ban.

During the Presidential campaign and gasoline prices were pushing $4 a gallon, Barack Obama said he was open to any energy option to drive gas prices down. He was for nuclear energy (as long as it was always safe), coal (as long as he could tax it into bankruptcy), and domestic drilling (as long as you can guarantee there would be no environmental damage). This view was against all of Obama's historic policy statements and voting record.

Obama and Congressional Democrats have been philosophically for higher gas prices. The higher the prices, the better. He supports high gas prices as a way of conserving energy, to drive people to mass transit, and to force the development of energy alternatives. That has long been the primary position of Democrats for years, who describe our need for energy as "addictive" and that there is something fundamentally wrong with Americans because they demand more energy than other country in the world. I don't apologize for our quality of life or the technology necessary to maintain it, I expect our government to create the environment to get those needs met through free enterprise. Furthermore, many of his Congressional allies are singing a similar tune.

So why did Obama and company say they would support these traditional forms of energy? Because they needed the votes. In fact, for the last 60 days of the campaign, Obama ran as a moderate and even attempted more conservative positions than McCain (rightly describing the Arizona Senator's home bailout plan as "irresponsible").

The election is over, the real Obama is standing up and doing so tall with this bold announcement. I think it is being done immediately because he hopes that the adverse effects it will have on oil futures (projecting future demand effects gas prices today) will be seen as a remnant of the Bush Administration and he wants to get the liberals' bizarre conservation program of high prices back on track. Every day we are enjoying prices around $2.00 a gallon, we are wasting energy and destroying our environment according to the Democrats. Obama believes this must stop.

This is just the beginning. Many of the things you worried about Obama earlier in the race when he ran as a liberal, but saw fade away in his rhetoric as he worried about his electoral success, will come back in full force. Will the real Barack Obama please stand up? I hope not.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

How to Determine Gas Prices in a Year

I don't want to mislead with my title. I don't own a crystal ball and can't predict exactly what fuel will cost at certain times. However, we have all been studying fuel prices rather closely the last few years and have begun to be able to see linkage between certain events and gas prices.

For example, as prices hit an all time high and hovering around $4.00 a gallon in the early part of the summer, House Republicans declared they were have a "staycation" like many other Americans and taking care of business by focusing on energy. The theme of the ad hoc Congress was "drill here, drill now" and the public and media took notice of the action. So did the oil speculators who lowered the price of oil per barrel, which showed up in our gas prices.

Another example was Senator John McCain declaring that he was changing his historic position of being opposed to domestic drilling and stating that everything should be brought to the table for consideration (biodesel, coal, etc.), including exploiting oil in the United States. He placed particular emphasis on the latter because of how that view stood in contrast to the Democrats position of avoiding all domestic drilling. The results was the further lowering of gas prices.

So, oil futures are based on projected consumption (demand) and projected supplies. The lack of oil in this country is not based on scarcity (which is created by nature), but because of shortages (which is based on government policies). With that, the single biggest factor about future supplies and prices of oil is the government. Oil speculators are convinced that the Democrats are hostile to domestic production (just look at their voting record and stated postions) and that the Republicans seem to take the pursuit seriously. With that, here is a quick breakdown of the future of prices:

• If the Democrats win both the Congress and the White House, expect gas prices to grow exponentially. I project them to more than double the current $3.00 a gallon level by the elections of 2010. That $6.00 a gallon rate could be rather conservative.


• If the Republicans win both the Congress and the White House, expect a rather significant drop in gas prices as long as the Legislative Branch makes domestic drilling a top priority. If they do that, you could see prices back around $2.00 or even less within two years.
  
• If you have divided government where different parties dominate the Legislative and Executive branches, you will likely see prices remain about the same with a continued upward trend.
  

Don't be fooled by arguments that passing legislation that encourages domestic drilling won't immediately lower prices. We know that serious discussion alone can achieve that. If Americans are concerned about lowering gas prices, they should be very deliberate about the way they vote.

A few weeks ago gas prices began to rise at a rapid rate. This was about the time the media began to declare that it was unlikely McCain would win. It is largely based on futures.

So what about the recent drop in gas prices? Everyone is thrilled with them going below $3.00 a gallon in many parts of the country. Why this is happening is the "bad news" to this otherwise exciting news. The current financial crisis is now having a direct impact on gas prices. Oil futures project that we are going to have people driving less, companies transporting fewer goods less often, and factories demanding less energy because of projected manufacturing declines. The good news of lower fuel costs is actually an omen of bigger economic problems.

