Memo To Bush: ‘Magic Wand’ Not Needed To Deal With Gas Prices
Memo To Bush: ‘Magic Wand’ Not Needed To Deal With Gas Prices
President Bush said Tuesday that he has no “magic wand” to affect gas prices. In reality, gas price is “all about government policy.” As the United States has some of the lowest gas taxes in the world, the price at the pump is dominated by the cost of oil:
Energy Information Administration
The rise in the price of oil in recent years involves four components:
— The effects of supply and demand. Exxon Mobil senior vice president Stephen Simon testified the supply-demand equilibrium is at “somewhere around $50-55 a barrel” — about half the current price.
– The weaker dollar. Since 2001, “the dollar has lost 45% of its value” against the euro. In 2003 one gallon of gas in the U.S. cost $1.50 and 1.50 Euro. Today’s $3.60 gallon of gas costs only 2.25 Euro.
– Geopolitical risk. Since 2003, the United States has been committed to a three-trillion-dollar war in Iraq, the heart of the turbulent oil-producing world. Furthermore, the burning of oil is continuing to increase global warming, “one of the greatest national security challenges ever faced.”
– Speculation. “Investors have looked to commodities
not only as a hedge against inflation but as a hedge against the tumbling greenback.
In recent years, the United States has gotten locked into a vicious circle in which the latter factors worsen each other. Suspending the federal gas tax would exacerbate the problem — in the words of Thomas Friedman, “we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.”
Immediate action to deal with rising gas prices should deal with the root problems, not worsen them. Center for American Progress analysts Sam Davis and Daniel J. Weiss describe how a demand-independent “reliefbate” plan could be paid for by closing several oil tax loopholes. The Washington Post’s Dan Froomkin further recognizes that there are “two hugely significant factors” that President Bush could affect immediately: “the war in Iraq and the value of the dollar.”
But the federal fuel tax is but one brushstroke in a much broader picture. As the Center for American Progress’s energy opportunity agenda states:
The realities of global warming and our growing dependence on oil, much of it imported, will make energy more pivotal than ever to our economic, environmental, and national security fortunes in the 21st century. The challenge we face is nothing short of the conversion of an economy sustained by high-carbon energy — putting both our national security and the health of our planet at serious risk — to one based on low-carbon, sustainable sources of energy. The scale of this undertaking is immense and its potential enormous.
7 Responses to “Memo To Bush: ‘Magic Wand’ Not Needed To Deal With Gas Prices”
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Well put Brad, The two proponents of this gas tax holiday are lacking in foresight and brains to realize they are just pandering to the citizens of this country in the same manner in which they both pander to lobbyist, I am insulted by both McCain and Clinton in this shameless deed.
May 5th, 2008 at 1:30 amI like your gas pump graphic, but shouldn’t the top half reflect how big an impact the “Enron loophole” has had on gasoline prices at the pump based on its impact on world oil barrel prices, with unregulated (or under-regulated) energy market speculators gaming the system for every petrodollar they can get their hands onto?
You alluded to this in your first point about “supply and demand” only accounting for about half of the price at the gasoline pump…with the other half (as many economists believe) caused by unregulated (and under-regulated) oil futures speculators taking advantage of the Sen. Phil Gramm-passed “Enron loophole.”
Other than this minor graphic detail, I completely agree that Dana Perino is wrong in asserting that nothing can be done about the high gasoline prices at the pump, or as the Republican “talking point” goes, nothing can be done in the short-term except open up additional acreage to oil company exploitation.
She’s lying. Don’t listen to anything she says, but immediately, and completely, close the “Enron loophole,” as Barack Obama has just endorsed, and let’s all see how much the “Enron loophole” is actually affecting gas pump prices.
Simple experiment. If the “Enron loophole” isn’t a factor, then gasoline prices should stay the same, but if gasoline prices at the pump start dropping appreciably, then we’ll all know who is to blame for our paying so much to fill up our cars…the Republicans.
June 23rd, 2008 at 8:34 pmIn all deference to Perino, we won’t have a short term fix: It will take quite some time to pull ourselves out of the Bush Quagmire: Afgahnistan and Iraq (with Iran looming), destabilized world, poor US economy, The McCain Enron loophole, Shrub holding in his first term that Americans have a right to drive big cars (and a tax break to steer them towards big cars), lack of training, etc. etc.
June 23rd, 2008 at 10:15 pmThat graphic is misleading and counterproductive because it doesn’t show SPECULATION
June 24th, 2008 at 9:04 am[deleted by admin]
June 24th, 2008 at 11:10 amI agree with phred24, this graph is misleading because it ignores speculation. This article just came out today:
Gas could fall to $2 if Congress acts, analysts say
“Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.
Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters’ assessment at a hearing on proposed legislation to limit speculation in futures markets.
Krapels said that it wouldn’t even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets.”
June 24th, 2008 at 4:00 pmhttp://www.marketwatch.com/news/story/gas-could-fall-2-if/story.aspx?guid={2673C102-68E0-41D9-9C9A-10EE2E723948}
The real fix is the permanent solution. A proper, first class, fully developed technology exists which we should already have, but don’t. Washington hears from me, and you can be an advocate too. We should have never used petroleum, coal or uranium for energy anyway. We can replace them immediately while solving a multitude of problems. I’m holding their feet to the fire: suppression of this technology is the greatest crime in history—and the discussion of oil prices is ridiculous to me.
June 24th, 2008 at 6:51 pm