TOWARD U.S. ENERGY INDEPENDENCE?

A big part of the game of politics is for the opposing political party to blame the president for anything that goes wrong while refusing him credit for anything that goes right. Not surprisingly with the gasoline prices going up, we see President Obama blamed for these rising prices though he can do little about them (Short of reimbursing consumers something per gallon of gas to effectively lower prices consumers pay, something that I doubt the opposing party would agree to as it would run up the Federal deficit. There are countries that do this however.). Democrats did the same thing to President Bush in 2008 so it is just bi-party fun. If you were to read one article on the oil story, the article by Clifford Krauss and Eric Lupton in the March 23rd issue of the NY Times is the one you should read (http://www.cnbc.com/id/46831786). As they point out, the facts are that oil production in the U.S. is up from 4.95 million barrels/day in 2008 to 5.7 million barrels/day.

And as Krauss and Lupton (2012) point out, this increase is largely due to an environmentally controversial law and tax breaks passed by the Bush Administration plus the high price of oil today. At the same time, imports of oil have fallen from 60% in 2005 to 45% today (Krauss and Lupton). As good as this may be, any knowledgeable person will tell you the gasoline prices have nothing to do with U.S. oil production. But this progress in lowering imports of oil has come with damaging local environmental consequences. Thus it is a tradeoff.

Furthermore, the Republican Party loves to tell the price of gasoline at the time that President Obama took office, but they carefully don't mention that nearly four months before the president was elected and six months before he took office, oil was at an all-time high , a record that stands through this date of blog publication. Subsequently the Great Recession caused the price of gasoline to plunge. The price of West Texas Intermediate (WTI) oil hit its all-time high in July of 2008 at $145.29/bbl [or in inflation corrected terms $151/bbl (Krauss and Lupton)] and the price of gasoline also hit its all-time high in that time period [$4.11/gal or $4.30/gal in inflation corrected terms (Kraus and Lupton)], records that still stand as of this date (See chart below from http://gasbuddy.com/gb_retail_price_chart.aspx).

Incidentally, although the standard quote for oil in the U.S. is WTI, the price of oil produced in various places in the U.S. vary markedly from around $80/bbl for North Dakota sour crude (http://crudeoilpostings.semgroupcorp.com/) to around $130/bbl for Louisiana light sweet crude (http://www.bloomberg.com/quote/USCRLLSS:IND).

Regarding the XL Pipeline:

Contrary to the way the topic is put by politicians, the XL Pipeline in the U.S. is very complicated and the best I can do is recommend you read the Wikipedia article: http://en.wikipedia.org/wiki/Keystone_Pipeline. And the lawsuits against the pipeline are not just from environmentalists but from refiners as well. I personally don't know how President Obama could approve the whole package until he is presented with either a final route for the pipeline or several recommended routes from which he could pick one. The part President Obama seems ready to endorse is the route from Cushing, OK, south and any route chosen from north of there is going to end up in Cushing anyway. So connecting will need be no problem. As far as the rest of it is concerned, I'm sure the XL Keystone pipeline will be built, one route or another. At any rate, it certainly has nothing to do with the price of oil now. The owners of the pipeline say they will sell to both Asia and the U.S. What does that mean? They will sell to the highest bidder? Getting congress involved in technological and scientific projects is scary.