Gaseious Politicians: Nonsense, Demagoguery on Oil Prices

Gaseous politicians: Nonsense, demagoguery on gas prices


Every increase in gasoline prices gets a rise out of gaseous American politicians seeking to fuel voter anger in their drive for power.

Quick fixes get featured. Lower prices are promised. Boilerplate press releases attach blame (Monday’s: “Obama’s Energy Crisis” from Republican National Committee). White House hopefuls claim that a nation with 2 percent of the world’s oil reserves, which consumes 20 percent of the world’s oil supply, has an easy way out: “Drill, Baby, Drill”.

Here is a selection of politicians’ gas about gas prices, the sense and the nonsense:
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Gaseous politicians

President Obama was speaking for himself as well as predecessors back to Richard Nixon when he declared Saturday:

“It’s easy to promise a quick fix when it comes to gas prices. There just isn’t one. Anyone who tells you otherwise, any career politician who promises some three-point plan for two-dollar gas, they’re not looking for a solution. They’re looking for your vote.”

Gaseous partisan rhetoric aside, here are a few indisputable facts about energy, how much America produces and how much America consumes. The picture actually holds some good news.

Domestic U.S. oil production drilling was at 10.3 million barrels a day in 2011, its highest level in nearly 30 years. The number of oil rigs deployed has quadrupled. The Obama administration has approved oil exploration in Arctic waters off Alaska, against protests from environmental groups.

Fuel efficiency in automobiles and SUV’s has gone from 24.7 miles a gallon in 2001 to 29.6 miles a gallon. New auto efficiency standards will require 55 mpg. cars by the middle of the next decade. (Only one Republican, Sen. Slade Gorton of Washington, championed fuel efficiency during the 1990′s.)

Total U.S. use of oil has declined from 20.8 million barrels a day in 2005 to slightly lower than 19 million barrels in 2011. Oil imports have fallen from 60 percent of America’s domestic consumption, seven years ago, to 45 percent in 2011.

Oh yes, when you see one of the American Petroleum Institute’s slick drill-baby-drill TV spots, remember that oil companies have 7,000 government-approved on-shore drilling permits that are not being used.

FACT CHECK: More US drilling didn't drop gas price

By SETH BORENSTEIN and JACK GILLUM
Associated Press


WASHINGTON (AP) -- It's the political cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.

A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.

If more domestic oil drilling worked as politicians say, you'd now be paying about $2 a gallon for gasoline. Instead, you're paying the highest prices ever for March.

Political rhetoric about the blame over gas prices and the power to change them - whether Republican claims now or Democrats' charges four years ago - is not supported by cold, hard figures. And that's especially true about oil drilling in the U.S. More oil production in the United States does not mean consistently lower prices at the pump.

Sometimes prices increase as American drilling ramps up. That's what has happened in the past three years. Since February 2009, U.S. oil production has increased 15 percent when seasonally adjusted. Prices in those three years went from $2.07 per gallon to $3.58. It was a case of drilling more and paying much more.

U.S. oil production is back to the same level it was in March 2003, when gas cost $2.10 per gallon when adjusted for inflation. But that's not what prices are now.

That's because oil is a global commodity and U.S. production has only a tiny influence on supply. Factors far beyond the control of a nation or a president dictate the price of gasoline.

When you put the inflation-adjusted price of gas on the same chart as U.S. oil production since 1976, the numbers sometimes go in the same direction, sometimes in opposite directions. If drilling for more oil meant lower prices, the lines on the chart would consistently go in opposite directions. A basic statistical measure of correlation found no link between the two, and outside statistical experts confirmed those calculations.

"Drill, baby, drill has nothing to do with it," said Judith Dwarkin, chief energy economist at ITG investment research. Two other energy economists said the same thing and experts in the field have been making that observation for decades.

The statistics directly contradict the title of GOP presidential candidate Newt Gingrich's 2008 book "Drill Here, Drill Now, Pay Less," as well as the campaign-trail claims from the GOP presidential candidates.

Earlier this month, GOP front-runner Mitt Romney said of his solution to higher gas prices: "I can cut through the baloney ... and just tell him, `Mr. President, open up drilling in the Gulf, open up drilling in ANWR (the Arctic National Wildlife Refuge). Open up drilling in continental shelf, drill in North Dakota, drill in Oklahoma and Texas.'"

On Wednesday, with President Barack Obama traveling to oil and gas production fields on federal lands, Crossroads GPS, a nonprofit arm of a super PAC supporting GOP candidates, released a new ad to air in the same states that Obama was visiting. It accused Obama of restricting oil development in America and concludes "bad energy policies mean energy prices we can't afford."

