Gas Wars: Will it help Bolling, Cuccinelli or McAuliffe be Governor?

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    by Paul Goldman

    Can Terry McAuliffe’s electric cars trump Cuccinelli’s investigative power? Or can the Governor give Bolling a position to join the oil politics card game? To the extent prices at the pump do hit the predicted $ 6 bucks a gallon, logic suggests it will connected – if not in fact then due to the too-good-to-pass-up opportunity – created by growing fears of Iran getting the A-bomb. In the oil business, it is known as the “war premium.”

    It is clever how the producers, refiners and pipeline owners use such fears to horde supply so as to drive the prices up yet have the public blame those beating the war drums.

    Iran actually has some good political reasons to play hard ball here. Their cost of production is considerably higher than the other Arab sheikdoms. Moreover, their oil industry is far behind the times in that regard, and so they have the double whammy: it costs more and they lag behind on modern production. Plus Iran uses a lot of its oil domestically, this is one reason they need a nuclear program because they need to start generating more nuclear energy for domestic use to free up oil for sale to foreign buyers.

    Bottom line: Iran needs the price of a barrel as high as possible.

    At the same time, the Iranian  leadership is not strong politically and thus it needs to rally the “nationalism” of its people against a common enemy.

    Remember Saddam also believed being attacked would help him in terms of internal politics. So why couldn’t the Iranian’s believe the same thing?

    Iran’s leadership would get to blame the Jews, the Americans and the Arab oil sheiks for all their problems, as they already do: except now they would have the smoking gun literarily.

    The point being: Since all politics is local, it may be that in Iran, raising the tensions with the West and Israel, even it if gets their nuclear facilities bombed, is seen as the right risk vs reward play.

    Washington and the President could act, and likely would. But outside of releasing supply from the Strategic Reserve what could they actually do? Moreover, they release oil, not the refined product. If refiners are already running at “full” capacity, what difference does having more unrefined product do?

    Enter then, Attorney General Cuccinelli.

    Six dollar a gallon gas is going to create a huge amount of anger in the very groups that are key to winning the Virginia Governorship.

    We know the public is going to put a good deal of blame on the oil industry.

    A Democratic Attorney General would have no problem taking the “populist” line. But historically, they have overplayed it in other states by charging more than could be proven.

    There is an old advertising maxim: You don’t have to sell sizzle if you got sizzle.

    $6 a gallon gas, heck $5 a gallon gas for any sustained period of time is going to sizzle the political boiling pot plenty.

    Normally, Republican Attorneys General are reluctant to get into the fray for fears of being called anti-business.

    That might have been true say for Attorney General Bob McDonnell.

    But Cuccinelli seems to see the politics of things differently.

    Yes, in theory, price is a matter of supply and demand. But this free market analysis assumes certain facts that don’t necessarily operate in the oil business.

    Moreover, this is not Texas or Louisiana for example: the politics are different here when it comes to energy.

    If you can be seen in that debate as being an advocate of the average person and business, it is going to be a big plus when you run for Governor.

    Terry’s electric cars will start looking a better at 6 bucks a gallon. It will make Terry look more visionary and astute. This will give a good political opening not to mention a good one business wise.

    Terry will need to find the sweet spot between making money and winning votes. It will not be easy but it will not hard either.

    As for Mr. Bolling, he will need to fight for a seat at this political table. Governor McDonnell can appoint him to head some Task Force. He can take the pro-production line. But that doesn’t help right now.

    He could concentrate on a group, say truckers since they are an important player in Virginia politics.

    The GOP is rural and suburban based. The price of gas hits them really hard.

    Bolling can’t just let Terry and Ken have the limelight here.

    My pick:

    The initial advantage goes to Terry. