Energy, Public Opinion and Obama

President Barack Obama talked a lot this week about energy. He's been trying to position himself as being pro-energy on development.

For example, on Thursday, he was in Cushing, Oklahoma, emphasizing support for the portion of the Keystone pipeline project running from there to the Gulf Coast. In response, House Speaker John Boehndr, according to TheHill.com, noted, "Today he's out in Oklahoma trying to take credit for a part of the pipeline that doesn't even require his approval. Now this is what I'm calling the Obama energy gap... There's a big gap between what the president promises and what he talks about and the actions that he's taking."

Apparently, though, it's not just the Speaker who has problems with the President on energy.

On March 19, TheHill.com released a poll of likely voters, and it was reported: "On energy, 58 percent say Obama's policies will result in gasoline prices increasing, while just 20 percent expect them to cut prices - and by a 46-percent-to-36-percent margin, voters believe they will cause the United States to become even more dependent on foreign oil."

One cannot seriously argue against such views given that the President, for example, has opposed expansion of offshore and onshore exploration and drilling; refused to approve the Keystone pipeline expansion project; allowed his EPA to advance regulations that will make energy far more costly and do serious damage to U.S. global competitiveness; and pushed for increased taxes on energy producers.

This policy direction, along with loose monetary policy, has helped push up the price of oil and, therefore, the price of gas at the pump.

Those increases in gasoline prices have very real effects on the economy, including on small businesses.

Consider the results of a survey done by TechnoMetrica for the Small Business & Entrepreneurship Council released in mid-March 2012 on how small firms are impacted by higher gas prices:

• 72 percent of respondents say that higher gas pricesare impacting their business.
• 41 percent of small business owners said higher prices were affecting their plans to hire.
• 22 percent of small business owners have cut back on employee hours.
• 40 percent of small business owners have raised their prices.
• 43 percent of respondents agreed with the following statement: "My business will not survive if energy prices continue to remain high or increase further." (23 percent strongly agreed with the statement.)

Those are significant negative effects that obviously present serious problems for an incumbent. The question is: Will people be fooled by political rhetoric that seeks to distract from the reality of policies that work against more affordable energy?

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.

Rising Fuel Prices

As recent as early October, the price of oil was below $80 a barrel. On February 22, it was just above $106. That's a nearly 40 percent increase in four-plus months.

At the gas pump, the national average price of a gallon of gas, according to Energy Information Administration data, came in at $3.65 on February 20. That was up by 30 cents a gallon versus early January.

Obviously, two big issues regarding prices at the gas pump are the price of crude oil and taxes. In fact, API's Chief Economist John Felmy noted on February 22 that 84 percent of the price of gasoline are accounted for by crude oil and taxes.

Interestingly, policymakers can help on both fronts. First, and most obvious, is the tax issue. Quite simply, rolling back taxes on the energy sector will reduce costs. Consider that the average federal and state tax on a gallon of gasoline is 48.8 cents. For good measure, the President and various members of Congress need to stop the push for increased taxes on energy firms, as that will only reduce investment and production.

As for the price of crude oil, there clearly is an Iran fear premium at work. That is, the threat of the Iranian nuclear program and the potential reactions, including possible war with Israel, disruption of oil supplies as some 17 million barrels flow through the Strait of Hormuz daily, and how the U.S. might react, have pushed up oil prices. If Israel does take action, all bets are off as to how high oil might jump.

Beyond decisions made in terms of national security and foreign policy, policymakers can make a difference by removing obstacles and prohibitions on domestic energy production. A good place to start would be with H.R. 3408, which passed the House of Representatives by a bipartisan vote of 237-187 on February 16. As summed up in a House press release, the legislation would "require the Administration to move forward with new offshore energy production in areas containing the most oil and natural gas resources - including the Atlantic Coast, Pacific Coast and portions of the Eastern Gulf of Mexico;" open a small percentage of ANWR to oil and natural gas development; "encourage the development of 1.5 trillion barrels of oil shale in the Rocky Mountain West, and approve the Keystone XL pipeline."

Natural Resources Committee Chairman Doc Hastings offered a challenge: "As gasoline prices continue to rise to almost double what they were when President Obama took office and Iran continues to strain foreign oil supply, Americans are demanding action. Republicans are responding with this action plan to create jobs and grow the economy through new American energy production. The only question is, will the Democrat controlled Senate and President Obama stand in the way or become part of the solution?"

In the end, of course, more energy production, whether in the U.S. or any other nation, is positive for prices and the energy costs faced by U.S. consumers and businesses.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.