President Obama Seems To Fail Economics 101

We are just back from Berlin, where we went for the 25th anniversary of the fall of the Wall.  It was absolutely fantastic, but more about that, and what that event and the results that followed after it, mean for the world today, later.

Today, I need to comment on something I saw in today’s paper.  I generally try not to get carried away in these posts (I realize some people may disagree with that), but what I read today was so mind-bogglingly (assuming that is a word) dumb, that it is hard not to go overboard.

Actually, “dumb” is probably the wrong word.  It is not “dumb,” as much as lack of knowledge.  In this case, it is economics, and the following statement about the Keystone XL pipeline is amazing in its lack of knowledge about economics and in its economic illiteracy:

“Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else.  It doesn’t have an impact on U.S. gas prices.”

It was, of course, President Obama who said this.  I don’t know if he was tired or misspoke or what.  Obviously, it is just wrong.  There is a worldwide market for energy.  More oil or gas in one place will mean lower prices everywhere, at least everywhere there is a free market.

This is why our fracking is so important.  The gas and oil that comes from our fracking not only lowers our prices (which is good for us, especially for poorer people, who have to spend more of their money on energy-related things than richer people do), but it also lowers the prices Russia gets for its oil.  Which means Vladimir Putin has less money for his aggression abroad (like in Ukraine) and repression at home.

I would have thought that President Obama understood this.  It’s basic economics.  But after reading his comment of yesterday, I am beginning to wonder – and to worry.