Yes, of course, presidents have no direct control over gas prices. But the American people know something about this president and his disdain for oil. The “fuel of the past,” he contemptuously calls it. To the American worker who doesn’t commute by government motorcade and is getting fleeced every week at the pump, oil seems very much a fuel of the present — and of the foreseeable future. 
 
 President Obama incessantly claims energy open-mindedness, insisting that his policy is “all of the above.” Except, of course, for drilling: 
 
 ●off the Mid-Atlantic coast (as Virginia, for example, wants); 
 
 ●off the Florida Gulf Coast (instead, the Castro brothers will drill near there); 
 
 ●in the broader Gulf of Mexico (where drilling in 2012 is expected to drop 30 percent below pre-moratorium forecasts); 
 
 ●in the Arctic National Wildlife Refuge (more than half the size of England, the drilling footprint being the size of Dulles International Airport); 
 
 ●on federal lands in the Rockies (where leases are down 70 percent since Obama took office). 
 
 But the event that drove home the extent of Obama’s antipathy to nearby, abundant, available oil was his veto of the Keystone pipeline, after the most extensive environmental vetting of any pipeline in U.S. history. It gave the game away because the case for Keystone is so obvious and overwhelming. Vetoing it gratuitously prolongs our dependence on outside powers, kills thousands of shovel-ready jobs, forfeits a major strategic resource to China, damages relations with our closest ally, and sends billions of oil dollars to Hugo Chavez, Vladimir Putin and already obscenely wealthy sheiks. 
 
 Obama boasts that, on his watch, production is up and imports down. True, but truly deceptive. These increases have occurred in spite of his restrictive policies. They are the result of Clinton- and Bush-era permitting. This has been accompanied by a gold rush of natural gas production resulting from new fracking technology that has nothing at all to do with Obama. 
 
 “The American people aren’t stupid,” Obama said (Feb. 23), mocking “Drill, baby, drill.” The “only solution,” he averred in yet another major energy speech last week, is that “we start using less — that lowers the demand, prices come down.” Yet five paragraphs later he claimed that regardless of “how much oil we produce at home . . . that’s not going to set the price of gas worldwide.” 
 
 So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does. Does Obama read his own speeches? 
 
 Obama says of drilling: “That’s not a plan.” Of course it’s a plan. We import nearly half of our oil, thereby exporting enormous amounts of U.S. wealth. Almost 60 percent of our trade deficit — $332 billion out of $560 billion — is shipped overseas to buy crude. 
 
 Drill here and you stanch the hemorrhage. You keep those dollars within the U.S. economy, repatriating not just wealth but jobs and denying them to foreign unfriendlies. Drilling is the single most important thing we can do to spur growth at home while strengthening our hand abroad. 
 
 Instead, Obama offers what he fancies to be the fuels of the future. You would think that he’d be a tad more modest today about his powers of divination after the Solyndra bankruptcy, the collapse of government-subsidized Ener1 (past makers of the batteries of the future) and GM’s suspension of production — for lack of demand — of another federally dictated confection, the flammable Chevy Volt. 
 
 Deterred? Hardly. Our undaunted seer of the energy future has come up with his own miracle fuel: algae. 
 
 Why, explained Obama, “we can grow it right here in the United States.” (Sounds like a miraculous local find — except that it grows just about everywhere on earth.) Accordingly, yet another $14 million of taxpayer money will be sprinkled on algae research by Steven Chu’s Energy Department. 
 
 This is the very same Dr. Chu who famously said in 2008 that he wanted U.S. gas prices to rise to European levels of $8-$10 a gallon — and who on Tuesday, eight months before Election Day, publicly recanted before Congress, Galileo-style. 
 
 Who do they think they’re fooling? An oil crisis looms, prices are spiking — and our president is extolling algae. After Solyndra, Keystone and promises of seaweed in their gas tanks, Americans sense a president so ideologically antipathetic to fossil fuels — which we possess in staggering abundance — that he is utterly unserious about the real world of oil in which the rest of us live. 
 
