President Obama has been backed into a tight political corner over rising gas prices. While it’s true that the president has little control over present gas prices as they currently stand, it’s also true that he’s made some high-profile blunders on energy policy during his first term, which makes him an open target for public blame. The Hill’s latest poll finds that a whopping 58 percent of American voters say Obama’s policies will lead to higher gas prices:
On energy, 58 percent say Obama’s policies will result in gasoline prices increasing, while just 20 percent expect them to cut prices — and by a 46-percent-to-36-percent margin, voters believe they will cause the United States to become even more dependent on foreign oil.
Voters’ wide-ranging pessimism comes as gasoline prices have risen sharply, which often dampens attitudes among U.S. voters toward those in power, and as opinions remain sharply divided on the president’s healthcare law.
Obama is setting out on a campaign tour to defend his energy policies this week, but his tools for dealing with the public anger are minimal. He’s been playing up his support for domestic oil production, but his recent rejection of the Keystone XL pipeline squashes that message. He’s pushing for an end to tax subsidies for oil and gas companies, but that will do nada to reign in gas prices and has more to do with his personal views on “fairness” than anything else. Republicans are also sure to point out that if raising taxes on oil companies has any impact on gas costs whatsoever, it’s more likely to raise the price at the pump.
The one big option Obama has, and the one that liberal Democrats have been lobbying for, is for him to tap into the strategic petroleum reserves. As I wrote on Friday, this would be a blatantly political move that could end up backfiring phenomenally on the president.
And the political backlash is likely to be much greater than the political gain. There’s no way to predict exactly how the release of reserve oil would impact the market, but if history is any indication, the effect on gas prices has diminished each time the reserves have been tapped into. At the Washington Times, Stephen Dinan writes:
Last June, when President Obama last ordered a release from the U.S. reserves, oil was trading at $95.41 a barrel. It dropped about $5 over the next few days, but quickly shot back up and two weeks after the announcement the price was right back where it was before the release was announced. …
Democrats said a 1991 oil release in the middle of the first Gulf War dropped prices at the pump by 33.4 percent, and said a 2000 release by President Clinton lowered prices by 18.7 percent. President George W. Bush’s 2005 move to stop filling the reserve dropped prices 9.1 percent.
Those numbers showed declining returns over the years, and analysts said that is one reason why Mr. Obama’s recent release didn’t have much lasting effect at all: The world market is far bigger than it used to be, thus the release of U.S. reserves has less impact.
Breaking into the strategic petroleum reserves for a two-week drop in gas prices? It’s such a joke that I can’t imagine Obama would ever take the risk. And for those who think the public wouldn’t notice the president playing political games with the reserves, William Galston at TNR notes that Al Gore was shredded for proposing a similar idea during the fall of 2000. Another reason to be skeptical that Obama would actually go ahead with this plan.
We are paying 50cents a gallon more on because of speculators. nRelease oil from the reserve, and conserve gasoline. nThat will drop the price of gasoline. nWe consume 380 million gallons a day in the U.S. nCutting back just 5 million gallons less than 2% would reduce our demand for nCrude oil by 1 millon barrels a day. nNote TransCanada wants to use Keystone and a Texas refinery co owned by the Saudis to export overseas. We are prouducing more oil than we have an years, but U.S oil companies are exporting more gasoline than ever.
Who is exporting gasoline, from what refinery/port, and to where? nAnd what grade(s) of gasoline? (Perhaps stuff the EPA won't allow to be sold here?) n nWe import a considerable amount of gasoline already — All the Irving Mainway and Irving Bluewave stations that are in the Northeast — that is Canadian gasoline. Irving is a Canadian company and they bring it in via tankers and I think they have a pipeline too. So the question is not if we are exporting gasoline but if we are a *net* exporter of it and I really doubt that. n nLast I checked, we are both net importers of crude oil and of refined product. Now as to what Hugo Chavez is doing with the Citgo Refinery, heaven only knows….
One other thing — we already have reduced our consumption because of something called the recession, and I really suspect that we have reduced it a tad more in response to the prices going up as much as they have. I don't see that making a difference….
Gasoline is a distillate product of crude oil — much like rum is distilled from molasses. Obama could flood the marketplace with crude oil and/or molasses to the point where both essentially are free and it still wouldn't inherently drop the price of gas or rum much because someone still has to distill this sticky gook into the products we want. n nWe have a shortage of refining capacity in this country. That, not supply, is the bottleneck. That (and the price of ethanol) is why the price of gasoline has gone up so fast when the price of crude really hasn't. n n We also have a distribution system that is made inefficient by the incredible number of regional and seasonal gasoline blends that are required by the EPA — think 50 completely different combinations of the Kosher rules and the logistics (and expenses) of running a restaurant or food distributorship that had to comply with such things. n nRemember the old adage of putting sugar in the gas tank of someone whom you weren't fond of? Well crude oil would do the same thing, only a whole lot worse. And what B. Hussain doesn't understand is that this stuff has to be REFINED before we can use it…..
Agree with you as far as refining capacity ( no new refineries built in the U.S. in over 30 years! ) and the insane amount of EPA regulations, some of which are about to hit in May-June and always jack up prices by several cents per gallon. But there is still very much a connection between the price of crude and what we pay at the pump. And Obama and his cronies know it– hence their back-door pleading with Saudi Arabia to ramp up production and dampen oil prices. n nThe Strategic Reserve does not affect global oil markets now because it is inherently temporary and the oil markets can quickly and easily price in that temporary effect. This is why, by the way, a GOP president would likely have more success affecting the oil markets with even the announcement that the U.S. would immediately pull out the stops to increase domestic oil production: the markets would (at least initially) tend to believe that a GOP president will actually follow through rather than just talk about it. "Speculators" are the latest boogeymen that Obama and the Left are dredging up in order to blame high gas prices upon, but they serve a vital function in the markets to weigh the risks of oil disruptions and plan accordingly. If the U.S. had started drilling in Alaska, the Gulf and off the U.S. coasts as conservatives wanted to 10 years ago, we would be flush with oil. And as to whether domestic oil gets exported and sold or refined for domestic use, the critical thing is that the dollars generated stay here in the U.S. and offset our huge trade imbalances and work to bring down overall oil prices.
Agreed that price of crude is quite relevant — and remember that you don't get 42 gallons of gasoline out of a (42 gallon) barrel of oil — you don't even get a combined 42 gallons of products because some of it is burnt for heat and some of it has to be burnt off in the "flare" for safety reasons unless you want things blowing up (i.e the BP way). n nYou can get more gasoline or more heating oil (diesel fuel) depending on how you do things, and the thing I find most interesting is how expensive diesel fuel is in the Northeast right now notwithstanding our mild winter (80 degrees in Amherst today) and lower than anticipated demand. n nOf course the wild card in all of this is Iran, and a disruption in the supply of crude to a refinery is going to be more severe than people realize because once a refinery runs out of crude to refine, it has to shut down and then restart and that is both time consuming and quite expensive. That, I think, is what speculators are aware of.