Mike Needham

Last week, President Obama played tough, scolding Congress as he tried to pivot the national political narrative to job creation. The President’s pivot, which he’s tried numerous times before, includes a host of excuses like “headwinds” and “uncertainty” but little in the way of real solutions.

A recent uptick in gasoline prices, gone largely unnoticed by the Washington crowd that was focused on raising America’s debt ceiling, will make job creation even more difficult. Since bottoming out toward the end of June, gas prices have been slowly rising. Last week, the average price for a gallon of regular stood at $3.71, up more than 13 cents since President Obama belittled Congress into cancelling their Fourth of July recess.

Consumer Pain

Consumer spending is a major driver of the American economy, and consumer confidence is a key economic indicator. As energy costs – specifically gasoline – increase, Americans have less money for goods, services and recreational activities like vacations. For every one-cent increase in a gallon of gasoline, Americans’ disposable income drops by about $600 million per year.

Last week, the government reported that Americans cut back on their spending for the first time in nearly two years. After a decade of personal borrowing spurred by a housing bubble, spending less and saving more is not necessarily a bad thing. However, declines in consumer spending and consumer confidence as an economic indicator paints an ominous picture.

Of course, rising gas prices – up nearly $1 per gallon from this time last year – are not solely responsible for the bleak economic outlook held by consumers. Bad manufacturing numbers, high unemployment and weak housing prices all contribute. However, gas prices remain one of the most visible and comprehensible reminders for Americans that our economy is in serious trouble. It is something that Washington could take action to correct.

Here to Help?

Of course, President Obama’s mantra is Washington is here to help. All too often (always?), his solutions favor government intervention over economic competition.

In late June, President Obama misguidedly released 30 million barrels of oil from our Strategic Petroleum Reserve (SPR). At the time, Americans were paying around $3.61 for a gallon of gas. In other words, the gimmick failed.

Then in the midst of the debt talks, President Obama announced a new set of fuel economy standards: passenger-car fuel economy to 54.5 miles per gallon by 2025. A study from the Michigan-based consulting firm Defour Group found a 56 mpg standard would destroy 220,000 jobs and numerous studies suggest the regulations will add over $3,000 to the price of each new vehicle. And this week President Obama will announce new standards for heavy-duty trucks.

If all else fails, the administration has a third avenue: subsidies. A host of benefits already exists for hybrids and electric cars. Last month, General Motors sold a whopping 125 Chevrolet Volts. Highly acclaimed and subsidized, but not selling. Nonetheless, the Obama administration and a bipartisan group in Congress is seeking similar subsidies for natural gas vehicles. Try, try, try again…

The Real Problem (and Solution)

At almost every turn, the Obama administration has made job creation, economic growth and domestic energy production more difficult. Just take oil and natural gas production in the Gulf of Mexico. Leasing activity is down, capital spending has dropped and jobs have been lost as a result of the administration’s de facto moratorium and slow walking.

An analysis by Quest Offshore Resources found that amazing growth would occur if the pace of offshore permitting were to return to early 2010 levels: 190,000 jobs created by 2013, capital expenditures would increase by 140% and spending by the offshore oil and natural gas industry would increase by 70%.

Rather than blocking and discouraging domestic production, which leads to domestic job creation, the administration should be encouraging it. President Obama and Congress should increase onshore and offshore access, as well as access to oil shale reserves. The permitting process needs to get moving, the review process sped up and the regulatory and legal delays must be dealt with.

A Harsh Reality

Instead of rhetorical, focus group-tested pivots, the President would be wise to pivot toward increasing American energy production, which would create jobs and help offset the rise in gas prices. Unfortunately, we cannot expect real, pro-growth policies from this administration or the Democrats who control the U.S. Senate.


Mike Needham

Mike Needham is the Chief Executive Officer of Heritage Action for America, a grassroots advocacy organization dedicated to advancing legislation that promotes freedom, opportunity and prosperity for all Americans.