Wednesday, July 11, 2012

Roll Over, Moe, Larry & Curly! Make Way For The 3 Gas Dummies: Captain Orange, BillO The Clown & Comb-Over!

Eags is still writing from the Centennial State's second largest city and he noticed something about roadside gas-price signage. According to the Dumbo/Teabagger triumvirate of Captain Orange (House Speaker John Boner), BillO The Clown (Faux News' loudest loudmouth), and Comb-Over (The Donald), gas prices were going to top $6/gallon this summer. Eags was struck by the gas-prices he recently saw in the Centennial State: all under $4/gallon. My, my. The trio of Dumbo/Teabagger energy experts seems to have been confounded by something called Supply & Demand. When the Supply is greater than the Demand, the commodity-price goes D-O-W-N. Drill, Baby, Drill! And you wonder why this blog calls 'em Dumbos? If this is a (fair & balanced) illustration of the economic model of price determination, so be it.

[x NY Fishwrap]
Gas Nags (Campaign Stops Blog)
By Timothy Eagan

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Up and down the high plains side of the Rocky Mountains, a road warrior becomes a comparative shopper. Last week, regular gas was $3.24 a gallon at the Safeway in Laramie, WY, $3.43 a gallon at Costco in Colorado Springs. A new American car, with an average fuel economy of 24 miles to the gallon, could cruise the entire midsection of Colorado on a single tank and still have enough change from $50 to buy caffeinated swill the color of the Houston Ship Channel.

Wait a minute: wasn’t gas supposed to be $5 a gallon now, costing $75 for that same trip? Let’s return to the experts:

“Certainly, this summer, we’ll see the highest gas prices in years.” So said House Speaker John Boehner, in February.

“Right now we’re headed toward $5 a gallon and by the end of summer — maybe 6.” That was Bill O’Reilly, of Fox News, in the same month.

“They’re gonna go to $5, $6, $7.” And that was Donald Trump in April, showing why he’s no better at predicting fuel prices than he is at reading public documents from the state of Hawaii.

As of Monday, the average price for a gallon of self-service regular was $3.38, according to the AAA daily survey, down from a peak of $3.93 in April. Prices fell just as Republicans and their partners at Fox launched a campaign to blame high gas costs on President Obama. The price is a graphic update, reminding voters of something with a real effect on their daily lives.

What does this unlikely gas price shrinkage prove, at the peak of the summer driving season no less, other than the hardy consumer advisory that people who demagogue for a living should stick to things that can’t be fact-checked?

For one, it shows that in the United States we’re still awash in cheap oil. Ask any European, used to paying $7 and $8 a gallon to fuel their golf-cart-size vehicles, what it’s like to fill up at the Loaf ‘N Jug in Fort Collins — reverse sticker shock.

But more broadly, this little economic parable is a good lesson in the phony politics that passes for a national debate on energy. Back in March, Mitt Romney, who certainly knows better, said there was “no question” that Obama was to blame for rising gasoline prices. At the same time, one of his surrogates, Senator John Barrasso of Wyoming, said Obama “should be held fully responsible for what the American public is paying for gasoline.”

O.K., so now that gas is much closer to $3 than $4, does Obama get the credit for the windfall, as Republicans indicated when they fell into this silly rhetorical trap? No, of course not. Fox hardly brings it up anymore. Gas prices — no story there.

But nor should Obama get to do a victory lap. Harvey, the invisible rabbit now strolling the boards on Broadway, has about as much power over the price of a global commodity like oil as the president of the United States does. And most voters, ahead of the politicians, understand that.

Obama is no environmental obstructionist, sad to say. There’s been more drilling on public land — much to the chagrin of lovers of wild open spaces in the West — under Obama’s watch than in the eight years of George W. Bush. It hasn’t done diddly to the global price. Oil companies are sitting on 7,000 leases to drill for oil which they’ve yet to tap.

And with the boom in North Dakota and elsewhere in the plains, Americans are less dependent on foreign sources: imports were 45 percent of total consumption last year, down from 60 percent in 2005.

But increasingly not all American oil stays in the states. Last year, for the first time since 1949, the United States exported more petroleum products than it imported, the Energy Department reported.

Drill, baby, drill is a fun thing for Republicans to chant back at Sarah Palin, but as a policy, it’s mindless, and enriches no one but an oil industry that made nearly $140 billion in profits last year.

The slogan, somewhat refined, sounds even worse when President Obama says it. “You have my word that we will keep drilling everywhere we can,” Obama told a crowd of oil workers in New Mexico earlier this year, when he was trying to get out ahead of the gas blame game.

Republicans say the Keystone XL Pipeline, which would ship dirty tar sands oil from Canada to the United States (and which Obama has refused to O.K.), could bring relief at the pump. Not a chance. The pipeline, under the best case scenario, would not open until 2020, and even then its output will be pegged to the global price, unless a President Palin decides to nationalize it.

Refinery production can lead to some short-term price manipulation, as we saw on the West Coast, which has the nation’s highest gas prices. Critics suspected willful withholding of full supplies to gas stations, as a way to run up the price, though the refineries said it was a simple capacity problem caused by repairs and other backups.

Most economists say the price at the pump has declined because the world has plenty of oil at a time of global economic slowdown. Production hit an all-time high earlier this year, while demand flattened — especially in Europe, which is using less oil than at any time since 1994.

It won’t fuel a talk radio rant on a long drive – better to listen to Springsteen sing about a “pink Cadillac” — but gas prices are pegged to a basic tenet of this summer’s economic conditions. Supply is up, demand is down, and prices have fallen. Even Donald Trump understands that, at some level. Ω

[Timothy Egan writes "Outposts," a column at the NY Fishwrap online. Egan — winner of both a Pulitzer Prize in 2001 as a member of a team of reporters who wrote the series "How Race Is Lived in America" and a National Book Award (The Worst Hard Time in 2006) — graduated from the University of Washington with a degree in journalism, and was awarded an honorary doctorate of humane letters by Whitman College in 2000 for his environmental writings. Egan's most recent book is The Big Burn: Teddy Roosevelt and the Fire that Saved America (2009).]

Copyright © 2012 The New York Times Company

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