Right up front I will tell you that I am a Republican, however I’m not trying to make this question a debate on which party has better policies etc… I am genuinely curious about an argument/accusation that was common during the Bush presidency, but is almost completely absent during the current admration. The claim I’m referring to is that the President has control over gasoline prices. During the Bush years as gas prices started to rise I clearly recall those on the left accusing Bush of manipulating gas prices upward in order to fill the coffers of his oil company friends. He was in bed with big oil and making the American public pay to enrich his friends.
Well, fast forward many years since the Bush Presidency. Gas prices are still very high, increasing more than ten cents on average in the last week alone. Regular gas here is above $3.55 a gallon. So, those on the left will try to say that Obama is the anti-Bush in no way in the hip pockets of big oil. If that’s true, then using the reasoning that the reason oil prices went up during the Bush years because of a conspiracy to enrich oil friends, doesn’t it make sense that gas should be way below the prices of the Bush years because big oil no longer had a friend in the White House? I mean, either a President has the ability to affect short term prices of fuel or he doesn’t. If the left claims Bush manipulated prices up- then why hasn’t Obama manipulated them down?
Keep in mind is what I am trying to find our is how those who said Bush controlled oil prices are now completely silent even though gas is much higher now than then. I don’t hear the same people accusing the President of keeping prices high. Now, I have of course heard the right propose the argument that certain policies of the current administration lead to higher fuel cost and I think they have a point. But those claims point to a long term problem of things like the lack of new refineries and such. I am not hearing that today’s prices are the result of the President, rather the left just blames big oil. For all I know they might be right, but that’s not the point. The point is the left specifically pointed to one person, George Bush as the reason for increasing prices on fuel. If their claims are valid, then President Obama is “guilty” of exactly the same thing and the left is willing to look the other way. Either a President can or can’t directly affect day to day prices. If he can, Bush did do it to make his friends wealthy. But if that’s true, Obama is beholden to the same forces as he is choosing not to stop the prices from rising. If a President can’t control the day to day price, then the left cares little for the truth and is willing to apply one standard to one President and turn a blind eye to that standard to another.
FWIW, I don’t think that a President had the ability to control had prices in the short term. I do think that an administration can set policy that can have long term effects that can affect prices, but I don’t think they can control them on a whim. I believe prices are high because we lack the capacity to refine fuel to meet demand, there are too many restrictions in place on refiners in the form of so many different blends for different parts of the country causing increased production costs. And mainly out lack of resolve to drill for domestic oil and relying on imported oil. The OPEC states are not our friends and are able to raise the price of crude because they have a monopoly on the product. We need it, they have it and they know they can charge what they like, we have little choice at this point but to continue to purchase, regardless of the price. Perhaps in the future technology will advance to the point where oil will no longer be the main product needed to fuel or cars, run our power plants and needed to produce the goods we need. But for now, it is. I also think that regardless of which party controls the White House that there is little they can do short term to lower fuel prices.
You might also recall the theory that he manipulated gas prices downward in late 2004 to improve his re-election prospects, by putting in a word with his oil company friends. Whether that is true or false, you may recall that no such thing happened in 2008. And for my part I do not even recall any theory that he manipulated them upward – the theory was that that just happened because the Iraq War was just a clusterfuck. Never attribute to malice that which can be adequately explained by stupidity.
Partly because not every POTUS has oil company friends.
Did the idea of GW affecting the gas prices come from Rush Limbaugh? I first heard this from a friend who seems to get all his political ideas from that guy. When I asked him why Bush hadn’t kept the prices from skyrocketing to start with he shut up about it.
Look, obbn, for a real LW take on the relationship between politics and gas prices during the w/Cheney Admin, see here. And do you read it very carefully.
I agree with your larger point about the President not having much influence on gas prices, but your listing a reliance on imported oil as a major reason why oil prices are high for us doesn’t make much sense. After all, Canada is apparently a net oil exporter, so by this sort of reasoning, they ought to have significantly lower gas prices than us. But they don’t.
By the way, while nobody (that I know of) accused Obama of manipulating oil prices to benefit friends in the industry, during the 2012 election campaign, many people on the Right (including Romney himself) used the high price of gasoline in comparison to why Obama took office as a piece of evidence of bad policies in regards to domestic oil production and just larger bad economics policies. This was a particularly ignorant claim since the reason why gasoline prices were so low when Obama took office was that the bottom had fallen out of the oil market when the whole financial crisis / recession hit. Gas prices had actually been higher in early 2008 than they have been anytime since.