Watch the headlines and observe gas prices. You will see the link. Think carefully how you vote, because it could profoundly impact your financial future.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Solving the Energy Crisis in 30 Days or Less

Since the media loves words like "crisis," I will use it; but it is certainly over used. Furthermore, our problems are not in energy but in policy. We have plenty of energy to fuel our cars and we could cut our prices by close to half in about a month if our elected officials had the courage and desire to do so. The majority in Congress have neither.

Thirty days seems ridiculously short and cutting prices in half, ambitious, but I sincerely believe these are goals that are realistic and should be pursued today. How?

* Congress could simply open a serious debate on making the hundreds of years of oil available in this country subject to drilling (in Alaska, the Dakotas, Florida, etc.).

* A few liberal Senators with a history of opposing drilling in this country, coming out in favor of such.

* Hearings on the subject in which Members of Congress strategize with oil industry leaders rather than lecturing them as if they were poorly behaving school children.

If these simple things happened -- without a single drop of new oil being pursued in this country -- the drop of oil prices would be exponential. The threat of the US becoming energy independent would be enough to throw the market into a tailspin. The world knows our ability to produce is legendary and the last thing out international competitors want us to do is produce in this area. A serious debate alone would drive our competitors to making sure it is a moot point. A similar debate in the 1980s led to a dramatic reduction in the price of oil per barrel.

So why isn't it happening today?

* The current Congress has a majority of members who actually want gas prices to be higher. Yes, you read that correctly. Many talk about America's desire for fuel as if it were an alcohol problem. In an environment such as this, you will never get actions that will drive prices down.

* This is going to sound a little conspiratorial, but I believe the majority of this Congress wants high prices, lost jobs, and economic downturn. It is the politics of "us vs. them" and economic decline that makes them believe they could have a more sizable majority in 2009 and one of their own in the White House. The Democrats need economic decline and they are our economy's woes biggest advocates.

I said at the very beginning of this post that the problem isn't energy, but policy. It isn't scarcity (which is caused by nature), but shortages (which is due to poor policy). We need to hold this Congress accountable. Tell them to stop lecturing the executives that represent the energy industry and support the owners of them (the many individuals of all economic groups that own stock in these publicly owned companies). Finally, sign the petition to get this problem solved today. Drill Here. Drill Now. Pay Less. A serious discussion alone could change everything.

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Clinton, Obama, Promise to Raise Gas Prices

If you are not paying enough for gas now, you will be if Hillary Clinton or Obama get elected. People are clearly tired of outrageous gas prices and are looking for relief -- and solutions -- from elected officials. They don't appear to be getting it from the Democrats.

Senator Clinton has a proposal that would provide a "tax holiday" that would lower costs around 20 cents a gallon, but the other tier of her program will devastate these savings -- a windfall profit tax for oil companies. The tax holiday is fine and I have proposed such on the radio and in this blog, but it should only be a small part in helping relieve our energy crisis.

Obama is worse, he wants nothing to do with a tax holiday and is asking for a windfall profit tax like Clinton's. How big of a tax? 50% once an oil company reaches a certain level of revenues. How will this lead to a tax increase? Such also leads to shortages and long lines like we experienced in the 1970s. You remember those "good old days." It is really that simple.

Prohibitive windfall profit taxes give businesses an incentive to stay away from that magic number, what ever it is and it actually leads to a decrease in production. Lower production, leads to higher demand, which in turn leads to higher prices. It is simple economics 101.

The heart of John McCain's program is tax holiday as well, which is fairly benign in a negative arena and should provide some modest relief. The good thing about McCain's proposal is that it won't undermine production and won't fuel higher profits or shortages.

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

Congress Poised to Raise Gas Prices

You haven't seen that headline, have you? But the recent hearings being held by Congress on how the tax laws benefit the oil companies gives me every reason to believe that they are looking at legislation that will close "loopholes" in the tax system. Closing those loopholes will, in turn lead to price increases. Why do I come to that conclusion? Because corporations don't pay taxes, they are merely tax collectors.

Simply put, businesses are not philanthropic, but are in the business of making a profit. Taxes on business are always absorbed by their customers either through high prices or lower quality (or both). High taxes will eventually lead those businesses to pursue those options are relocate.

If Congress is doing more than election year rhetoric (a huge possibility, of course), than expect them to raise your prices through what essentially will be a tax increase. Because "closing loopholes" has that exact same effect.

For a copy of the free report, "Why Your Marketing Isn't Working," email Info@HoustonBusinessShow.com and put "marketing" in the subject line.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.