Thursday, March 22, 2012

Of Gas Prices and Gasbags: Who is Responsible for America's Pain at the Pump?

by Sunnyjane

Gas Prices

Who is responsible for the high gasoline prices at the pump?   As hard as it is in this election year for opposition political candidates to admit publicly, the price of gasoline, as we shall see, can indeed be blamed on a who.   (Spoiler: it isn't the President of the United States.)  The more obvious determining factors in how much you and I will be charged on our already high-balance credit cards are due to a what, or in many cases, several whats. Of course, one must never let solid facts get in the way of stirring up more hate and fear amongst your ignorant base when it can be aimed directly and effectively -- not to mention delightfully -- at that Not One of Us usurper in the White House.

Lest anyone fear that this post will sink to the level of a snooze-inducing course in Introduction Into the  World of Petroleum Exploration, Production, and Marketing 101, lighten up; that isn't going to happen.  But briefly, the price of a barrel of crude oil is influenced by the mood swings of OPEC; the world oil markets; the unpredictability of weather (which affects drilling operations);  climate changes (mild winters mean the demand for fuel oil goes down, etc.); wars (President Obama recently said in an interview that fears of an approaching war with Iran have driven up the price of gas: The biggest driver of these high gas prices is speculation about possible war in the Middle East, which is why we've been trying to reduce some of the loose talk about war there.)supply and demand; commodities markets; equipment failures; accidents; and local gas station competition -- just take a drive (or better yet, a walk or bicycle ride) around your community and see the price-at-the-pump differences.

It is critical, for the sake of an intelligent narrative on fuel prices, to understand that oil (as well as other fuel sources such as gas and coal) are fossil fuels,  non-renewable resources that take millions of years to form, and whose reserves are being depleted much faster than new resources to accomplish the same results are being created.  Harvesting fossil fuel raw materials require either digging or drilling, which are expensive and dangerous to both humans and the environment.  

But perhaps Sarah Palin, quitter governor of Alaska, is the more appropriate person to explain oil production.  Palin was appointed to the non-technical position of Chairwoman and Ethics Supervisor (feel free to snort and chuckle here) of the Alaska Oil and Gas Conservation Commission in 2003; she quit in 2004.  After all, in selecting her as his running mate in 2008, John McCain claimed that Palin knows more about energy than probably anyone else in the United States of America.   So, I'll let her explain the mysteries of oil production, as she did at a town hall assembly during the 2008 campaign:

Oil and coal? Of course, it’s a fungible commodity and they don’t flag, you know, the molecules, where it’s going and where it’s not. But in the sense of the Congress today, they know that there are very, very hungry domestic markets that need that oil first. So, I believe that what Congress is going to do, also, is not to allow the export bans to such a degree that it’s Americans that get stuck to holding the bag without the energy source that is produced here, pumped here. It’s got to flow into our domestic markets first.

I wonder if John McCain ever realized that he had just insulted every real energy expert in the United States.   Nah, probably not.



In the midst of all the election-year ranting, raving, and GOP finger-pointing at the White House, it's important to keep one factor in mind:   Koch Industries, which funds most of the GOP/Teabagger candidates, has a huge stake in the oil business, specifically their Flint Hills Resources refinery, which it innocently refers to as an independent refining and chemicals company.  From their own website:  The company, based in Wichita, Kan., has expanded its operations through capital projects and acquisitions worth more than $6.2 billion since 2002.   That's their corporate-speak for: We've got lots of money, we're going to keep it, we're going to make more of it, and we don't want the damn government taxing it or supporting some tree-hugging green energy crap.   

They go on to tell us how oil is used in the many other products that Flint Hills Resources makes:  Its petrochemicals are used to manufacture goods from plastics to building products to packaging materials. The asphalt it produces is used in communities across the Midwest and Alaska. The base oils it markets are the principle raw material used to produce premium motor oil, commercial lubricants and sealants and coatings.  Its refineries produce fuels that power much of Texas, the Midwest and the Alaska interior. 

In a blatant effort to continue stirring the pot of fear, Mitt Romney is trying to convince his few holding-their-noses-supporters (and anyone else who will listen) that President Obama should fire his Gas Hike Trio because they are scheming to see that the price of gas rises so the President can further his agenda to increase production of renewable energy resources.

Never one to be left on the outer fringes of the lie-and-make-a-fool-of-yourself brigade, Newt Gingrich is going to ensure that America has  $2.50 a gallon gas when he is president.

Just recently, Gingrich lied about what President Obama said in a press conference:   And I thought today, in one of the most shallow and self-serving comments by a president that I've heard in a long time, he was candid in his press conference. He said, “You know, I’m really worried about higher gas prices because it will make it harder for me to get re-elected.”  I did not make this up.

