Bush’s order was, of course, immediately dismissed by the “experts.” Reuters waved away the action as “a largely symbolic move unlikely to have any short-term impact on high gasoline costs.” Barack Obama’s campaign lectured that if “offshore drilling would provide short-term relief at the pump or a long-term strategy for energy independence, it would be worthy of our consideration, regardless of the risks. But most experts, even within the Bush administration, concede it would do neither.”
The movement left was even more dismissive. ClimateProgress.org blasted The Washington Post for failing to headline their story about the order “Offshore Drilling Raises Oil Prices.” In response to Bush’s assertion that additional offshore extraction could equal current U.S. production in 10 years, they editorialized: “Yes, and monkeys could fly out of my butt” (emphasis in original).
There was just one problem: reality. Even though, as critics were eager to point out, any additional American drilling was years in the future, oil prices immediately went into free-fall. By Friday, July 18, the price of a barrel of crude had dropped to $128.94, a 12% decrease. A month later, on August 14, the price had fallen to $115.05. In spectacular fashion, Bush’s academic and media critics were proven seriously wrong.
For commodities traders who’d been pricing oil based on a supposition of scarcity, the potential for millions of additional barrels on the market hit like a thunderbolt. The simple act of putting America’s resources on the table popped the oil bubble, and a stunning price drop followed in short order. By election day, November 4, the price of a barrel of crude had plummeted to $70.84 — a 51% decrease in less than five months.
But wait. I can already hear the cries of, “Uh uh! The price dropped because demand fell off! Haven’tcha ever heard of the Great Recession?”
Problem is, all of that happened months prior to the collapse of Lehman Brothers and the beginning of the financial crisis on September 15, 2008 (price of crude: $95.52). Oil prices actually spiked at the outset of the economic mess, peaking at just over $100/barrel on September 30 before falling again. They reached a bottom price of $30.28 on December 23, a jaw-dropping 80% off the July peak, less than a month before Barack Obama took office.
Speaking of which: Obama had been president-elect for all of five days when he announced his intention to rescind Bush’s order. Oil prices started going up again in January of 2009 and steadily increasing ever since. Obama Energy Secretary Ken Salazar announced a highly restrictive offshore leasing policy last December, and the Bush executive order was officially reversed on February 8, 2011.
The price of crude that day was $85.85. By April 19, it had risen to $107.18, with no end in sight.
Update: On his PJ Xpress blog, Ed Driscoll adds “CNN Neuters Obama” and a president’s impact on oil prices.