The late 1980s and 1990s show exactly how domestic drilling is not related to gas prices.

Seasonally adjusted U.S. oil production dropped steadily from February 1986 until three years ago. But starting in March 1986, inflation-adjusted gas prices fell below the $2-a-gallon mark and stayed there for most of the rest of the 1980s and 1990s. Production between 1986 and 1999 dropped by nearly one-third. If the drill-now theory were correct, prices should have soared. Instead they went down by nearly a dollar.

The AP analysis used Energy Department figures for regular unleaded gas prices adjusted for inflation to 2012 dollars, oil production and oil demand. The figures go back to January 1976, the earliest the Energy Department keeps figures on unleaded gas prices. Phil Hanser, an economist and statistician at the energy consulting firm The Brattle Group; University of South Carolina statistics professor John Grego; New York University statistics professor Edward Melnick and David Peterson, a retired Duke University statistics professor, looked at the analysis, ran their own calculations, including several complicated formulas, and came to the same conclusion.

When U.S. production goes up, the price of gas "is certainly not going down," Melnick said. "The data does not suggest that whatsoever."

The calculations "help make the point that U.S. production and demand have little to do with the price of gasoline in the U.S., and lend support to the notion that there is not a great deal we in the U.S., acting alone, can do to affect the price of gasoline," Peterson wrote in an email. He pointed out that Energy Department figures show that gas prices in the U.S. seem to rise and fall similarly to gas prices in Europe, showing that it has little to do with American drilling.

And that's the key. It's a world market, economists say.

Unlike natural gas or electricity, the United States alone does not have the power to change the supply-and-demand equation in the world oil market, said Christopher Knittel, a professor of energy economics at MIT. American oil production is about 11 percent of the world's output, so even if the U.S. were to increase its oil production by 50 percent - that is more than drilling in the Arctic, increased public-lands and offshore drilling, and the Canadian pipeline would provide - it would at most cut gas prices by 10 percent.

"There are not many markets where the United States can't impose its will on market outcomes," Knittel said. "This is one we can't, and it's hard for the average American to understand that and it's easy for politicians to feed off that."

If drilling activity rises around the globe for a sustained period of time, gasoline prices can fall as that new supply eventually finds its way to market, but the U.S. can't do it alone, oil analysts say.

Politicians - especially those in the party that's not occupying the White House - have long harped on high gas prices when expedient. Then-Sen. Barack Obama said in 2008, when he was running for president, that "here in Ohio, you're paying nearly $3.70 a gallon for gas, 2-1/2 times what it cost when George Bush took office."

But Obama, who has seen gas prices go up 73 percent since he took office, was singing a different tune last week in his weekly radio address: "The truth is: The price of gas depends on a lot of factors that are often beyond our control. Unrest in the Middle East can tighten global oil supply. Growing nations like China or India adding cars to the road increases demand. But one thing we should control is fraud and manipulation that can cause prices to spike even further."

The political party of the president doesn't seem to matter to the price at the pump either. Since 1976, the average monthly gas price, adjusted for inflation, during Democratic presidencies has been $2.25; under Republicans it's been $2.34. Obama had the steepest monthly average at $3.05 and Bill Clinton the cheapest at $1.68.

When Bush and running mate Dick Cheney campaigned in 2000, they argued that as oil executives they could get oil prices down, with Bush saying, `'I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply."

Yet it was during the last few months of Bush's term in 2008 that gas prices hit their highest: $4.27 when adjusted for inflation.

---

Associated Press writers Dina Cappiello and Matthew Daly in Washington and Jonathan Fahey in New York contributed to this report.

---

Online:

Documents behind the AP's analysis: http://bit.ly/GJvhL6

---

Follow Seth Borenstein at http://twitter.com/borenbears , and Jack Gillum at http://twitter.com/jackgillum

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

Mandel Ngan / AFP/Getty Images
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Washington --

It's the political cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, according to an Associated Press statistical analysis of 36 years of data.

Political rhetoric about the blame over gas prices and the power to change them - whether Republican claims now or Democrats' charges four years ago - is not supported by cold, hard figures. And that's especially true about oil drilling in the United States. More oil production in the United States does not mean consistently lower prices at the pump.

That's because oil is a global commodity and U.S. production has only a tiny influence on supply. Factors far beyond the control of a nation or a president dictate the price of gasoline.

When you put the inflation-adjusted price of gas on the same chart as U.S. oil production since 1976, the numbers sometimes go in the same direction, sometimes in opposite directions. If drilling for more oil meant lower prices, the lines on the chart would consistently go in opposite directions. A basic statistical measure of correlation found no link between the two, and outside statistical experts confirmed those calculations.

