Looming Career Change Forces Obama To Consider Reality?

Supply side economics? Maybe high gasoline prices aren't so good for America after all. Certainly, high prices are not good for Obama's re-election prospects.

It is said there are no atheists in foxholes. In that context, the recent rise in oil prices seems to have turned the Obama administration into true believers (at least rhetorically) when it comes to the best method to keep gas prices down and the American economy growing.

With oil costing more than $100 a barrel, the White House announced last week that it was going to increase oil supply by withdrawing 30 million barrels from our Strategic Petroleum Reserve and putting that oil into the world market.

As Treasury Secretary Timothy F. Geithner usefully explained last week, “[C]ostlier energy and less vigorous worldwide growth would keep U.S. economic growth to around a 2 percent annual rate in the first half this year. These reserves exist to help mitigate those kinds of disruption.” Putting additional oil supplies on the market, he said, was a “sensible policy” that should give a lift to a slowly expanding economy.

This has not been the analysis the Obama administration, until now, has brought to the issue. Over the past few years, the administration has argued that gas is too cheap. The president’s energy secretary, Steven Chu, has said, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” When gas went up to $4 a gallon, the president was asked on CNBC whether $4-a-gallon gas prices were good for the American economy. He replied: “I think that I would have preferred a gradual adjustment.” In other words, he wants the price of gasoline in America to go higher, but he would prefer that it go up gradually (presumably so that the new grim reality could sneak up on the public slowly and with little attention paid to the steady increase.) One has to commend the president for that remarkably frank statement.