Oh yeah?

This is the actual March 7 exchange between Fox News reporter Ed Henry and the President:

Henry:  Related to Iran and Israel, you have expressed concern about this “loose talk of war,” as you call it, driving up gas prices further. Your critics will say on Capitol Hill that you want gas prices to go higher, because you have said before that will wean the American people off fossil fuels onto renewable fuels. How do you respond to that?

President Obama:  Ed, just from a political perspective, do you think the president of the United States going into reelection wants gas prices to go up higher? Is that — Is there anybody here [in the White House press corps] who thinks that makes a lot of sense?

The Who of Gas-Pains at the Pump 

The words that shall not be spoken by a GOP candidate in this election are: Wall Street speculators!   The truth is that rising gas prices have little to do with energy policy, but rather with America's continuing failure to adequately regulate Wall Street because speculators and big financial players now dominate oil trading.  On March 21, Bernie Sanders said this on the Ed Schultz show after Schultz asked him if the Republican presidential candidates were lying about Obama’s policies driving up the price of gas:  Yeah, they are. The truth is, as the president indicated, we are doing a lot of oil drilling right now. But I think at the root of the problem is not the supply issue, I think the root of the problem is that our friends on Wall Street who caused this recession through their greed are at it again, and by manipulating oil futures market they’re driving up prices. What we are trying to do, Ed, now is demand that Commodity Futures Trading Commission, an arcane agency which regulates the oil futures market, use emergency power to end excessive speculation.

The President's Extremely Accidental Defenders

Ah, 'tis a thing of beauty when Fox News is caught out defending the President's role in rising gas prices.  Oh, to be sure, it is not the current president!  No, 'twas President George Bush they were defending in the spring and summer of 2008, when the price of gas reached $4.27 a gallon at the pump.

What they all agreed to was that a president, and politicians in general, had absolutely no control over the price of gasoline.  In fact, as the Pensito Review's excellent article (with transcript and video) tells us,  Bill O’Reilly went into full-on tree-hugger mode, saying:  Next time you hear a politician say he or she will bring down oil prices, understand it’s complete bull shit.  Americans want lower gas prices — cut back. Sell those SUVs. Ride a bike when you can. If every one of us bought 10 percent less gasoline, prices would fall fast. That’s what the candidates should be saying. We need a strong leader who’s honest, smart, courageous and willing to explain dubious associations. That’s what we need.

Cheryl Casone of Fox Business News: You know, at this point, it really is tough for this president. I have to be honest with you, because he really does not have any control what’s gonna happen with the markets and with the economy, and with oil prices and supply and demand and gasoline, it really is out of this president’s hands.

And there's this beautiful exchange between Greta Van Susteren and a guest expert discussing whether drilling in Alaska's Arctic National Wildlife Refuge  would solve America's energy problems:

Van Susteren:  If ANWAR drilling were permitted — and Pres. Bush 41 said basically no, Pres. Clinton said no, and this president [Bush] said no — today he’s now changed or at least some point he did — what difference would it make to gas prices, and how much could we produce based against our daily consumption?

Guest: Well, interestingly, the energy economist in the [Bush administration] made an assessment just a few weeks ago, and what they came up with — it would reduce the price of oil about 40 cents a barrel or maybe as much as a $1.40 a barrel. Right now the price is $130 a barrel.

Van Susteren: So what does that do to my gallon of gas?

Guest: It does not really change it much at all. The problem is that, even though — I mean, Pres. Bush today said that there are 18 billion barrels of oil in ANWAR. The Saudis have 266 billion barrels of oil. It is really a small amount of oil, if you look at worldwide reserves.

Van Susteren: One statistic that I was given is that if we drilled in ANWAR, we’d get 4 percent of our daily consumption of oil. We only get 4 percent if go there and do…

Guest: At peak, we’d get about — I don’t know — 800,000 barrels a day out of ANWAR. Right now, we’re using 20 million barrels a day. We are using so much oil that [ANWAR] is literally a drop in the bucket.

It's particularly satisfying to remember that opening up ANWR was at the front of Sarah Palin's Drill, Baby, Drill meme during the 2008 election. 

Watch the video:

End Note

Neither the President of the United States nor his energy policies are responsible for the price of a gallon of gas.   In some small way, we are responsible, and we can do something about it.   We can combine trips, carpool, and stop going to the grocery store for one lemon or one loaf of bread because we think we can't live without it.   We can check with our neighbors and see if any of them need something when we're on our way out the door; this small effort will be repaid.

And there are other things we can do, because we must.


Thanks to Leadfoot_LA for allowing me hijack her idea for this post, and to NightEditor1 for the excellent link to the Fox News video and transcript; it's a gem!

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