Your mommy used to tell you “it’s not polite to point.”
Too bad she’s not around now because you could unleash her to give her little talk to a bunch of people.
Gas prices are soaring and the patience of the American public is running out faster than gas supplies at some stations on the East Coast. The Democrats point to the White House. The White House points to Congress and the increasingly tense world situation. The public points to the politicos. Nearly everyone points to the oil companies.
Except the oil companies, who point to gas prices in Europe, which they stress are higher than the prices in the United States — where our gas prices are reaching a point to where consumers may soon have to sell their cars on eBay to afford to pay for gas.
It’s getting so bad that some officials in Congress may soon have to increase the price it costs to buy them, too…
It’s not a pretty picture — a picture that is going to need some massive repainting by the White House, by the oil-company friendly GOP, and by oil companies. After all, George W. Bush made a big deal in 2000 about how his background in the oil biz would help the U.S.
The President moved quickly yesterday (the influence of new Chief of Staff Josh Bolten?) to address the issue. The full text of his comments are here. The New York Times reports:
President Bush today announced a series of short-term steps that he said might slightly ease energy prices, including a suspension of government purchases to refill the Strategic Petroleum Reserve and investigations into possible price gouging and price fixing. The moves reflect growing concern among Republicans that the price hikes would become another election-year liability for them.
In a speech this morning before the Renewable Fuels Association, Mr. Bush followed the path of Republican leaders who, in a reversal, have suddenly called for the Federal Trade Commission and the Justice Department to conduct investigations and to consider “windfall profits” taxes, which the party has usually rejected.
While the amount of oil that would be freed up by suspending deposits to the strategic reserve is small, analysts said it would help by sending a signal to oil companies that the administration is serious about the issue.
Nevertheless, administration officials conceded that their power to hold down or reduce gasoline prices was limited.
And President’s remarks seemed to have an immediate positive band-aid effect, according to the AP:
Crude oil and gasoline futures fell Tuesday after President Bush gave the Environmental Protection Agency the authority to relax regional clean-fuel standards to attract more imports of gasoline to the United States and to make it easier for supplies to be moved from one state to another.
President Bush also said he would halt deposits of oil to the nation’s strategic petroleum reserve until the fall, but analysts said that measure would have next to no impact on crude prices and certainly would not help make gasoline any cheaper. Even the fuel-specification waivers will have a marginal impact, analysts said, given that the main force behind today’s soaring pump prices is the near-record price of crude oil.
“If you have $75 a barrel crude oil, you’re sort of at a starting point of $2.90 a gallon for gasoline,” said Mary Novak, managing director at the economic consulting firm Global Insight.
Henry Payne, writing in the Detroit News, argues that Big Government, not Big Oil, is to blame for the prices:
As opportunistic Democrats pile on, Republicans defensively point to their passage last year of the energy bill as evidence that they are “doing something” — reducing dependence on imported oil and encouraging greater use of ethanol in gasoline.
How ironic. It is precisely the energy bill — along with international events — that is causing the prices to increase.
“Gasoline prices are up 60 cents over last year at this time,” says Dan Gilligan, president of the American Petroleum Marketers Association of America, which represents fuel distributors nationwide. “Forty-five percent of that is higher crude prices, due to reasons we have little control over: political instability in places like Iran and South America, Chinese demand, etc.
“But 15 percent of that increase is due to the effect of last year’s energy bill.”
Payne’s piece (which should be read in full) says GOPers, big oil and Democrat-allied trial lawyers have held up the shift to a saner energy policy.
Congress first mandated the production of 4 billion gallons of ethanol this year (increasing to 7.5 billion in 2012). This arbitrary number is to help wean America from its “oil addiction,” as President Bush puts it. In reality, it is a sop to the powerful farm lobby that makes corn-based ethanol.
Second, the energy bill required that ethanol replace MTBE as an additive in gasoline to meet smog rules in urban areas. Because smog is heaviest in summer, oil companies are refining their “summer blends” now. Already struggling to meet the initial 4 billion gallon mandate, the ethanol industry cannot keep up with the additional demand from the MTBE mandate, resulting in shortages and price spikes.
“We asked for a more orderly, two-year transition from MTBE to ethanol. But we didn’t get it,” Gilligan laments.
An easier transition would have required offending another powerful group: the Democrat-allied trial lawyers. They await the potential windfall from lawsuits alleging MTBE has leaked from gas tanks and tainted groundwater. As long as MTBE was federally mandated, oil firms had legal cover. But the energy bill set a May 5 deadline for the transition — without any continuing liability protection for MTBE.
