Political Jockeying Over Gas Prices Is Divorced From Reality
Though many transportation reformers, economists and environmentalists would say that gas prices aren’t nearly high enough to disincentivize single-occupancy-vehicle use and to pay for the external harms, Republicans and Democrats on Capitol Hill take it for granted that gas prices are too damn high. In fact, it’s one of the very, very few things that they do agree on these days. And it’s a message that resonates with their constituents, who are suffering under a sluggish economy.
Republicans are blaming President Obama for the “high” prices, saying his refusal to sign onto more oil drilling, weaker regulations, and the Keystone pipeline is costing Americans at the pump. Obama shot back with his plan to increase regulation of oil speculators. Neither plan will do much of anything about gas prices, but they make for good election-year candy.
The GOP has passed a raft of bills to increase oil drilling, even (especially!) in environmentally sensitive areas like the Arctic National Wildlife Refuge and the Rocky Mountains. We’ve covered on this blog several of those bills that were supposed to help pay for infrastructure.
Now Republicans have a new plan to lower gas prices by giving your kid asthma.
The Gasoline Regulations Act would water down the 40-year-old Clean Air Act requirement that pollution standards be decided purely on the science of public health. Instead, it would introduce a cost factor. It also mandates research on the economic impact of EPA regulations and delays the enactment of air quality rules until the study is complete. “This legislation raises the cost of gasoline to a new level,” NRDC’s Scott Slesinger said. “Americans would have to pay with both their money and their health.”
Under existing law, cost concerns can factor into how air quality problems are mitigated, but they can’t be a factor when determining how much pollution is unhealthy to breathe. That part, these days, is still left up to science. The Supreme Court upheld this standard in 2001, with none other than conservative mainstay Antonin Scalia writing the majority opinion.
NRDC also claims “the bill won’t do a thing to lower gas prices,” and the organization’s C4 wing put out a video of bill sponsor Ed Whitfield admitting that fact (while other Republicans line up to say otherwise).
Meanwhile, President Obama announced his plan a couple weeks ago to rein in Wall Street oil speculators. The proposal would beef up the ability of the Commodity Futures Trading Commission to oversee trading (to the tune of $52 million), increase penalties for market manipulation, and force traders to spend more of their own money on the deals.
Republicans are trying to remove regulations, not strengthen them, so the House is unlikely to go along with this plan. Then again, Democrats are unlikely to go along with the GOP Gas Act. And really, most bills and proposals introduced these days don’t go anywhere. According to GovTrack, only five percent of bills introduced are signed into law on a good year – and if you hadn’t noticed, this is not a good year.
“A lot of Beltway scorekeepers think Obama’s announcement is smart, simply because it produced headlines such as, ‘Obama Moves to Curb Oil Speculators,’” Matthew Philips wrote in BusinessWeek. “That may be, but it’s not clear the plan would actually lower the price of oil, because the demand to invest in it would remain.” He added that if investors can no longer invest in oil speculation, they might just go ahead and “start buying actual oil.”
None of these measures will do anything to impact gas prices, wrote USA Today’s Wendy Koch. “U.S. gas prices are largely determined by global crude oil prices,” she wrote, “which depend on a widening and shifting array of factors half a world away: economic sanctions on Iran; deepwater drilling off Brazil; spare oil capacity in Saudi Arabia; auto use in China; less nuclear power in Japan.”
“So oil rigs may be hopping in North Dakota,” she went on, “but what happens in the Strait of Hormuz will likely have more impact on prices at the local gas station — even though the U.S. doesn’t import a single gallon from Iran.”
Koch lists five factors that do impact prices at the pump:
- Global crude oil price increases – the price of crude determines 72 percent of the price of a gallon of gas
- Iran and other geopolitical uncertainties in places like Yemen, Syria, and Sudan
- Limited spare capacity (meaning even small changes in supply or demand can swing prices)
- Rising worldwide demand – it’s going down in the U.S. as we invest in more efficient technologies and driving levels off, but in emerging economies oil demand is booming
- Refinery closures and production costs
One element largely missing from the bipartisan outcry over skyrocketing gas prices is the pesky truth that gas prices are actually dropping. Not by a lot, but the average cost of a gallon of gas went down eight cents next month, and experts agree that it’s peaked for the year. But don’t expect reality dampen the bloated political rhetoric six months before the election.