Prices increased dramatically in the Bush years due to two things. Firstly there was a big increase in demand, especially from countries like China whose vehicle fleet is increasing by millions a year. Secondly, what happened to the dollar under Bush :
OPEC countries being paid in dollars were able to buy less stuff with the dollars they were being paid. So they cut oil supply to get the price up in order to get enough dollars to maintain their standard of living.
Oil is a global commodity and when you have massive increased global demand and plateauing or decreasing supply coupled with a depreciating dollar then there’s very little that the President can do to to reduce the price of oil, despite what the great public intellectual Donald Trump would have you believe.
That’s because oil is something that is traded on global commodity markets, which means that there is a price for that oil. Price your oil under the market rate, and you leave money on the table, and price it over, and you won’t sell your oil. So generally speaking, producers sell their oil at the going market rate.
So in other words, the folks in West Texas and the folks in Alberta are selling the oil they produce for more or less the same price, even if they’re selling it to local refiners.
That’s why the prices aren’t significantly lower anywhere, and also why things like increasing foreign oil demand drives gas prices in places like Texas and Alberta, despite their being net exporters of oil (and in Texas’ case, refined products).
I can’t comment on presidential influence on gas prices, but I think there are a couple of false premises in the OP.
High gas prices are more a combination of production costs and demand. It costs so frigging much to get oil from the ground to the gas pumps that even if the U.S. got all of its oil domestically, gas prices would still be relatively high. More refineries wouldn’t do much because they’re ludicrously expensive to build as well, and that cost would be passed on to the consumer.
They can’t raise the price so high that consumers can’t afford it or they’ll cut their own throats, but they haven’t reached that point yet. Right now, gas prices are a hardship only for those in lower income brackets. Most people who can afford big SUV’s and pickups can also afford to pay higher gas prices and have no incentive to reduce their consumption. As long as there’s increasing demand for gas, you can expect prices to go even higher, all other things being equal.
And BTW, OPEC states are your friends. As long as you need oil, you need to be friendly with them. The members of the bin Laden family who were in the U.S. on 9/11 got special treatment for a reason.
In a market-driven, supply-and-demand economy, you have the choice of reducing your demand for their oil. That’s a choice that Obama has made by trying to increase alternative energy sources.
Really, the President has little effect on the price of gas. Take a look at this chart.
Gas prices in US and Europe, while different have a very similar pattern of ups and downs, which are related to global demand/supply of gasoline. Opening more refineries and drilling more oil wells are not going to effectively change the world market. Since the world market doesn’t change, there’s no reason for our producers to cut price here when they could sell for more overseas.
I once thought that cutting the US demand for gasoline would cut the US price for gasoline, but that’s not true. The variable price isn’t due to our local conditions, it’s global.
For national security purposes, I’m in favor of expanding our oil infrastructure and reducing usage, to reduce our dependence on foreign energy sources. It’s easier to take out a tanker in the middle of the ocean than it is to take out a pipeline deep within our borders. That expansion will not show up as a reduction in our energy costs, it’s just security.
The only effect that the President has on gas prices is the ability to release some of the Strategic Petroleum Reserve, and perhaps to put in a plug with friendly oil producing countries to up their production. The problem with that is that it’s all crude oil and must be refined. The refineries are running at around 100% at all times, there’s not much more capacity and there are virtually no places that a refinery can be built without getting hung up in NIMBY lawsuits.
If the President can influence gas prices directly it’s at best a few cents. He can, however, raise them almost instantaneously simply by getting in front of a microphone and saying something that panics the oil market, something that is not at all hard to do.
First, I want to clarify that I don’t believe that the President has much ability to affect the spot price of oil. He has a little, obviously, by making some foreign policy changes. Start rattling sabers toward the middle east or Venezuela, and the price may go up in anticipation of lowered future production. There are also things like the strategic petroleum reserve which can have a short-term effect in either direction.
That said, it’s much much easier to manipulate the price of something up than to manipulate it down. If you want to increase the price, you just need one of the big players to reduce production in some way. If you want to reduce it, you either have to convince the population that the price will drop substantially in the future (which will reduce present demand to some extent), or you have to actually sell at a loss, which can easily lead to a situation where other players in the market buy up all your supply and then resell at the market price.
Increasing the price wouldn’t “line their pockets”. Since they’re already trying to sell at the profit-maximizing price, they’d be leaving money on the table to reduce supply. But if, for example, some large oil company thought that spiking the price of gasoline near an election would lead to an administration more favorable to them, it wouldn’t be unheard of for them to do something like that. There have certainly been price-fixing conspiracies before, and there likely will be again.
