Oil and politics, a volatile mix

My column appearing in the print edition of the Sky Hi News, June 15, 2011
The 2012 election outcome will depend upon the shape of the economy and who gets the blame. The emerging GOP field smells blood because high oil prices are hurting job creation and giving consumers gas pains. If they can pin the problem on Obama, they think they have a hot issue ready-made for attack ads.

Darrell Issa, Republican chair of the House Oversight Committee, released a “report” claiming the Obama administration had conspired to raise prices by purposefully instituting administrative and environmental roadblocks to keep domestic oil production down, thereby causing prices to rise.

He tried to make the case that Obama wanted high prices to force Americans to invest in alternative energy. Grilled by Elliott Spitzer on CNN, Issa backed down on his claim that current high prices were due to administration policies, shifting to an argument that Obama's policies would impact future prices. He got the long mixed up with the short of it.

It makes no political sense either. The last thing a president running soon for re-election wants is high gas prices.

Ed Wallace, writing in Bloomberg Business Week, put the blame for current high prices on oil speculators, who were driving up the prices beyond $60-$70 a barrel to the stratosphere of over $100 with predictions of $140 later this year. He blamed the Obama administration by not pushing for laws that would control such speculation, but he also shot his argument in his foot by mentioning that both John McCain and Obama had advocated the same laws in 2008 and nothing had happened. It was a bipartisan failure, not just an Obama one. Oil speculation is a worldwide problem, too, so US regulation alone would not suffice.

Saudi Prince Ali-Waleed bin Talal, in an interview by Fareed Zakaria on CNN, also blamed speculation, claiming that high prices were not in their interest either since Europe would switch to alternative energy forever, implying that would be bad for his business.

The truth is Obama has little control over oil prices in the short term. The Middle Eastern cartel of oil producing countries, OPEC, controls 40 percent of the world's supply. Domestic prices are determined by their production and cartel price setting, and not very much by U.S. production. The OPEC cartel last week voted not to increase production, though the Saudis said they would increase their output anyway.

Obama also ran into a bit of unanticipated bad luck: the Arab Spring. Libyan production reduced supplies by 1.2 million barrels a day and investors have become jittery about the stability of other producers in the region. These fears only fed speculation.

Obama's tool box to influence prices in the short term is pretty sparse. He can release strategic reserves and his spokesman last week said the administration was considering that. He needs to take care, though. U.S. reserves in total account for a month's supply and usually are kept in our hip pocket in case foreign supplies are cut off, not an unrealistic possibility given the situation in the Middle East.

Most of his weapons are long term: He has already opened up more federal leases. Permitting more drilling in the Gulf to recheck concerns about safety and environmental damage did cause a delay in resumption of drilling, but that too is a limited , longer term solution. Drill, baby, drill lost some credibility in 2008 when Americans realized the U.S. has only 2 percent of the world's oil reserves, yet we consume more than 20 percent of the world's oil.

Our dependence on foreign oil is also not in U.S. interests because it has forced us to lick the boots of some bad actors. It is now coming back to haunt us in revolutions and terrorism. Obama is right: In the long term, we just have to kick the oil habit. In the short term, we should take Republican finger-pointing with a grain of salt.

Appointing Katherine Archuleta to be political director of the Obama re-election campaign is a brilliant move

I have had the pleasure of serving with and under her in the Pena administration when he was Mayor of Denver. Katherine later served as chief of staff to three cabinet members in the Clinton and Obama administrations. Not only does she have impressive administrative talent, her greatest skill is in organizing and strategizing political campaigns.   She should be credited with intense voter registration and getting out the Hispanic vote drives that caused Colorado and other southwestern states to change from red to blue in 2008 and which carried over to Democratic Senate wins as well in 2010. Katherine will be helped by the propensity of the GOP in these critical swing states of the southwest to take the hardest line possible on immigration and wasting  any gains in that community Bush had made with his more reasonable approach to comprehensive immigration reforms.
It is easy to see where the Obama campaign is heading by dramatizing the fact that his stimulus saved the US auto industry in the rust belt and by zeroing in on the Hispanic vote in the Southwest. Both areas will be critical swings in the 2012 election. By contrast, the GOP fought the auto bailout and has appeared to be anti Hispanic with unreasonable hard line immigration policies.

