“Obama’s environmental and energy policies are also a key reason why prices are constantly heading higher.”
The Washington Examiner editorializes,
… But there is another factor behind the economic stagnation produced by President Obama’s policies — soaring energy costs — that hurt all Americans, not just those without jobs or who are trapped in lower-paying positions. As CNBC reported earlier this week, the typical American family will spend the largest portion ever of its budget — 8.4 percent — on gasoline this year. Economists expect the average price of a gallon of gas to be $3.53, a 76-cent increase over 2010.
Growing world demand for gas caused by economic expansion in China and India only partially explains this increase. Obama’s environmental and energy policies are also a key reason why prices are constantly heading higher. The American oil and gas industry is producing record domestic yields these days, thanks to the vastly increased efficiency made possible by technological advances like horizontal drilling and hydraulic fracturing.
That ought to be good news because increased supply normally means lower prices. But the energy industry’s ability to process oil into gasoline is greatly handicapped by environmental regulations that are so stringent that it’s been nearly four decades since a new refinery was built in this country. Plus, existing refineries face a complicated web of government-mandated blends of gas with additives like ethanol that are designed to reduce emissions and that vary by geographical region and seasons of the year. That means refineries frequently must stop producing one blend to change to production of a different one.
Add to these factors the dramatic decrease in the number of new drilling permits issued by the government under Obama, longer waiting times for those that are issued, and the president’s success in barring expansion of oil and gas exploration and production to federal lands known to be rich in untapped resources. The result is constant upward pressure on the price consumers must pay at the pump.
Not only is the cost paid by families every time they fill up at the local gas station, the economy takes a hit as well. James Hamilton, an economics professor at the University of California at San Diego, who studies energy prices, told CNBC that high gasoline prices reduce economic growth by about 0.5 percent for the year. In a $14 trillion economy, half a percent is a big deal, especially when growth is about 2 percent a year. And we haven’t even mentioned Solyndra.