Without a legislative majority to defend or a major economic slouch to ruin the mood, President Obama spoke confidently, perhaps even defiantly, during Tuesday’s State of the Union address. This meant that Obama took credit for, or at least addressed, quite a few things about the economy, such as the fact that job growth is at its strongest in over a decade.
Obama promised to “turn the page” toward a more economically sound and progressive United States, but parts of his speech make it appear that the page is a little stuck, as some of his comments were in conflict with the administration’s official policies. One thing I took serious issue with in particular was his comments about oil dependency and production.
“Thanks to lower gas prices and higher fuel standards, the typical family this year should save about $750 at the pump,” he said.
His comments were met with applause, and the savings are not fictitious, but the president’s mention of gas prices promotes a frustrating national pastime of associating the presidency with gas prices when there is little direct connection.
In the United States, where the petroleum industry is private enterprise rather than state-owned, as it is in Venezuela and Saudi Arabia, companies determine prices in a market. The federal government levies a gasoline tax, but that hasn’t changed in two decades.
Several other factors, none of which have to do with the presidency, cause prices to rise or fluctuate. There are foreign organizations, most notably the Organization of the Petroleum Exporting Countries (OPEC) in the Middle East, that set prices on a vast majority of the world’s oil. Current events and disasters, such as anarchy in Libya or civil war in Syria, also cause prices to fluctuate. State policies further confound prices; gas is more expensive in California than in many other states due to stringent environmental regulations on the cleanliness of petroleum that are intended to both curb our driving habits and pollute less.
However, the association between president and petroleum continues to happen, because invoking what I call the “appeal to gas prices” is a cheap way to score political points. Leaders undeservingly come under fire when prices are high, but it’s equally unscrupulous to suggest that the presidency has a say in things when they are low.
It is possible to challenge the notion that governments have nothing to do with oil prices. They are low, one could say, because of the proliferation of stateside oil production, particularly through the controversial hydraulic fracturing technique. The industry’s growth during the last half decade that has made the United States the world’s biggest oil producer can be directly attributed to a political and legal atmosphere conducive to such phenomenal growth. Of course, part of the reason why prices are currently low is because OPEC is refusing to raise prices to strain U.S. fracking, which is a more costly process, to inhibit industry growth.
It’s unlikely that Obama will make mention of this, let alone take credit for it, since it lies in direct contradiction to his administration’s environmental policy, which is all about encouraging investment and use in renewable energy. That the president has completely failed—due to Congress, not because of his own inaction—to reduce or eliminate billions of dollars of annual subsidies to oil companies has not helped the situation.
So, how does one make out the fact that SUV sales are higher than they’ve been in a decade? Perhaps, as a recent Daily Bruin column argued, it shouldn’t be taken as good news. And a president who claims to commit to green energy and reducing emissions is in a tough position to tout cheap oil and expanding oil production as a positive thing for the country or the environment.