Rising Gas Prices Fuel Obama’s Western Road Trip

Posted March 21st, 2012 at 2:15 pm (UTC-5)
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U.S. President Barack Obama is swinging into action, trying to rally support for his energy policies as rising oil prices take an ever deeper bite out of the average American's paychecks.

Mr. Obama embarked on a two-day, four-state tour Wednesday to promote his efforts to make the United States less dependant on foreign oil and more reliant on so-called clean sources, like solar and wind power. And White House officials say that on Thursday the president will announce his support for speeding up construction of part a controversial oil pipeline to the Gulf of Mexico.

Nathan Hultman, director of Environmental Policy Program at the University of Maryland, says President Obama's energy policy push will not do much to ease the pain of consumers.

“It probably has, frankly, a higher value in terms of visibility about what the intention is than it actually will in terms of actual effect at the pump.”

A White House official says construction of the southern part of the Keystone XL pipeline will relieve “a bottleneck of oil” and bring domestic resources to market. The move also avoids some of the controversy of the full, Calgary-based TransCanada project – a proposed 2,700 kilometer pipeline that would carry heavy crude oil from Alberta, Canada to refineries along the Gulf of Mexico.

The pipeline project has run into opposition from environmentalists, who contend it could potentially harm a sensitive region in Nebraska. Earlier this year, the State Department blocked permitting of the full pipeline. But analysts have also questioned the effectiveness of efforts to boost oil production, Hultman included.

“Even if we were to, say, double our own production, which is actually geologically impossible, we still wouldn't move the needle much on overall world prices.”

Hultman says there is little President Obama, or lawmakers, can do in the short-run to lower gas prices and that any solutions will take time to implement.

“Reducing demand is probably, in the long run, a sort of very effective strategy. And I think certainly, something like increasing fuel efficiency standards for passenger vehicles and for fleet vehicles can actually create, if you think about it that way, a large amount of new supply by people essentially using less.”

On Wednesday the White House released a fact sheet touting those new, higher fuel efficiency standards, saying they will “save American families $1.7 trillion,” or roughly $8,200 per vehicle at the pump in the next decade. It will “cut oil consumption by 12 billion barrels” and “slash oil consumption by 2.2 million barrels a day by 2025.”

President Obama's so-called “all of the above” strategy is also banking on reducing the need for foreign oil through the use of solar power, and the president is kicking off his trip with a visit to the Copper Mountain Solar 1 Facility in Boulder City, Nevada, the largest plant of its kind in the U.S., powering 17,000 homes.

In the interim, though, oil industry analysts, like Tom Kloza with the Oil Price Information Service, have said oil prices are likely to keep pushing higher, for several key reasons, including demand in developing countries, instability in the Middle East and speculation by investors.