Timing, politics, and Mitt Romney

Republicans want voters to forget the mess the Bush administration left for Obama, the seriousness of which was not evident until the first quarter of 2009, but the damage was caused prior years by government policies of deregultion, failure to enforce regulation, and loose credit standards. A little bit of folk wisdom: the deeper the hole,the harder it is to dig out. To ignore the Bush mess is to deny history.  The Romney announcement pins 100% of the blame on Obama and failed to do more than outline goals for the economy which even Democrats approve.  My column appearing on the on line edition of the Sky Hi Daily News today goes into more thoughts on the Romney announcement speech:
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Timing in politics can be a matter of astuteness. Mitt Romney launched his presidential campaign the same day economic reports were released that showed an increase in joblessness and the housing sector's double dip. His single-issue pitch was that Obama had failed the American people on economic issues.

Romney's opening announcement was mostly an attack ad against the Obama administration. He latched on to the negatives and failed to accent any positives. While setting goals for the economy, Romney was MIA on the hows and whats he would do better, only asking voters to trust him because he had a great resume. The time is going to come when his political opponents are going to demand that he presents his business plan for the nation in detail.

President Obama carefully timed his rebuttal by visiting a Chrysler plant in Toledo soon after to visually dramatize how he had created jobs by bailing out the auto industry, claiming that if the Republicans had the majority vote in Congress, the U.S. auto industry and one million jobs would have gone down the drain. Obama was inferring that without the stimulus, the hole we are climbing out of could have been much deeper.

Pundits hyped the economic dip as a probable backslide in the recovery. Time will tell if this is a bump or a downward trend. What will count will not be what the economy was in 2011; it will be what the economy is in 2012.

As the Bible says, there is a time to sow and a time to reap. No one on either side of the aisle disagrees we need to sow intermediate and long-term plans to reduce the deficit, but given the lingering fragile nature of the economy, real fear exists that cold turkey austerity at this time as Republicans want could kill off economic growth, delaying the time for any economic harvest.

Republicans holding any agreement on raising the debt ceiling hostage to their ideologically based plan for cuts beginning now are already causing jitters. This may be an effective legislative strategy, but they have created uncertainty about Congress' ability to resolve this. Their actions do nothing to encourage industry and banks to invest the abundant cash they hold are holding in reserve to expand. If Republicans dare carry out their threat to block raising the debt ceiling, interest rates will rise on everything for which consumers use credit, whacking job creation and business recovery in the knees.

Obama had already enacted cutting payroll tax deductions, reforming some job killing regulations, extending the Bush tax cuts, and offering business investment tax credits. These are all short term measures geared to bolster private sector job creation and they are just taking effect.

He had also proposed a long term plan to reduce the deficit by nearly as much as GOP'S much-panned Ryan plan that would have caused seniors to pay more from their own pockets for health care. Instead of running away from the plan, Republicans have decided to defend it. Polls show it will be a hard sell.

Obama's long term plan includes tax increases of a dollar for every three dollars of cuts, saving Medicare as we know it.  While the GOP stubbornly opposes any tax increases down the line on ideological grounds, all commissions studying the deficit problem have concluded deficit reduction will not work without them. The Republicans will have to buck nonpartisan experts on that issue.

The tasks for the coming year for both the GOP and Democrats are straightforward. Dems should and can make a strong case that GOP's cure for the deficit and the economy is worse than the disease and another formula will work nearly as well without the side effects. The GOP will need to assert with credibility that their past judgment calls that events and results have proved wrongheaded are not an indicator of their future performance. The game clock is running."

