Imagine two parallel universes in which the drama of
fluctuating oil prices is in full swing. The first Universe is called real, the
second Fanciful. While all the events begin to take place in the Real Universe,
a message about them passes almost instantaneously to the Fanciful Universe.
Unfortunately, however, it happens that the messages get distorted on the way
there with the consequence that when they are duplicated in the Fanciful
Universe, they play out a totally different drama.
If this were to be used as a metaphor to shed light on the
drama of fluctuating oil prices, what is playing out in our Real Universe would
represent what happens on the ground in a planet called Earth. As to what plays
out in the Fanciful Universe, it would represent what goes on inside the
cranium of souls that cannot capture a message without distorting it so
severely as to tell a different story. One such soul is Victor Davis Hanson who
wrote: “The Ironies of Oil,” an article that also came under the subtitle:
“Obama once ridiculed cheap energy, which is now saving him from himself.” It
was published on January 1, 2015 in National Review Online.
In the Real Universe, the big multinational oil companies
and the nations that control their own vast reserves (OPEC), try to cooperate
so as to maintain a system that is beneficial to both. It happens at times,
however, that the two sides do not see eye to eye, and a “price war” erupts
between them resulting in the weaker party being forced to play by the rules of
the winner. In this drama, the government of the “free market” nations where
the multinationals are usually based, have near-zero influence on what
transpires. This includes the government of the United States of America.
Thus, President Barack Obama could have done nothing to
spark the current price war between OPEC and the American producers of shale
oil and gas. And he can do nothing now to end that war if he so wished. It is
the result of thousands of individuals making decisions to further their own
interests, and the interests of the institutions for which they work.
Disregarding that reality, Victor Hanson picks the elements
that suit him from the unfolding drama, and combines them with the elements
which are usually referred to as the “talking points” of the ideology he
represents. He then puts together a new drama to run in a parallel Fanciful
Universe while pretending to duplicate what happens in the Real Universe.
While being as entertaining if not more entertaining than
the original drama, Hanson's creation not only fails to educate the public as
to the economics of oil, natural gas and energy in general, it adds confusion
to the little that the public knows, yet badly needs to make an informed
decision when the time comes to vote for the candidate that may or may not have
a suitable economic plan.
Instead of talking about a phenomenon in economics known as
charging for a cheaply obtained commodity an elevated price that reflects the
cost of its replacement, he talks about petro-chicken and desperate sheiks. He
then blames Obama for the high price of oil that prevailed before the onset of
the price-war without mentioning that the prevailing cost at the time reflected
that of its replacement. And he certainly fails to warn that the price will
rise again when the war ends regardless as to who wins it.
Victor Hanson ends the article by rattling off the
obligatory spin, which is to say that the economic success America is enjoying
at this time is due not to the policies that were adopted by President Obama,
but to the fact that a “desperate sheik” sitting in the Arabian Desert decided
to play the game of petro-chicken.
Our author then makes the mistake of comparing the effect of
the price war on everyone that matters without realizing that to do so exposes
America as a future loser when the price of oil will have risen to its old
level, and the likes of Iran, Russia and Venezuela will be seeing the good
times roll again for them.