It wasn't a very merry Christmas for America's motorists, as pump prices averaged $3 per gallon nationwide for the first time since 2008. President Obama's holiday gift to car and truck owners - new proposals to clamp down on domestic oil drilling and ratchet up refining costs - will only make matters worse in the years ahead.
The days before big holiday weekends have become a busy time for Obama administration regulators, as they take advantage of the occasion to slip through unpopular measures with minimal public attention. Coming on the heels of a pre-Thanksgiving announcement that oil exploration and drilling in Alaska would be curtailed to create vast expanses of polar-bear habitat, the Obama Department of the Interior made a pre-Christmas policy change that would further reduce domestic oil supplies by placing more energy-rich lands out of reach.
Designating federal lands as wilderness areas is supposed to require an act of Congress - and for good reason, as such a designation places any such lands off-limits to oil- and gas-leasing or any other economically beneficial use. Thanks to the Dec. 23 announcement, Interior bureaucrats essentially will be able to make that determination on their own, reversing a George W. Bush-era policy that constrained this kind of unilateral agency action.
At issue are millions of acres throughout the West. Some of this land sits atop promising oil and natural-gas deposits. Indeed, wherever energy supplies lie below ground, environmental activists and bureaucrats hype whatever lies on the surface as some kind of treasure in need of being fenced off.
Utah is particularly hard hit, with up to 6 million acres in jeopardy of being locked away from development. Rep. Rob Bishop, Utah Republican, told the Salt Lake Tribune, "[T]his decision will seriously hinder domestic energy development and further contribute to the uncertainty and economic distress that continues to prevent the creation of new jobs in a region that has unduly suffered from this administration's radical policies."
On the same day as Interior's anti-drilling announcement, the Environmental Protection Agency (EPA) went after America's refiners with a proposal to place limits on carbon-dioxide emissions from refineries. The details have yet to be determined, but the proposal almost certainly would increase the cost of turning oil into gasoline and thus raise retail prices.
It should be noted that these new measures do not explain the current spike to $3 per gallon, which appears to be the result of growing demand from a recovering global economy. But these and other anti-energy policies are likely to put more upward pressure on pump prices as they take effect in the years ahead.
Arctic Power, an organization funded by Alaska to promote its energy industry, was sharply critical of the polar-bear decision as well as other measures that have all but shut down oil exploration and drilling activities in the state. Adrian Herrera, head of Arctic Power's Washington office, describes such policies as "taking away the farmer's seeds" because today's exploration and drilling lead to tomorrow's production. Without new fields to replace the declining output from existing ones, future production will dwindle and prices will rise.
In sum, the Obama administration gave us a Thursday-before-Christmas present of lower future supplies and higher prices for oil and increased costs of refining that oil into gasoline. It did so at a time when pump prices have reached their highest level since Mr. Obama took office.
Last summer, during the height of the BP oil spill in the Gulf, a majority of the American people still supported expanded domestic drilling. Now that the spill is over (and wasn't nearly as bad as we were led to believe) and pump prices are reaching painful levels, that support is only likely to increase. It's little wonder the feds made the announcement when people were paying more attention to their holiday plans.
Ben Lieberman is an adjunct fellow at the Competitive Enterprise Institute and a contributor to Openmarket.org.
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