 High gasoline prices are a major political problem for Obama. They are not just a pain at the pump, however. They are a constant reminder of three years of a rigid, fatuous, fantasy-driven energy policy that has rendered us scandalously dependent and excessively vulnerable. 
 
 letters@charleskrauthammer.com ||||| To be a modern Republican in good standing, you have to believe — or pretend to believe — in two miracle cures for whatever ails the economy: more tax cuts for the rich and more drilling for oil . And with prices at the pump on the rise, so is the chant of “Drill, baby, drill.” More and more, Republicans are telling us that gasoline would be cheap and jobs plentiful if only we would stop protecting the environment and let energy companies do whatever they want. 
 
 Thus Mitt Romney claims that gasoline prices are high not because of saber-rattling over Iran , but because President Obama won’t allow unrestricted drilling in the Gulf of Mexico and the Arctic National Wildlife Refuge. Meanwhile, Stephen Moore of The Wall Street Journal tells readers that America as a whole could have a jobs boom, just like North Dakota , if only the environmentalists would get out of the way. 
 
 The irony here is that these claims come just as events are confirming what everyone who did the math already knew, namely, that U.S. energy policy has very little effect either on oil prices or on overall U.S. employment. For the truth is that we’re already having a hydrocarbon boom, with U.S. oil and gas production rising and U.S. fuel imports dropping. If there were any truth to drill-here-drill-now, this boom should have yielded substantially lower gasoline prices and lots of new jobs. Predictably, however, it has done neither. 
 
 Why the hydrocarbon boom? It’s all about the fracking. The combination of horizontal drilling with hydraulic fracturing of shale and other low-permeability rocks has opened up large reserves of oil and natural gas to production. As a result, U.S. oil production has risen significantly over the past three years, reversing a decline over decades, while natural gas production has exploded. 
 
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 Given this expansion, it’s hard to claim that excessive regulation has crippled energy production. Indeed, reporting in The Times makes it clear that U.S. policy has been seriously negligent — that the environmental costs of fracking have been underplayed and ignored. But, in a way, that’s the point. The reality is that far from being hobbled by eco-freaks, the energy industry has been given a largely free hand to expand domestic oil and gas production, never mind the environment. 
 
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 Strange to say, however, while natural gas prices have dropped, rising oil production and a sharp fall in import dependence haven’t stopped gasoline prices from rising toward $4 a gallon. Nor has the oil and gas boom given a noticeable boost to an economic recovery that, despite better news lately, has been very disappointing on the jobs front. ||||| The plummeting price of oil is still the biggest energy story in the world. It's bringing back cheap gasoline to the United States while wreaking havoc on oil-producing countries like Russia and Venezuela. 
 
 But why does the price of oil keep falling? Back in June 2014, the price of Brent crude was up around $115 per barrel. As of January 23, 2015, it had fallen by more than half, down to $49 per barrel: 
 
 The short version of the story goes like this: For much of the past decade, oil prices have been high — bouncing around $100 per barrel since 2010 — because of soaring oil consumption in countries like China and conflicts in key oil nations like Iraq. Oil production in conventional fields couldn't keep up with demand, so prices spiked. 
 
 By 2014, oil supply was much higher than demand 
 
 But beneath the surface, many of those dynamics were rapidly shifting. High prices spurred companies in the US and Canada to start drilling for new, hard-to-extract crude in North Dakota's shale formations and Alberta's oil sands. Then, over the last year, demand for oil in places like Europe, Asia, and the US began tapering off, thanks to weakening economies and new efficiency measures. 
 
 By late 2014, world oil supply was on track to rise much higher than actual demand, as the chart below from the International Energy Agency shows. A lot of unused oil was simply being stockpiled away for later. So, in September, prices started falling sharply. 
 
 As prices slid, many observers waited to see whether OPEC, the world's largest oil cartel, would cut back on production to push prices back up. (Many OPEC states, like Saudi Arabia and Iran, need higher prices to balance their budgets.) But at its big meeting last November, OPEC did nothing. Saudi Arabia didn't want to give up market share and refused to cut production — in the hopes that lower prices would help throttle the US shale boom. That was a surprise. So oil went into free-fall. 
 
 The oil price crash is now upending the global economy, with ramifications for every country in the world. Low prices are excellent news for oil consumers in places like Japan or the US, where gasoline is the cheapest it's been in years. But it's a different story for nations reliant on oil sales. Russia's economy is facing a potential meltdown. Venezuela is facing unrest and may default on its debt. Even better-prepared countries like Saudi Arabia could face heavy pressure if oil prices stay low. 
 
