Kelly know economics ...(?)

Jack Kelly thinks you are stupid. He wants you to blame Barack Obama for gas prices, based largely on the notion he thinks Obama is arrogant. What was such a desirable quality in George Bush is held against Barack Obama. Of course, George Bush's arrogance manifested itself in swaggering and lying to the American people about why the sons of the poor were being sent to their deaths, while Kelly's anecdotal example of Obama's arrogance could also be seen as suggesting Americans could take responsibility for their own foolish choices. But Kelly is counting on your stupidity.

Kelly blames Obama for high gas prices for three ways: the declining value of the dollar, turmoil in the Middle East and because Obama has restricted new drilling. These reasons show a pretty profound lack of understanding of how economics work, and/or Kelly's general contempt for his readership.

A declining dollar could have an effect on the price of oil, but it is worthwhile to remember that cheap dollars make our exports cheaper. Our economy is supposed to be recovering, and a strong export sector would mean jobs, including for poor people of color without high school degrees. It is a helluva thing to want the unemployed to suffer so that middle class and wealthy people who bought SUV's can continue to waste gas without paying for (pushing the costs onto our grandchildren).

As for the turmoil in the Middle East, I have one word for that: Iraq.

And thinking about drilling domestically, Kelly leaves out a crucial step, the refining process. That has as big an impact, maybe more so, as the supply of oil. there has been something like two requests (to the EPA) for new refineries in the last thirty five years, although there are requests for modification and expansion of existing refineries. The refineries we have can adjust the capacity they at which they operate, and apparently are not, right now, operating at as high a capacity as they could, while apparently crude oil inventories have been rising (piling up?). Of course, refineries have maintenance cycles and unexpected outages, but it is at least as an important factor as drilling in setting the supply.

And of course, all Kelly is writing about is supply. He wants cheap gas delivered to us on a silver platter. He doesn't care how difficult oil is to extract, what environmental, social, political or future costs there might be in drilling for oil (or converting oil sands or "gasifying" coal). Kelly doesn't think about the other component in gas prices, demand. To me, two times that gas prices have fallen are important to look at. First, when highway speeds were reduced to 55, there were relatively significant drops in US oil consumption. And of course the last time gas prices spiked this high, demand fell considerably, and not long after gas prices fell. Which means that if, when those prices fell, we could had imposed a gas tax that could have kept demand reduced. We could have given tax rebates when people file taxes, large ones for the poor and smaller ones for the middle class, to ease the "pain at the pump". But that opportunity might have slipped from our grasp, as the prices have risen. My personal feeling is that oil speculators are behind the current price spike, and I don't know if the speculators will keep the prices high this time. So instead of lowering demand by intentionally raising prices in a controlled fashion and returning a large chunk if not all the money to consumers, we are allowing the oil companies to pick our pockets. If fact, by driving 70 mph, we are encouraging the oil companies to take our money (even while they pay no taxes).

Jack Kelly thinks you are stupid.