How Obama Is Choking Off U.S. Oil Production

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The news wires are reporting that President Obama actively lobbied Senate Democrats to defeat the Keystone pipeline yesterday. The effect of blocking the Keystone XL Pipeline is to defer 700,000 barrels of oil per day. And as I reported at The Weekly Standard recently, the president’s policy of choking off oil production under federal leases will prevent another 1 million barrels of oil per day this year, and even more next year.

Obama will soon be personally responsible for preventing some 2 million barrels per day of possible North American crude oil production from reaching the American economy. The U.S. currently produces only about 6 million barrels of domestic crude oil, so that would be more than a 30 percent increase in domestic production.

The president likes to say that America is producing more oil than ever before, but that’s due entirely to shale oil (e.g., fracking) and oil sands. The boom in production from private sources is currently shielding the administration from the political consequences of taking such a huge amount of oil off the market.

Two millions barrels per day of oil production would affect not just the price of gasoline in North America, but also the economics of world oil production: The president is preventing the U.S. from increasing oil production by an amount nearly equivalent to Iran’s total oil exports. He insists that gasoline prices are rising because of “fears” about a disruption in Iranian supply, but he wants you to believe that gasoline prices would be unaffected by a 30 percent increase in domestic U.S. oil production in the next two years.

If you’re gullible enough to believe that, consider this: The recession drove world oil demand from a peak of 86 million barrels per day in 2007 to a low of 85 million barrels per day in 2009. In the same period, the price of gasoline fell by half. We are once again entering a period of scarcity, where slight fluctuations in demand or supply will have a disproportionate impact on gas prices — but this time the scarcity is largely the product of Obama’s policies.

Courtesy NR

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There are so many news sources and many congressmen who use as their reasoning that after the Canadian oil is refined in US refineries, it will be sold to foreign countries. They use this as a reason to state that no jobs will be created. What about the alternative where the crude oil is shipped by pipeline to the west coast and sold to the Chinese. Which alternative would create US jobs? Who will maintain and operate the pipeline in the US after it is built? They also fail to relate that light sweet crude oil from Montana, and the Dakotas is currently being shipped at a 33% discount by truck and rail (Warren Buffet’s railroad!). Pipe lines are much safer. The 33% of revenue eans the poor farmer loses because he gets a percent of the royalities.

Ever wonder why “economic sanctions” to the ME do NOT work? The above posting highlights this, even if it doesn’t relay that point directly.

Economic sanctions will not, and cannot, work if the ones doing the sanctioning are dependent upon those the sanctions are laid upon.

@johngalt:
Claudia Rosette made a name for herself by her research and publication of the many ways Saddam did end-runs around the UN’s Oil-For-Food sanctions.

I’m sure Iran would be even better at sneaking cash in.

It is also worth noting that Oil Exporting countries do not hold on to much US debt.
As of May 2011 it was only 5% total.
One chart.
OPEC and other oil exporters are basically failed states that use US dollars while their own people fail to ever build a stable economy.

@Nan G:

Well, as I said, economic sanctions will not, and cannot, work on a country when the one’s laying the sanctions depend upon them. We can be as staunch as we wish on those sanctions, with full rhetoric support from the UN, and if Russia and China aren’t, and want, or need, the oil, Iran will sell it’s oil and the sanctions become mere words.