"Drill, baby, drill has nothing to do with it," said Judith Dwarkin, chief energy economist at ITG investment research. Two other energy economists said the same thing and experts in the field have been making that observation for decades.

The statistics directly contradict the title of GOP presidential candidate Newt Gingrich's 2008 book "Drill Here, Drill Now, Pay Less," as well as the campaign-trail claims from the GOP presidential candidates.

Earlier this month, GOP front-runner Mitt Romney said of his solution to higher gas prices: "I can cut through the baloney ... and just tell him, 'Mr. President, open up drilling in the gulf, open up drilling in ANWR (the Arctic National Wildlife Refuge). Open up drilling in continental shelf, drill in North Dakota, drill in Oklahoma and Texas.' "

On Wednesday, with President Obama traveling to oil and gas production fields on federal lands, Crossroads GPS, a nonprofit arm of a super PAC supporting GOP candidates, released a new ad that accused Obama of restricting oil development in America and concludes "Bad energy policies mean energy prices we can't afford."

The AP analysis used Energy Department figures for regular unleaded gas prices adjusted for inflation to 2012 dollars, oil production and oil demand. Phil Hanser, an economist and statistician at the energy consulting firm the Brattle Group; University of South Carolina statistics Professor John Grego; New York University statistics Professor Edward Melnick and David Peterson, a retired Duke University statistics professor, looked at the analysis, ran their own calculations, including several complicated formulas, and came to the same conclusion.

When U.S. production goes up, the price of gas "is certainly not going down," Melnick said. "The data does not suggest that whatsoever."

The key, say economists, is that it's a world market.

American oil production is about 11 percent of the world's output, so even if the United States were to increase its oil production by 50 percent - that is more than drilling in the Arctic, increased public-lands and offshore drilling, and the Canadian pipeline would provide - it would at most cut gas prices by 10 percent.



Read more: http://www.sfgate.com/cgi-bin/articl...#ixzz1poo8HTSQ

Another gaseous politician. Here is what he said then. We know what he says today.
Pure hypocrisy.


Flashback of the Day
"I'm very much in favor of people recognizing that these high gasoline prices are probably here to stay."

-- Mitt Romney, quoted by the New Republic in 2006.

When Romney Liked High Gas Prices
Alec MacGillisMarch 22, 2012 | 12:00 am
http://www.tnr.com/article/politics/...newable-energy

As he campaigns for president, Mitt Romney is ratcheting up his attacks on Barack Obama over high gas prices, putting the issue at the center of his economic message. He is calling for Obama to fire his Energy secretary, EPA administrator, and Interior secretary, saying they are to blame for high prices at the pump. “No question in my mind that these—I call them the gas-hike trio—that those three are on a mission to drive up the price of gasoline and all energy so that they can finally get their solar and their wind to be more price-competitive. That’s what they want to do,” Romney said on Monday.

Curiously overlooked, though, is just what a shift this rhetoric is from the approach that Romney took on the issue of gas prices while governor of Massachusetts. Befitting his profile as a moderate Republican who cared about the environment, Governor Romney responded to price spikes by describing them as the natural result of global market pressures and by calling for increases in fuel efficiency—the same approach that he now derides Obama for taking as president.

At moments, Romney went so far as to make high gas prices out to be a welcome reality for the foreseeable future, one that people needed to learn to live with. When lieutenant governor Kerry Healey, a fellow Republican, called for suspending the state’s 23.5 cent gas tax during a price spike in May 2006, Romney rejected the idea, saying it would only further drive up gasoline consumption. “I don’t think that now is the time, and I’m not sure there will be the right time, for us to encourage the use of more gasoline,” Romney said, according to the Quincy Patriot Ledger’s report at the time. “I’m very much in favor of people recognizing that these high gasoline prices are probably here to stay.”

Romney’s response to high gas prices while governor fit into his broader effort to promote “smart growth” policies in Massachusetts—a focus that is rare among Republican leaders but that he took up with alacrity. After taking office in 2003, he combined the state’s transportation, environment, and housing departments into a single “Office for Commonwealth Development” under the command of Doug Foy, a prominent local environmentalist who was known to commute to work 20 miles by bike. Together, Romney and Foy pushed for legislation to channel new development into existing communities, thereby reducing the need for new road construction and the car dependence of Massachusetts residents. They put forward a sweeping “Climate Protection Plan” in 2004, which included, among many other things, calls for more car-pooling, public transit and tax breaks for motorists who bought hybrid vehicles. Clean energy was the future, Romney declared at a conference in 2005: “This is an industry that is going to be explosive in its growth in the next decade.”