By Bill Crawford
Things are not always what they seem, particularly in political seasons. Take “skyrocketing” gasoline prices, predicted by some to hit $5 per gallon by Labor Day. Popular politics blame the president’s energy and environmental policies for this trend, saying they stymie oil production and push gasoline prices higher.
Let’s put some facts on the table.
From mid-February last year to mid-February this year, the average retail price of regular gasoline went up from $3.14 to $3.52.
Over virtually the same period, U.S. oil production increased from 5.6 to 5.8 million barrels per day. Oil imports increased, going from 8.3 to 8.8 million barrels per day.
Meanwhile, U.S. gasoline production dropped from 9.2 to 8.8 million barrels per day. Imports dropped from .9 to .5 million barrels per day.
So, more oil did not result in more gasoline and lower prices. Indeed, gasoline production and imports dropped, suggesting that refiners are limiting gasoline supplies to maintain prices, a strategy not unlike OPEC’s for maintaining oil prices.
Market traded gasoline futures drive changes in retail gas prices. Tight supply management makes gasoline futures susceptible to other factors, such as crude oil prices, the value of the dollar, and international crises.
Indeed, the President’s low-interest-rates-to-aid-the-economic-recovery policy plus his Middle East policies appear to have more to do with current gas prices than his energy and environmental policies.
Low interest rates are, in part, responsible for the weaker U.S. dollar. Since oil, gas, and other international commodities are valued in dollars, a weaker dollar pushes up prices. Of course, it is this same weaker dollar that is fueling the upsurge in U.S. based manufacturing and private sector job growth.
The U.S. leads international efforts to blockade Iran and force it to abandon nuclear weapons development, a major factor in current Middle East tensions. This incites speculator worries about world crude oil supplies and distribution disruptions. Iran’s latest move to halt exports to France and England raised the ante.
So, yes, blame the President for rising gas prices. But don’t blame his energy and environmental policies. Blame his low-interest-rate and Iran-blockade policies.
No presidential contenders, however, seem to have much desire to argue for higher interest rates or kid glove treatment for Iran, though either would bring oil and gas prices down quickly. Neither do they want to call out U.S. refiners for limiting production to keep prices up.
It’s much more popular to blame energy and environmental policies and call for more domestic oil production.
Now, this is not an argument against more sensible energy and environmental policies or increased U.S. oil production. We need all those for many good reasons.
This is an argument for more seemly politics. After all, truth, not deceit, begets liberty.
Bill Crawford (email@example.com) is a syndicated columnist from Meridian.