[Vision2020] Obama Sets Gas Prices? Just Another G.O.P. Myth

[Art Deco]

March 17, 2012*
Obama Sets Gas Prices? Just Another G.O.P. Myth*
By ROBERT B. SEMPLE Jr.

Jeff Bingaman, chairman of the Senate energy committee, complained the
other day of “widespread misunderstanding” about rising oil prices. He was
being senatorially polite.

The issue of gas prices has not only been misunderstood but thoroughly
distorted by relentless ideological spin from industry and its political
allies, mainly Republican. Hardly a day goes by that some industry
cheerleader somewhere — be it Gov. Bobby Jindal of Louisiana or Senator
James Inhofe of Oklahoma — does not flay President Obama for driving up oil
prices by denying the industry access to oil and gas deposits and imposing
ruinous environmental rules. Senator John Barrasso, a Wyoming Republican,
said last week that Mr. Obama should be held “fully responsible for what
the American public is paying for gasoline.”

If only the president had the power to give us $2.50-a-gallon gasoline, as
Newt Gingrich promised to do if he got to the White House. It is ridiculous
to think that a president can.

One can sympathize with consumers feeling the pain of higher gas prices.
But the fundamental truth is that those prices are tied to the price of
oil, set by world markets. There are peaks and valleys, but their causes —
a worldwide recession, an embargo or conflict in the Middle East — are
beyond the control of any one country. As the chart below shows, gasoline
prices rise and fall in the same pattern throughout the world. Americans
historically pay much less at the pump because they pay lower taxes; when
the price of a gallon spikes at $3.70 in the United States, it is closer to
$8 in, say, Germany.

Because oil is a global commodity, increasing domestic production will do
very little to bring down retail prices, although it does help narrow the
trade deficit as America spends less on imports. On this score, America is
doing much better than the Republicans will admit. In 2005, oil imports
accounted for nearly 60 percent of America’s daily consumption. In 2010,
for the first time in recent memory, imports were less than half of
consumption, and last year, imports were only 45 percent — 8.6 million
barrels a day of the 19 million consumed. There are two reasons for this
welcome shift: production is up and oil consumption is down. Production of
crude oil and other liquid fuels, onshore and offshore, reached about 10.3
million barrels daily in 2011, its highest level since the late 1980s.

Some of the biggest discoveries have occurred on private land in deep shale
formations in Texas and North Dakota, and production on federal land is
beginning to boom, too. The real issue, which industry’s allies never
mention, is whether the oil companies are fully exploiting the federal
resources they already control. Mr. Bingaman notes that 7,000 approved
onshore drilling permits have been sitting unused by the companies that own
them, and that millions of acres under lease in the gulf remain unexplored.

The most encouraging news is on the consumption side. Americans are getting
more miles to the gallon, which means there’s that much less carbon dioxide
going into the atmosphere. We used 20.8 million barrels a day in 2005, the
highest level in history. That dropped to just under 19 million barrels
last year, and, according to the federal Energy Information Administration,
is likely to stay there awhile. The recession has had a lot to do with the
decline, but so has fuel efficiency. Ten years ago, cars and light trucks
(including S.U.V.’s) averaged 24.7 miles a gallon. In 2011, the figure rose
to 29.6 miles a gallon as consumers chose more efficient cars. Two landmark
agreements between the administration and the automakers — aimed at
improving efficiency and reducing greenhouse gases — could raise it to 55
miles per gallon by 2025.

Despite this progress, ending dependence on foreign oil seems as remote as
when President Richard Nixon proposed it. With developing countries like
China and India demanding more petroleum, prices are likely to stay high.
That’s reality — no matter what the Republican spinners say. Only a rounded
policy mix of greater fuel efficiency, steady production and the aggressive
development of alternative fuels can protect American consumers against
what could be even greater price shocks in the years ahead.



-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/vision2020/attachments/20120318/b7c09bb2/attachment.html>