Meanwhile, Democrats pointed to the Bush administration and the GOP in particular:
“I think the American public on this issue, on this issue alone, may decide the election this fall, on where you stand on this issue: on whether or not you stand with those that want to see a rebate going back or whether or not you’re going to protect large oil companies … and if you’re perceived as standing on that side and your up for re-election or election, then you’re in trouble,” said Sen. Chris Dodd of Connecticut.
Dodd and Sen. Byron Dorgan of North Dakota introduced an amendment to the emergency supplemental spending bill now in the Senate that would impose a 50 percent windfall profits tax on oil company revenue derived from sales of oil at more than $40 per barrel.
Dodd said he anticipates that senators will attempt to deride this legislation, but they do so at their “own peril” because soaring gas prices will affect the 2006 election.
But Republicans countered that Democrats have obstructed efforts to up the supply of oil and for many years listened to “radical environmentalists” who forced onerous regulations on oil companies…
…Gas prices have doubled since Bush took office in 2001, and members of Congress returned from their Easter recess this week with the issue near the top of their agenda. With prices approaching $3 per gallon of gas, Bush said Tuesday he opposes increasing taxes on oil company profits but instead wants them to reinvest more of their profits in finding ways to reduce oil dependency.
The likely outlook?
This issue may be just be in its formative stages.
The everyday, increasingly defiant — and threatening — rhetoric from Iran aside, Bush will likely come under fire in coming months if prices continue to rise and if there are publicized gasoline shortages heading into the summer. Gas lines are bad; people being stranded and unable to work and losing income is catastrophic.
Unless gas prices are stabilized and kept stabilized, critics will ask why Bush hasn’t moved to demand greater mileage on vehicles and why once again he is seemingly “tilting” to side of oil companies by opposing taxes on profits. Is it mere coincidence that he’s siding with his longtime supporters in the oil industry? critics will ask. And, some will ask, why didn’t talk in 2000 about his oil industry expertise translate into more stable gas prices?
People will ask why a better energy policy isn’t already in place. Blaming high gas prices or a shortage on the refusal of many members of Congress to drill in ANWR or raising that as a kind of panacea won’t cut it, because its short and long range impact remains in dispute in many quarters.
What you can expect: hearings (and posturing) in Congress where oil officials are called into testify — and if there’s evidence of price-gouging, you can expect a highly-publicized arrest of a prominent oil official.
Bush is going to have to move swiftly to try and stabilize the gas situation facing an uncertain international outlook plus the fact that he’s now working with limited political capital.
But, as always, there’s a factor that will make the administration’s problems more difficult: its growing credibility problems and bitter confrontation with the news media over leaks and threats of legal prosecution of journalists.
Even without the press and credibility problems Bush would have a plate that’s terribly full. Due to his earlier choices in governing style, his plate will now be overflowing because some will no longer give him the benefit of the doubt.
And bipartisanship ain’t easy to get in an election year…
UPDATE: The Los Angeles Times says Bush’s measures will probably not help much:
That’s because the factors driving today’s record gas prices are varied and complex — and beyond the reach of presidential dictate. They include a shortage of refining capacity, rampant speculation in oil markets, oil company choices of fuel additives, unrelenting gasoline demand and high industry profits.
Even so, U.S. commodities traders seemed to give the president credit for the effort.
Prices on oil and gasoline markets fell after Bush halted government oil purchases for the strategic petroleum reserve and urged the Environmental Protection Agency to consider relaxing clean-fuel rules if gasoline supply problems emerge. The moves were aimed at keeping more oil on the open market and making it easier for refiners to deliver fuel where it is most needed.
“It took oil prices down, it took oil stocks down, and it calmed the market,” said Fadel Gheit, an oil industry analyst at Oppenheimer & Co. in New York. But the proposals, he added, “aren’t really going to do anything. It’s good TV and gives the appearance of being in touch.”
That appearance, already important in an election year, will be more so this week, as oil companies including giant Exxon Mobil Corp. and Chevron Corp. roll out first-quarter profits that are expected to top previous records that generated anger at the pump and in Congress.
“They are going to be record, blockbuster, huge, given the fact of where these commodity prices are going,” said John Kilduff, a senior vice president at commodities firm Fimat USA Inc. in New York.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.