Clipping blog

When You Scoff At Newt’s $2.50 Gas Promise, You Scoff at History.

Posted: 04 Mar 2012 01:14 PM PST

Newt Gingrich has caught quite a bit of heat for his claim that he would, as President, help get the price of gas down to $2.50. His plan is pretty simple. He wants to increase domestic drilling, begin construction of the Keystone XL pipeline, and take a giant machete to the EPA’s job-killing, price-increasing regulations on the production of domestic energy. But even those simple steps have drawn little but dismissive derision from the bureacratic class and prominent Democrats. Mitt Romney, favorite candidate of the professional Republicans, jumped on Newt’s plan with a barely-disguised scoff and used many of the same arguments. He said he would not “pander” to voters by setting, as Newt has, a certain price for gas in the future. Here’s a good summary of the criticism from CNN.

The promise might garner attention on the campaign trail, but there’s little politicians can do to influence the price of gasoline in the short-term, and long-run efforts are likely to be complicated by the global nature of the crude oil market.

“Political rhetoric is all it is,” said Guy Caruso, an economist who led the Energy Information Administration and worked as an analyst at the Central Intelligence Agency.

“Short of price controls, which were a disaster during the Nixon administration, politicians can’t do much to change the price of gasoline,” he said.

Other industry experts CNNMoney surveyed echoed those sentiments.

“This is absurd,” said Paul Bledsoe, a Bipartisan Policy Center scholar who spent more than 20 years working on energy policy in Washington. “Obviously the price of oil is set on a global market. In the immediate term there is almost nothing you can do.”

Both of those arguments are ridiculous and I can prove it with a couple charts and a few simple links.

Here is a chart of gasoline and crude oil prices that goes back four years. It’s tracked by the GasBuddy site, which tracks gasoline prices from all over the country. If you want to know what gas costs in your area, GasBuddy is there for you. And no, I don’t work for GasBuddy, but it’s a terribly useful site if you want to scout out gasoline prices in your burg, or elsewhere.

Notice that little gap between 6/4/2008 and 7/25/2008. At that point, gasoline hovered around $4.00 a gallon nationally, and crude oil was at nearly $150 a barrel. Then something happened, very close to July 25 that drove the prices of both down to the point that, by the beginning of 2009, gas cost less than $2.00 a gallon. Something happened to drop the cost of a gallon of gas about $2 a gallon. What could have happened?

Well, how about this?

President Bush lifted an executive order banning offshore oil drilling on Monday and urged Congress to follow suit.

Citing the high prices Americans are paying at the pump, Bush said from the White House Rose Garden that allowing offshore oil drilling is “one of the most important steps we can take” to reduce that burden.

However, the move is largely symbolic as there is also a federal law banning offshore drilling.

“This means that the only thing standing between the American people and these vast oil reserves is action from the U.S. Congress,” Bush said.

A few months after signed his executive order, President Bush signed legislation to lift the decades-old moratorium on offshore oil drilling.

Now, follow that little blue arrow. President Bush signed his executive order on July 14, 2009 at which point prices dropped to about $3.50 a gallon. They dropped slightly, blipped upwards a bit, then dropped off the table as Congress debated, and finally passed, the legislation which ended the offshore exploration moratorium in late October. The President signed it into law and gas prices continued to drop through the rest of the year.

But what happened after that? Well, let’s look at this timeline, and use this chart for reference.

As you can see, gas prices nudged up after the first of the year, as the Bush administration ended and the administration of the man who promised to raise energy prices began. In February, 2009, Energy Secretary Salazar made it known that the Obama administration would shelve the previous administration’s Outer Continental Shelf lease plan for six months while he went on a “listening tour”. The Bush plan would have opened up a number of new leases for domestic exploration and drilling and had already received significant public input, most of which was positive. Between then and September, when he announced that we would see no new lease plan until at least 2012, gas prices rose sharply and continued to trend steadily upwards.

The big blow came on December 1, 2010 when President Obama slapped a new moratorium on drilling over many, of not most, of the areas the Bush administration had opened just a year earlier. You can see what happened to the price of gasoline after that.

So, you still think, as CNN dismissively wrote, “there’s little politicians can do to influence the price of gasoline in the short-term”? It looks to me as if there’s quite a bit politicians did do and there is every reason to believe that we would see a similar drop in gas prices if the politicians in Washington decide to allow us to get the trillions of gallons of oil we and the rest of the world know are in areas Barack Obama has specifically placed off-limits.

I want to make one more point here. When George Bush signed that executive order and when Congress lifted the moratorium, gas prices dropped even though we had not pumped one drop of oil from those newly-opened areas. The very idea that the United States would tap its immense oil wealth — put into motion with a concrete government action — caused the worldwide markets to move. Does anyone really believe that could not happen again? Remember, gas prices dropped well over $2.00 a gallon in four months in 2009. Newt Gingrich’s plan would only drop prices by $1.50 or so and he’s given no particular deadline for when that would happen. If it takes a year, that will mean that would have taken three times as long to do less than the Bush administration did.

That does not strike me as “absurd” “political rhetoric” not a “pander” but a realistic goal with reasonable plans to back it up.