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Tag Archives: oil

Obama to Release Oil for Strategic Reserve

This just in from the White House:

U.S. Energy Secretary Steven Chu announced today that the U.S. and its partners in the International Energy Agency have decided to release a total of 60 million barrels of oil onto the world market over the next 30 days to offset the disruption in the oil supply caused by unrest in the Middle East.  As part of this effort, the U.S. will release 30 million barrels of oil from the Strategic Petroleum Reserve (SPR).  The SPR is currently at a historically high level with 727 million barrels.

“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” said Energy Secretary Steven Chu.  “As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary.”

The United States has been in close contact with oil producing and consuming countries about disruptions to the international oil market that could affect the global economy.  The situation in Libya has caused a loss of roughly 1.5 million barrels of oil per day – particularly of light, sweet crude – from global markets.  As the United States enters the months of July and August, when demand is typically highest, prices remain significantly higher than they were prior to the start of the unrest in Libya.

Obama and Boehner Propose Raising Gas Prices

President Obama and House Speaker John Boehner joined hands and jumped off an economic cliff, proposing together a way to INCREASE gasoline taxes as you prepare for $5 gasoline at the pump.

It’s good to know these two are on top of the situation. Perhaps its’ not terribly surprising in the president’s case since he proposed to lower the deficit by spending $1 trillion on a new health care benefit. Same logic.

How do they propose to do this? Raising taxes on oil companies by eliminating tax subsidies. Obama wants to “reinvest” the money in alternative energy. This may or may not be a good long term solution. But in the short term, what will the oil companies – what does any company – do when its taxes go up? PASS THE COSTS ALONG THE THE CONSUMER.

That is, higher gas prices.

But who cares? Boehner and Obama were on a roll. What better way for the country’s two highest ranking politicians to play to the crowd than by promising to disembowel the evil oil companies.

Boehner opened the door by launching the attack.

Asked by ABC’s Jonathan Karl, who noticed Boehner’s fangs were bared, if it was time to take away the subsidies, Boehner said, “Kill, kill, kill.”

It’s certainly something we should be looking at . . . We’re in a time when the federal government’s short on revenues. They ought to be paying their fair share.

Get rid of the depletion allowances. Kill. Kill.

Everybody wants to go after the oil companies and, frankly, they’ve got some part of this to blame . . .  I dont think the big oil companies need to have the depletion allowances.

This got Obama salivating, calling for Oil Baron blood. “Good Boehner. Nice puppy. Kill. Kill.”

He fired off a letter to Congress.

I am writing to urge you to take immediate action to eliminate unwarranted tax breaks for the oil and gas industry, adn to use those dollars to invest in clean energy to reduct our dependence on oil . . . I was heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies for the oil and gas industry.

I’ve never forgotten the time when at a restaurant where I worked as a waiter and bartender for several years in Washington DC, the city raised “sin taxes” on alcohol. The owner marched angrily downstairs to computers, a list of the new taxes in his hand, and added them, penny for penny, to the price of every drink in the place.

Today, White House Press Secretary Jay Carney was asked – by me – why the oil companies won’t act like any small or large business and pass the taxes on to consumers. Here’s the exchange.

WHITE HOUSE DOSSIER: But you don’t know that they won’t pass it on, do you?  Is there any study you’ve done? Have you spoken with the oil companies?

MR. CARNEY:  I think I’ve addressed this.  I’ve addressed this.  What I’ve said is on balance, knowing what we know and looking — and analyzing what we know, that this is overwhelmingly the right thing to do.

WHD: Even though prices may go up in the short term,

MR. CARNEY:  I’ve just addressed it.  Based on what we know —

WHD: They’re passing the higher price of oil onto consumers now.  Why wouldn’t they pass a higher tax burden onto consumers?

MR. CARNEY:  Well, based on what we know — you have companies making billions of dollars in profit, $100 million a day in profit — that’s great, okay?  That’s good.  That’s fine.  We should not be taxed.  We — the American taxpayers should not be subsidizing that profit, okay?  I mean, that’s just in and of itself, we believe, the right policy.

No answer. Because Jay’s a smart guy and a former reporter, and he knows that sticking it to consumers is exactly what they’d do. His point is that “on balance,” eliminating subsidies the right thing to do. But the bad part balancing the potential long term good is that gasoline prices would go up tomorrow.