Strategize This!

Embedded into our notion of what “character” means is the concept of consistency. When we talk about a person’s character, to some extent we mean predictability. Your character shapes your response to a changing situation. By knowing someone’s character, we can have confidence in how that individual will react to circumstances. If we speak of someone as brave, we would be surprised if they ran from danger. If we speak of someone as cowardly, the surprise would be if that person stood up to danger.

I bring this up because the Obama administration is behaving out of character with regard to the recent rise in gas prices. The President has made statements indicating that he is considering opening up the Strategic Petroleum Reserve and selling oil to bring down gasoline prices.

These comments make me think that the administration is having a hard time with the concept of a “strategic” reserve. Strategy implies a long term orientation. In the case of the Strategic Petroleum Reserve, it was established to ensure a US based source of oil in the event of a major supply disruption, like the OPEC oil embargo.

There is no evidence of any supply interruption occurring in today’s situation. There are no shortages of gasoline being reported. Instead, smoothly working market mechanisms have driven up oil pricing in response to the Federal government printing money (the Fed’s quantitative easing II), and geopolitical instability, particularly the civil war in Libya.

I like low gas prices as much as the next guy. But when gas prices go up, I tend to try and find ways to drive less. When pump prices cracked past $3.25 per gallon, we cancelled that tractor pull set up for next week. This is normal market behavior. When the price of a commodity increases, buyers begin to use less of that commodity. Long Sunday drives: bad; long Sunday crossword puzzles: good.

The reason I find the Obama administration’s reaction to high gas prices inconsistent is because they want us to use less gasoline. Internal combustion engines are a major source of greenhouse gas emissions. If you’re opposed to the prospect of global warming, you should celebrate increases in gas prices. Every nickel rise in gasoline prices moves another thousand hybrid vehicles off showroom floors. Pumping oil out of the Reserve to lower gas prices works directly against that situation. So you can see why it appears out of character for this administration.

Unless the true character of the administration is to pander to the voters in every possible way. The President’s statements are perfectly in character with that end.