 Read on for the longer guide to how we got here — and how countries around the world could be affected by the oil crash: 
 
 Why oil prices plummeted in 2014 
 
 To understand this story, we first have to go back to the mid-2000s. Oil prices were rising sharply because global demand was surging — especially in China — and there simply wasn't enough oil production to keep up. That led to large price spikes, and oil hovered around $100 per barrel between 2011 and 2014. 
 
 Yet as oil prices increased, many energy companies found it profitable to begin extracting oil from difficult-to-drill places. In the United States, companies began using techniques like fracking and horizontal drilling to extract oil from shale formations in North Dakota and Texas. In Canada, companies were heating Alberta's gooey oil sands with steam to extract usable crude. 
 
 This led to a boom in "unconventional" oil production. The US alone has added 4 million extra barrels of crude oil per day to the global market since 2008. (Global crude production is about 75 million barrels per day, so this is significant.) 
 
 Up until very recently, however, that US oil boom had surprisingly little effect on global prices. That's because, at the exact same time, geopolitical conflicts were flaring up in key oil regions. There was a civil war in Libya. Iraq was facing threats from ISIS. The US and EU slapped oil sanctions on Iran and pinched its oil exports. Those conflicts took more than 3 million barrels per day off the market: 
 
 By mid-2014, however, those outages and conflicts were no longer quite as important. Production in the United States and Canada was still rising fast — and the world's supply of oil kept growing. 
 
 Even more significantly, oil demand in Asia and Europe suddenly began weakening — thanks to slowdowns in China and Germany. More broadly, oil demand has been flatlining in lots of places around the world. The United States, once the world's biggest oil consumer, has seen gasoline consumption stagnate as cars became more fuel efficient. At the same time, countries like Indonesia and Iran have been cutting back on subsidies for fuel users. 
 
 That combination of weaker-than-expected demand and steadily rising supply caused oil prices to start dropping from their June peak of $115 per barrel down to around $80 per barrel by mid-November. And that was only the start… 
 
 OPEC's surprising response: Let prices keep falling 
 
 That brings us to OPEC, a collection of oil-producing nations that pumps out about 40 percent of the world's oil. In the past, this cartel has sometimes tried to influence the price of oil by coordinating either to cut back or boost production. 
 
 At its big meeting in Vienna on November 27, there was a lot of heated debate among OPEC members about how best to respond to the drop in oil prices. Some countries, like Venezuela and Iran, wanted the cartel (mainly Saudi Arabia) to cut back on production in order to prop up the price. These countries need high prices in order to "break even" on their budgets and pay for all the government spending they've racked up: 
 
 On the other side of the debate was Saudi Arabia, the world's second-largest crude oil producer, which was opposed to cutting production and seemed willing to let prices keep dropping. 
 
 Why was that? For one, officials in Saudi Arabia remember what happened in the 1980s, when prices fell and the country tried to cut back on production to prop them up. The result was that prices kept declining anyway and Saudi Arabia simply lost market share. What's more, the Saudis have signaled that they can live with lower prices in the short term. (The government has built up $750 billion in foreign-exchange reserves to finance deficits.) 
 
 SAUDI ARABIA WAS IN FAVOR OF LETTING PRICES CONTINUE TO FALL 
 
 In the end, OPEC couldn't quite agree on a response and ended up keeping production unchanged. "We will produce 30 million barrels a day for the next 6 months, and we will watch to see how the market behaves," said OPEC Secretary-General Abdalla El-Badri after the meeting. 
 
 That caused the price of oil to start crashing even further. The price of Brent crude went from $80 per barrel to $70 per barrel in just a few days. And it kept tumbling to down below $60 per barrel by mid-December and $50 by January. 
 
 For all intents and purposes, OPEC is now engaged in a "price war" with the US. What that means is that it's relatively cheap to pump oil out of places like Saudi Arabia and Kuwait. But it's more expensive to extract oil from shale formations in places like Texas and North Dakota. So as the price of oil keeps falling, some US producers may become unprofitable and go out of business. And the price of oil will stabilize. At least that's what OPEC members hope. 
 
