Outside View: Soon in your neighborhood, $8 a gallon gas!

COLLEGE PARK, Md., April 3 (UPI) -- Campaigning for office, U.S. President Barack Obama promised to do something about high gasoline prices but now he is denying he can do much about what Americans pay to drive. He is too modest!

In September 2008, Steven Chu said to The Wall Street Journal, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe," and Obama picked him for secretary of energy.

When Obama was inaugurated, gas was selling for $1.90 a gallon and it is now nearly $4. Not quite European levels but doubling gas prices is a good start.

Obama says he needs four more years to change America -- if he is re-elected can we look forward to $8 a gallon?

Don't laugh. Obama and Chu are good at the economically imprudent.

Chu and Obama share some rather radical notions that the nation has over-invested in oil and under-invested in solar, wind and other alternative energy sources.

The president has continued bans on drilling in the eastern half of the Gulf of Mexico, offshore on the Pacific and Atlantic coasts and the richest fields in Alaska and he has thrown onerous regulatory barriers to drilling where it is still legal.

Yet Obama boasts U.S. oil production is up.

With crude oil prices doubling since 2005, domestic oil production has increased a paltry 12 percent and stands at 5.8 million barrels a day. John Hofmeister, former chairman of Shell Oil, estimates opening U.S. proven reserves could raise U.S. oil production to 10 million barrels a day while still adhering to prudent environmental safeguards.

U.S. oil prices don't move in lock step with international prices because refineries are built to handle the special characteristics of the oil produced by their primary sources of supply. Hence, oil sells for less in the United States than, for example, in Europe and increasing U.S. production would lower refineries acquisition costs and gasoline prices.

Whatever Americans pay for gasoline, increasing domestic production to 10 million barrels a day would cut combined crude oil and gasoline imports in half -- saving at least $150 billion a year. That money would be spent in the United States on cement, steel, engineering services and the like, and boost gross domestic product by $250 billion, create about 2.5 million jobs and lower unemployment to less than 7 percent.

Instead, the president says he needs to raise taxes on oil companies so he can increase investments in solar and wind power -- the basic supposition is the private sector, which already benefits from numerous tax breaks to develop and sell alternative technologies, hasn't exploited all commercially sound opportunities.

Yet, given billions to invest directly, the best Chu could do was plow money into Solyndra and about a dozen other projects independent Wall Street investment analysts advised would be "C" rated if offered in the bond market.

"C" is rating assigned to companies with a 70 percent chance of default.

Thanks to generous tax breaks, the private sector has already over-invested in solar, wind and other alternative energy resources, while it is barred from adequately investing in oil production -- even with tax breaks to big oil Obama loves to rail against.

As importantly, the recent problems of the Volt and Leaf indicate the difficulties of switching to wholly electric cars. More efficient internal combustion engines, like those being rolled out by Ford and Mazda, and hybrids, which also use gas but just more efficiently, are where drivers will be for a long time.

For the present, the choices are: Do Americans produce oil at home, where environmental risks can be effectively managed or do they import oil from developing countries, where those risks may not be so effectively contained?

By choosing to keep and manage the risks at home, Americans can fire up growth and get unemployment closer to acceptable levels.

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(Peter Morici is an economist and professor of business at the University of Maryland and a national columnist.

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(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)