Joplin..lessons learned from Katrina

Pres. Obama's walking  through the wreckage in Joplin and in Alabama and his very appropriate and enthusiastically received rhetoric at the memorial services  in Joplin is a  contrast with Pres. Bush's flyover and "good job brownie" detachment from reality on the ground post Katrina, New Orleans' devastating hurricane. Obama has also been tagged with being detached and failing to connect with just plain folks.  He showed another side of him, or at least he demonstrated lessons learned from the Katrina bungling, the  low point of the Bush administration. Obama's promising that his administration would not abandon the rebuilding and recovery of Joplin until the job was done was also a response to past disappointments suffered by New Orleans.  Like the tsunami in Japan, it is taking time for Joplin to count the dead, though the scope of the loss of life is minuscule compared to the tsunami and nuclear meltdown. Unlike both the tsunami and Katrina, federal government response was quick, devoid of political wrangling, accusations and finger pointing.

 I have a very personal reaction to Joplin and it appeared in the online version of the newspaper today.

"I was born and raised in tornado alley so spring was a time of terror for me. The pictures of Joplin, Mo., brought back some familiar pains in the pit of my stomach and memories.

My home town, Muskogee, Okla., is 125 miles south west of Joplin, and Joplin was on the way to grandmother's house in southwestern Missouri. My 1940s childhood memory of Joplin was a pit stop to fill up the gas tank.

When tornado season came I huddled in my bed on the second floor of our wood frame house, waiting for death to come. It never did, but I resolved never to live near tornado land again.

The Wizard of Oz story never had much credibility with me. I never thought I would wake up from a fantastic dream because I knew I would be sucked up and die in a funnel cloud.

Looking back on those times, I probably was realistic. There were no tornado sirens, no Doppler radar, and no storm shelters. The closest cellar was in a neighbor's home nearly a block away. All we were educated to do was to go to the southwest corner of the building. We knew no more than that. We were just sitting ducks waiting to be plucked up. The myth had always been that Muskogee was immune because it sat down in the Arkansas valley. One April day in 1945 the myth was blown away by a tornado that devastated the east side of the town. Two children were killed and my father, a telephone company executive, took me on a tour of the destruction, which only reinforced my terror of spring.

Two years later the Woodward tornado in the southwestern corner of the state killed more than 100 people. I remember the radio reports, newspaper's screaming headlines, and my parents talking about it. It was since that terrible episode that records began to be kept of death and destruction caused by tornadoes in the U.S. Joplin 2011 was the worst.

My life brought me to Colorado 15 years later and for once I breathed a sigh of relief, though springtime at the edge of the Rockies was a brief, windy, late and cold matter. Through the thin, clear and dry air we saw many of the funnel clouds, and some farther out on the eastern plains of Colorado were also devastating. Limon and closer to Denver, Windsor, were names that took on special meanings from destructive tornadoes that ravaged them ... the rest near us were baby sized, compared to Oklahoma's.

I have made a few brief trips to Oklahoma where a funnel cloud is now plotted and followed block by block on local TV thanks to Doppler radar. When a siren warns us, it is to a closet, a bathroom tub immediately. I am the first there, believe me. Bless the storm chasers, the weather broadcasters, the attention given prediction and causes by both the weather service and the universities.

The closest I have ever been to the devastation that tornadoes can cause was the destruction I saw in the wake of a category 5 hurricane accompanied by 26 tornadoes. Even then, only two people died because there was time to evacuate and go to well organized shelters. It was no miracle; it was a matter of time to warn in advance.

Every day I count my blessings that I now live high the mountains where we do not have a spring … just mud and a chill wind, a bit of unpleasantness until a glorious summer arrives. The only fears we have here are forest fires and blizzards. Fires we can deal with and pay our insurance premiums, make our homes defensible, and get out of the way. And blizzards bring our bread and butter for the ski area — snow.

For every one, I suppose, there are preferred rankings of degrees of fear of whatever Mother Nature dishes out. For me nothing equals the terror of those springs in Oklahoma.

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