By Jeffrey Folks
In a version of "hit 'em while they're down,' the Obama administration has unleashed a slew of new regulations targeting U.S. oil and gas production. These include costly methane emission rules on all new and existing wells, reversals of promised offshore acreage leasing, a de facto freeze of leasing on federal lands, and burdensome EPA restrictions of fracking. Then there is Obama's recent budget proposal of a $10-per-barrel surtax on top of the high taxes and royalties already paid by oil companies. Just as low oil prices are driving hundreds of oil companies out of business, Obama is piling on in an apparent effort to drive even more into bankruptcy.
Restrictions on drilling don't hurt consumers so much when the world is awash in oil, as it has been since 2014. The problem is that prices don't remain low for long. Low prices result in reduced investment, which results in less production. And less production results in higher prices. As every economist knows, commodities are cyclical businesses. A wise national energy policy would anticipate volatility by promoting lower production costs in both good times and bad, thereby reducing future price shocks. Obama's energy policy has pursued the opposite path.......
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