The morning after the second US presidential debate, Republican hopeful Mitt Romney’s “binders full of women” comment is getting the lion’s share of online attention. But what is getting less attention is his attempt to use high gasoline prices to attack his Democratic opponent, President Barack Obama.
And there is a very good reason for that: voters care deeply about gasoline prices, but they are truly confused whether the president can do anything about them.
In a poll released Tuesday by the University of Texas at Austin, researchers found that only 32% of voters believed the president had the power to manage gasoline prices. And only 9% believed the president is the “most responsible” for the price at the pump — in contrast, the largest percentage, 36%, blamed oil and gas companies.
However, and this is a big however in the runup to the November 6 election, a full 63% of voters said they would be more likely to vote for a candidate who promised to make gasoline cheaper. So, essentially, voters are acknowledging that the president has little power to affect gasoline prices, but they may hold him accountable anyway.
“What we see is a disconnect between reality and what people would like reality to be,” said Sheril Kirshenbaum, director of the University of Texas at Austin Energy Poll.
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During the town hall-style debate between the two candidates Tuesday at Hofstra University in Hempstead, New York, the issue proved to be on the minds of voters when audience member Phillip Tricolla asked Obama if — as Energy Secretary Steven Chu has said — it is not the role of the Department of Energy to help lower gasoline prices.
While Obama avoided a direct answer, he did say his administration has focused on reducing oil imports and increasing vehicle fuel efficiency, which he said will mean individuals spend less on gasoline overall.
“We’ve also got to continue to figure out how we have efficient energy, because ultimately that’s how we’re going to lower demand, and that’s what’s going to keep gas prices lower,” Obama said.
During the debate former Massachusetts Governor Romney went on the attack, charging that gasoline prices have doubled since Obama took office. While the charge is accurate, it ignores that when Obama took office gasoline prices were at their lowest point in almost five years, having plunged as an economic crisis gripped the US. A look at a chart of gasoline prices since 2000 shows a steep rise during the administration of former President George W. Bush, where the average weekly price topped out at about $4.11 per gallon in July 2008, before dropping to a $1.66 at the end of December 2008 as the US economy faced the worst conditions since the Great Depression.
Obama argued that point in the debate, attempting to turn the issue into an attack on Romney.
“So, it’s conceivable that Governor Romney could bring down gas prices, because with his policies, we might be back in that same mess,” Obama said.
Romney, however, blamed gasoline prices on the Obama administration’s failure to permit enough oil and gas production on public lands in the US, and said he would increase that development.
“If we do that, if we do what I’m planning on doing, which is getting us energy independent, North America energy independence within eight years, you’re going to see manufacturing jobs come back,” Romney said. “Because our energy is low cost, they are already beginning to come back because of our abundant energy. I’ll get America and North America energy independent. I’ll do it by more drilling, more permits and licenses.”
What Obama didn’t say was an argument he has made in the past — that the price of crude oil that is refined into gasoline is set in a global market — and that simply increasing US supply in the face of increasing global demand by China and others will likely do little to significantly cut the price at the pump in Iowa, or California, or anywhere else in this country.
Oil is a global commodity, just like iron ore. If we don’t have production rising as fast as demand (reference the China mention above), then price will rise. So if you want the global oil price to go down, then produce a lot more – anywhere. The US is a really good place to do that, as we have a lot of untapped tight oil and the technology to get it (not every country does). If we drill, frack, pump enough and build pipelines to distribution points, not only does the global price of oil go down, but a lot of jobs are created. (Going after tight oil makes economic sense as long as the oil price stays above $40/barrel, so cutting oil prices in half by increased production is feasible.)
On top of that, the more oil we produce here, the less we have to buy from elsewhere, which improves our trade balance, the value of the dollar, the security of our supply (people that don’t like us have a harder time messing with it), and allows us a lot more freedom from middle east entanglement issues – fewer reasons to go to war. If we shift some of our oil consumption over to CNG or LNG, we might have the ability to become net exporters and make a lot of money off of China & Europe (they’ll want LNG from us too).
There are also some advantages to local sourcing due to lower transportation costs, but a very significant cost to the end user is in the refining of the raw material into the grade of product that will be purchased.
In the case of gasoline, it is really hard to get a new refinery permitted. The siting regulations alone are numerous, strict, and expensive. The same goes for operating the refinery. If we had more refinery capacity, we’d have lower gasoline prices, but that would mean someone has to fight through the regulatory red tape and fight through the environmentalists’ court cases first just to get the permit to build it – it is tough to risk capital on that in good times and its very unlikely that anyone will want to try with a weak economy. Reduce the regulations and institute a ‘loser pays’ policy in the courts, and that could change.
The additives required for winter vs summer gasolines are different and the botique blends required for California are exotic (which is why a minor impairment to a CA refinery causes major price hikes there). The additives are a totally different product stream – if those get pinched, at the pump gasoline prices rise even if oil price is steady.
The reference to difficulties getting a new refinery permitted are certainly true, but it implies two things: that anybody actually wants to build a new refinery, and that US refining capacity has been stagnant as a result of the fact that no greenfield refineries have been built. There actually have been a few attempts to build refineries in some relatively out of the way places, such as the Yuma, Arizona refinery and the plan still on the boards to build a new refinery in South Dakota. But the fact is the US has greatly expanded refining capacity through a few steps: debottlenecking, which has had an enormous impact; the construction of at least 1 million b/d in ethanol capacity, which produces a transportation fuel that displaces gasoline; and expansions at individual refineries, such as the big growth at Marathon’s Garyville, La. refinery that was practically the size of a medium-sized plant all by itself. With these trends, combined with declining US consumption of gasoline, no new refineries are needed.
President Obama is not responsible for gasoline prices soaring. When other president’s were in office gasoline prices was fluctuating up and down
But they did not blame those president’s of gasoline prices going up, so it appears to me that racism is alive and well in america.