 A big question: Will low oil prices kill the US shale boom? 
 
 By January 2015, it was clear that low prices were starting to pinch producers in the United States and Canada. The only real question is how much it would hurt. 
 
 Analysts often focus on a metric called the "breakeven price" for oil-drilling projects — the price of oil necessary for a project to produce reasonable returns. ScotiaBank has estimated breakeven prices for various shale and oil sands projects across North America: 
 
 US shale projects are especially vulnerable when oil dips below $60 per barrel. Fracking wells tend to deplete quickly — with output falling about 65 percent after the first year — so new wells have to be drilled constantly. So, when the price falls, many companies can respond quickly by scaling back on new drilling. Already, firms are pulling out of places like Texas' Permian Basin, and the number of US rigs has fallen 15 percent from December to January. 
 
 But not everyone is leaving all at once: Some companies have sunk costs and need to keep drilling. Others may try to cut their costs and grit it out. It really varies from company to company. What's more, the situation is different up in Canada: oil sands projects have huge upfront costs, but once those are paid off, they can keep producing oil cheaply for many decades. 
 
 That all makes it hard to predict how this all shakes out — or where global oil prices will bottom out. The US Energy Information Administration still expects that overall US oil production will grow another 700,000 barrels per day in 2015 — though that's slightly lower than the prediction when prices were high. We're about to see if that's right. 
 
 How falling oil prices could affect Russia, Iran, and the US 
 
 The plunge in oil prices is having significant economic consequences around the world. A few examples: 
 
 Russia: Russia's situation is getting the most attention these days. The country's is hugely dependent on oil and gas production — with oil revenues making up 45 percent of the government budget — and the sharp fall on prices has been ruinous. 
 
 Russia's economy is expected to shrink 4.5% next year if oil stays at $60 per barrel 
 
 Economists now estimate that Russia's GDP will shrink at least 4.5 percent in 2015 if oil says below $60 per barrel. The plunging price of oil has also caused the ruble's value to collapse — which is leading to panic inside Russia and a rise in inflation, as imports become drastically more expensive. Many Russians, worried that their savings may vanish, have been rushing out to buy cars and washing machines — anything that has more lasting value than currency. 
 
 So far, Russia's central bank has been struggling to deal with this crisis. On December 15, 2014, the country suddenly hiked interest rates from 10.5 percent to 17 percent in an attempt to stop people from selling off rubles. But those rate hikes are likely to slow the country's economy down even further. 
 
 Iran: Iran's economy had recently started to rebound after years of recession. The International Monetary Fund had been projecting that the country was on track to grow 2.3 percent next year. But that was all before oil prices started to plunge — a potentially precarious situation for the country. 
 
 One big problem for Iran is that it also needs oil prices well north of $100 per barrel to balance its budget, especially since Western sanctions have made it much harder to export crude. If oil prices keep falling, the Iranian government may need to make up revenues elsewhere — say, by paring back domestic fuel subsidies (always an unpopular move, at least in the short term). 
 
 Venezuela: There's growing concern that the oil crash could cause Venezuela, another major oil producer, to default. The nation's economy — heavily dependent on oil revenue — is set to shrink some 3 percent this year and inflation is rampant. 
 
 Saudi Arabia: There's no question that Saudi Arabia, the world's second-largest crude producer (after Russia), will suffer financially from cheap oil. If oil stays at around $60 per barrel next year, the government will run a deficit equal to 14 percent of GDP. 
 
 For now, however, the Saudis are toughing this out — and show no sign of trying to prop up prices as they have in the past. The kingdom has built up a stockpile of foreign currency worth some $750 billion, which it will use to finance its deficits. In December, the country's oil minister, Ali al-Naimi, said he didn't care if prices crashed to $20 or $40 per barrel, he wasn't going to budge from his position. "It is not in the interest of OPEC producers to cut their production, whatever the price is," he said. 
 
 That said, if low oil prices persist, Saudi Arabia may have to cut back on some of the social programs it had instituted after the Arab Spring. And Naimi's strategy of maintaining oil output is controversial within the kingdom. (In January 2015, Saudi King Abdullah died, but his successor Salman said he would maintain the current oil policy.) 
 
