Can Obama pay the pump price?

by on July 5th, 2008

The meeting was depressing, sometimes frightening. True believers are always a bit grim and these anti-nuclear energy zealots were no exception. They refused to listen to anyone who suggested that nuclear power could be part of the solution to America’s continuing energy crisis.

Several times, they cited Presidential Candidate Barack Obama as a friend in their campaign to prevent not just expansion of nuclear energy but also to prevent increased production of oil and natural gas. They loudly opposed any further drilling in Alaska or off the coasts and in the Gulf of Mexico. They called for excess profits taxes on oil companies and the automobile industry.

They went further. The United States was not the only country singled out for emotional criticism. Sweden was accused of burying its nuclear waste in a negligent way that allows radioactive material to bleed out of the soil and into the Baltic sea where it endangers its neighbors as it washes ashore. France, they claim, is so careless in regulating nuclear power facilities that all of Europe may someday disappear in a giant fireball. Norway and Scotland were charged with spilling oil into the sea, threatening the shores of neighboring countries.

When is a flip not a flop?

The charges are untrue. But the anti-nuke crowd did not care. They were preaching to each other. Still, some people may have to listen as the campaign heats up.

Obama must listen. He is a target and an ally of the anti-nuke, anti-drilling crowd. He has a problem because as good as the alternative energy advocates make solar power, wind power and ethanol sound, those energy sources have problems, too. Nobody thinks that solar and wind power can replace petroleum anytime soon. Ethanol is questioned by an ever-growing number of people. For the near future at least, we are stuck with oil.

Into this debate strode Republican Candidate John McCain. He seized the energy issue by modifying his position and letting his opponent attack him. Obama accused McCain of a flip-flop. In politics, Obama may soon learn, it’s only a flip-flop if the public has not already flipped. The public has flipped and McCain has, too. The energy crisis is the first issue to differentiate the two candidates since Obama locked up the Democratic nomination and McCain has outmaneuvered Obama. McCain now advocates offshore oil drilling. President Bush’s decision to press the issue in Congress puts the Democrats in the position of advocating the wear-your-sweater policies that made Jimmy Carter unpopular.

With gas prices over $4, all of the previous policies will be reexamined. That reexamination could affect the election. Will fixed-income voters in Florida want to pay ever higher prices for fuel? Or will they want to reconsider the ban on offshore drilling? McCain is making the argument that even hurricane Katrina did not cause serious oil spills from offshore rigs in the Gulf of Mexico.

With his willingness to respond to the gas price crisis with bold – if gimmicky – measures, McCain comes across as a pragmatist. Obama risks coming across as an ideologue who puts climate change ahead of making it possible for the average American to drive to work.

For decades, Americans have been spoiled and have not needed to conserve gasoline. Americans have been able to dabble, never seriously, with alternative energy sources. Americans have been able to coexist with reasonable and with zany environmentalists. There was time later to get serious about energy development. Time’s up.

The ding-ding of the gas pump has jolted a complacent country. This is worse than the gas lines in the ’70s. Americans understood that those lines were temporary, even as the zealots proclaimed Armageddon. Possibly the last time the nation was shocked into action was when Sputnik sent its pinging signal back to earth. People felt suddenly vulnerable. That vulnerability ended with an American walking on the surface of the moon. Before that, an attack on Pearl Harbor so angered the American people that they fought back on two fronts and destroyed whole cities in forcing unconditional surrender.

Do we appreciate what the American people can do when they gather their thoughts and their technology and set out to accomplish a mission? Do the leaders of petroleum producing countries understand the single mindedness of American resolve – or American fear? Does Venezuela? Do the Saudis? The Iranians? The defenders of the Alaskan wilderness? The anti-nuke crowd? The candidates for president?

McCain may have latched onto the issue of 2008

Unless defused, this mood could gather momentum quickly. Suddenly, everything could be on the table: Offshore drilling, Alaska, nuclear power, wind, solar, long-lasting batteries. McCain is out ahead of the issue. He entered the debate by saying something that makes good common sense to most people: $4 a gallon changed his mind. He is willing to drill offshore. So far, Obama seems trapped in liberal orthodoxy. He is against offshore and Alaska drilling and ambivalent on nuclear power. He is for the environmentalists’ solutions. McCain says we need to pursue those solutions, too, as we search for more oil. He comes across as realistic, a straight-talker. Obama may come across as sincere but impractical. One of the worst things a candidate can be is “well-meaning.”

During the Democratic primaries, Obama opposed a gas tax holiday and denigrated McCain for supporting the tax holiday. Research now shows that voters agreed with Obama’s position as tax and energy conservation policy, but gave McCain more credit for his willingness to try something new, even if it was gimmicky. Soon, when voters are asked which candidate will be better at solving the energy crisis, they may answer McCain because they know he is willing to try something, anything. Something, anything just might work.

McCain has nodded to the left: He attacked oil speculators. Trading in oil futures soared from $13 billion in 2003 to $260 billion now. Voters see the spike in prices as more than supply and demand. They see it as another insider trading mess like the mortgage crisis. Again, McCain speaks their language.The higher price of gasoline may change more than driving habits. Relationships will change. The Saudis may have made a mistake. For years, Americans have been held hostage to Saudi oil. But the Saudis did not work to increase supply to put downward pressure on the price at the pump. If fuel efficiency becomes the new national cause in the U.S., the Saudis may need new markets just about the time that new technology is reducing the need for imported oil around the world.

Politics will change. If the consumer wants the U.S. to develop a national obsession with fuel efficiency and alternative energy sources, politicians will eventually change. Today, environmental concerns are more important, especially to Democrats. Obama approaches the problem from the environmentalist viewpoint. But McCain realizes that this is now a front-burner issue and the environmentalists will no longer control the debate. People who drive their cars to work will have a bigger say.

Democratic ambivalence is rooted in concerns about climate change. The Democrats oppose expansion of carbon based energy. Obama wants a windfall profits tax on oil companies. But consumers have different priorities: More oil, more drilling, more refining, more alternative energy sources, flex-fuel cars, plug in vehicles, nuclear power and anything else that will help lower the price at the pump. That change in emphasis will change other things, too.

Suddenly, the U.S. will do something about climate change

Strangely, the high price of gas makes it inevitable that the U.S. will do something – and because Americans are such thirsty gas hogs, that something will make the U.S. the leader in fighting climate change. With $4 gas, Americans are switching to fuel efficient cars. Oil consumption is down by 500,000 barrels a day in the past year, a three percent drop. What will $5 gas bring? Much depends on technology, an American advantage. So this crisis may be exactly what is needed to get the U.S. moving toward a more energy efficient and environmentally friendly future.

McCain is out ahead on energy policy. Obama has not understood the public change in attitude. With the first big issue of the Obama-McCain campaign, will McCain force Obama to pay the price at the pump?

Radnor Reports

Kenneth E. Feltman