Lies, Damn Lies, and Obama’s Energy Statistics

American writer Darrell Huff intended his bestselling 1954 book to serve as a “primer in ways to use statistics to deceive.” He justified its purpose, explaining “the crooks already know these tricks; honest men must learn them in self-defense.”

Nearly 60 years later, the term “crooks” could well be interchangeable with“politicians.” And the most recent examples of our leaders substituting stats for spin stems from the national energy debate.

Available Resources: In a speech today, President Obama doubled down on the faulty claim that “we’ve got 2 percent of the world oil reserves; we use 20 percent.”However, Investor’s Business Daily writer John Merline demonstrates that the U.S. has 60 times more oil than the White House claims.

Recent Production: With a straight face, the President said that under his administration oil production was at an 8 year high and that the number of working oil rigs had increased 34%.  This clearly a case of “semi-attached figures” and spurious correlation.

The increase in drilling and production on federal lands is the result of leasing that took place before Mr. Obama became president.  The biggest upsurge in production is from the use of “fracking” on private lands.  During his three years as President, he has said no to offshore drilling, he has said no to drilling in the eastern Gulf of Mexico, he has said no to Keystone XL, and he has said no to drilling in Alaska’s coastal plain.

Oil “Subsidies”: President Obama also continues to refer to standard tax provisions used by the oil sector as “outrageous” and “inexcusable” and is pushing Sen. Reid to call for a vote to repeal them. Yet, a Wall Street Journal editorial this week showed that the only thing outrageous is the administration’s erroneous claims:

All told, the government rakes in $86 million from oil and gas every day—far more than from any other business.

As for the “subsidies” that Mr. Obama says the oil industry receives, these aren’t direct cash handouts like those that go to the green lobby. They’re deductions from taxes that cover the cost of doing business and earning income to tax in the first place. Most of them are available to other manufacturers.

What Mr. Obama really means is that he wants to put the risky and capital-intensive process of finding, extracting and producing oil and gas at a competitive disadvantage against other businesses. He does so because he ultimately wants to make them more expensive than his favorites in the wind, solar and ethanol industries.

If the President had allowed energy realities to guide him over the past three years instead of his green ideology, the supply of North American crude would be much higher today. That would have put downward pressure on crude prices. If OPEC’s response was to reduce production to maintain high prices, at least our energy security would be greater. More than likely, OPEC would have acted to lower the price of crude as a way to make some domestic production uneconomic.

In addition to the failure to take actions to increase oil production, EPA has been on a regulatory tear which imposes higher costs on refiners. Those costs ultimately get passed through to the consumer and may be one of the reasons for recent refinery closures. Now EPA is considering another gasoline regulation that will further drive up the cost of gasoline.

Not only do actions have consequences but inaction has them too. We are now seeing the consequences of inaction and the philosophy espoused by Energy Secretary Chu that we need gasoline prices like Europe.

The President’s attempts to blame oil companies, foreign producers, or anyone but himself are a reflection of the political adage made famous by the late Senator Everett Dirksen: “When I feel the heat, I see the light.” The President is feeling plenty of heat, so maybe he sees the light, at least until the second Tuesday in November.

This article appeared in the Fuel Fix weblog athttp://fuelfix.com/blog/2012/03/15/lies-damn-lies-and-obama-energy-oil-statistics/

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