 The United States: In the US, meanwhile, a fall in crude prices will have both positive and negative impacts. For many people, it will offer an excellent economic boost: cheaper oil means lower gasoline prices — which have fallen to $2.04 per gallon, the lowest since 2009: 
 
 The EIA projects that US drivers will spend about $550 less on gasoline in 2015 than they did in 2014, assuming prices stay low. That will give consumers more money to spend on other things. 
 
 But it's not all good news. Oil-producing states like Texas and North Dakota are likely to see a drop in revenues and economic activity. The falling price of oil is also putting severe pressure on Alaska's state budget. All told, oil prices are likely to be good for 42 states (in green) and bad for the other 8 (in red): 
 
 If the price drop lasts a long time, that could also spur people to start using more oil. Case in point: In recent years, high gasoline prices have spurred many Americans to buy smaller, more efficient cars. But if gasoline prices fall, bigger cars and SUVs could make a comeback. (That said, overall US fuel economy will still keep rising over time — because the federal government has imposed new standards on cars and light trucks through 2025. But this might now happen more slowly.) 
 
 For more on the impacts on oil use, see: "Driving in the US has been declining for years. Will cheap gas change that?" 
 
 Will global oil prices stay low? 
 
 This is very hard to predict. If oil demand remains weak and production stays high, prices might not bounce back for some time. 
 
 But the world is full of potential surprises. Conflict could break out again in Libya or Iraq, which would hamper oil production. China's economy could come roaring back. Europe could suddenly rebound out of its malaise. Saudi Arabia could decide that enough is enough and cut back on production all of the sudden. Any of those things could increase prices. 
 
 Some experts think we should prepare for the inevitable price rise 
 
 So far, we haven't seen any of those shocks. In fact, all the surprises have gone the other way — in January, both Iraq and Russia announced that they were exporting more oil than ever, and prices slumped even further. 
 
 If history is any indication, oil prices will eventually rise again, though it could take some time. And some experts think we should be preparing for that day. In the Financial Times, energy expert Michael Levi wrote a piece on how the US (and other countries) could take advantage of low oil prices to make needed energy-policy reforms — such as ending wasteful fossil-fuel subsidies or putting in place new efficiency measures. That would help countries insulate against future price shocks. 
 
 But that's hardly guaranteed to happen: Many policymakers might just decide low oil prices are here to stay and use it as an excuse to cut back on efficiency measures or energy alternatives. 
 
 Update: This piece has been brought up-to-date and expanded since it was first published. The last update was on January 23. 
 
 Further reading 
 
 -- What the huge drop in gasoline prices means for America 
 
 -- Driving in the US has been declining for years. Will cheap gas change that? 
 
 -- How far do oil prices have to fall to throttle the US shale boom? 
 
 -- A look at North Dakota's efforts to prepare for an oil price bust 
 
 -- Right now is a perfect time to raise the gas tax 
 
 -- What Saudi King Abdullah's death could mean for oil prices
– The US president may not directly control gas prices, but Barack Obama's "disdain" for oil is still hurting Americans terribly, writes Charles Krauthammer in the Washington Post. Restricting drilling, vetoing the Keystone pipeline, and similar anti-oil moves are killing thousands of local jobs, hurting relations with Canada, and sending billions of dollars to Venezuela, Russia, and Saudi Arabia. Trying to develop alternative fuels of the future is a waste of time and resources. "Drilling is the single most important thing we can do to spur growth at home while strengthening our hand abroad," writes Krauthammer. High gas prices are "a constant reminder of three years of a rigid, fatuous, fantasy-driven energy policy that has rendered us scandalously dependent and excessively vulnerable."  But calls for more drilling are just "intellectual bankruptcy," argues Paul Krugman in the New York Times. America is already in a "hydrocarbon boom," with oil and natural gas production on the rise, but that has not stopped oil prices from soaring. That's because increasing demand from developing countries and Mideast war worries "easily outweigh any downward pressure on prices from rising US production." The hydrocarbon boom has also had little effect on jobs—the 70,000 jobs gained since the middle of the last decade represent just .05% of total US employment. So why the GOP focus on fossil fuels? One, the oil and gas lobby. And, two, conservatives have no other ideas. "And intellectual bankruptcy, I’m sorry to say, is a problem that no amount of drilling and fracking can solve."