Obama Calls for Drilling, Gas Prices Fall

President Obama said in his weekly Saturday address on May 14, that he is directing the Department of the Interior to conduct annual lease sales in Alaska and in the Gulf of Mexico, to streamline permitting in these areas, and to "speed up the evaluation of oil and gas resources in the mid and south Atlantic." Speeding up evaluation is very vague and could just as easily be taken to mean that they will hurry up and say "no" to new leases and permits in the Atlantic.

However, on the face of it, this all sounds very friendly to oil development. It may not be true, and probably won't amount to anything, but it has had the effect of causing gasoline prices drop more than 10 cents in the last two weeks. Personally I think it's been 15 or 20 cents. The same thing happened when prices were high under George W. Bush. Just the mention of drilling HERE softens the market speculation and causes futures prices for oil to drop and soon after that retail gasoline follows. Seeing that the mere mention of making oil development easier in the U.S. can drop gasoline prices, Mr. Obama is probably using this fact to get gasoline prices down, making it easier for his re-election, while not actually having to do any actual new drilling and thereby keeping his environmental base happy.

The fact that he puts the old canard out there that oil companies aren't using or developing the leases they do have is straight from the liberal playbook. There are many reasons that oil companies may not use a lease that they hold to drill for oil somewhere. One is the Obama administration's bureaucratic processes and hurdles for getting permits to drill for oil. Another is the cost-effectiveness in drilling in a particular location. Finally, the location of the lease may not have enough, or any, oil.

According to AAA, gasoline prices were $2.77 one year ago. They are on average $3.81 per gallon now. From the consumer's point of view, any downward direction in the price of fuel is going to be appreciated, regardless of whether more drilling permits are given.