Update: Thanks to a commenter for pointing out an error. I wrote oil production and consumption in terms of “billions” of barrels, not “millions”. However, the underlying ratios were correct as is my point. And the president is still wrong.
The President was at a town hall meeting last week where he received a question about rising gas prices. His answer was full of misdirection on oil production, the causes of gas prices and outright snark at people who find it necessary to buy big vehicles for their big families. It was, in effect, another “bitterly clinging to their guns and religions” moment.
So the questioner asked him what Obama was going to do about high gas prices, and then the President gave him an impromptu supply-and-demand lesson that sounded good, but was—unfortunately and predictably—wrong. He said that a few years ago, when the economy was going great and individuals and industry were buying lots of oil, the high demand drove oil prices up. Then when the global economy tanked and demand dropped, prices dropped. And now that the economy is recovering—he claims—the prices are going up again because demand is up.
For one thing, oil prices are not driven primarily by supply and demand. Oil prices are driven by oil production, which is controlled by the consortium of oil-producing countries known as OPEC.
That sounds like a nice pat lesson from a freshman economics textbook. Unfortunately, it’s completely inadequate. For one thing, oil prices are not driven primarily by supply and demand. Oil prices are driven by oil production, which is controlled by the consortium of oil-producing countries known as OPEC. They decide how much oil will be produced and thus how much we must be willing to pay for it. For another thing, oil prices are also affected by politics, like, say, our little adventure in Libya, attacking Quaddafi on behalf of the al Quaeda rebels seeking to overthrow him.
Rather than higher oil prices being simply an indication of a recovering economy, it’s also an indicator of political turmoil and decisions by a group of non-democratic nations with varying levels of animosity toward the US.
Math is hard
At this point, Obama isn’t done showing what is either appalling ignorance or an appalling cynicism toward the intelligence of his audience.
We have about 2, maybe 3 percent of the world’s proven oil reserves; we use 25 percent of the world’s oil. So think about it. Even if we doubled the amount of oil that we produce, we’d still be short by a factor of five.
It seems reasonable at first, but look deeper and you see that he’s comparing apples and oranges. The United States has 2 to 3 percent of the world’s oil reserves. That’s a static number. That is not production, or supply, a dynamic number. Our consumption of 25 percent of oil is dynamic. His comparison makes it seem like the US produces a minuscule amount of the world’s oil.
In fact, the the United States is the third-largest producer of oil behind Russia and Saudi Arabia. (We produce 8.3 millions of barrels/day; Russia: 9.8 million bbl/day; Saudia Arabia: 11 million bbl/day.) Meanwhile, our oil consumption is 18 million barrels of oil per day.
If we doubled our oil production, we wouldn’t be short by a factor of five as he claimed. We’d actually break even and be producing all of the oil we need and would no longer be beholden to the OPEC oil cartel.
Consider that. If we doubled our oil production, we wouldn’t be short by a factor of five as he claimed. We’d actually break even and be producing all of the oil we need and would no longer be beholden to the OPEC oil cartel. Is the President lying, is he stupid, or is he cynically banking on a lack of education on the part of his audience?
Bitterly clinging to our gas-guzzlers
But he’s still not done. He then goes on to talk about increasing efficiency in vehicles. He takes to task the people who drive fuel-inefficient SUVs and other large vehicles.
“If you’re complaining about the price of gas and only getting eight miles a gallon… [inaudible comment from the crowd] … you may have a big family, but it’s probably not that big. How many kids you have? [inaudible] Ten kids, you say? Ten kids? [snarky smirk on his face] Then you definitely need a hybrid van then.”
It’s not like big families are out there driving gas-guzzling, giant vehicles because we want them. We drive these vehicles because none of the automakers have been producing vehicles for us over the past 20 years. When I was a kid, families bought station wagons and just piled in as many kids would fit. Now, not only do we need to be belted in, we need massive car seats that ensure that you can’t fit more than 2 kids under 12 into an average sedan. There are essentially no more station wagons and once you get up to five kids, you’re looking at either a full-size van or a full-size SUV.
And in my general experience, number of children is inversely proportional to the amount disposable income available for the purchase of new hybrid vans, if they even made one that seats 10. (Do they?)
It’s just another out of touch pandering moment by Obama. He ends by suggesting that his interlocutor think about a trade-in for his eight-mile-per-gallon gas guzzler. Can we get a trade-in on our ideology-guzzling president instead?