The Drudge Report blasted out a link this morning to a piece trumpeting “Gas prices’ earliest-ever rise above $3.50 a bad sign for motorists.” The piece quoted Brian L. Milne, fuels editor for Telvent DTN, a commodity information services firm, who stated that by June, the U.S. average would be above $4 per gallon; in some parts of the country, he said, gas would be above $5 per gallon.
So just where were gas prices when President Obama took office? The average gas price in the U.S. was just $1.84 per gallon. So, what determines price at the pump? The short answer is supply. If we produced more of our oil – if we had, in the words of Sarah Palin, drilled, baby, drilled – our prices at the pump would be lower. But because America imports so much of our oil, we are largely reliant on the whims of cartels like OPEC. That means that international diplomacy and relationships with oil-producing nations are paramount.
President Obama fails on both fronts.
American oil production is up only on private and state lands, and is down on federal lands. According to the Institute for Energy Research, “oil production on federal lands has fallen by 43 percent over the past 9 years according to the Obama administration’s Energy Information Administration.” Meanwhile, turmoil in the Middle East, thanks to Obama’s Islamist Winter, is jacking up oil prices from the region.
Let’s put this in context for a moment. Back before the Great Collapse of September 2008, America’s oil prices were above $4 per gallon. Meanwhile, the federal government was continuing to sponsor bad mortgages. Many economists believe that the gas prices at the pump directly contributed to the collapse.
Today, we’re talking $4 per gallon again – and as The Wall Street Journal reported yesterday, we’re looking at bailing out Fannie Mae and Freddie Mac once again:
“FHA-backed mortgages are an attractive option for borrowers because they can make down payments as low as 3.5%. But as home prices continue to fall, many of those borrowers have fallen underwater, where they owe more than their homes are worth and are at greater risk of default if they experience income shocks. The estimates by the White House's Office of Management and Budget show that the FHA's capital reserves, which stood at $4.7 billion in October, would be wiped out in the coming year, forcing the agency to seek nearly $700 million from the U.S. Treasury.”
Are we looking at a double dip? The preconditions are certainly there. And this double dip is brought to you by the Obama Administration.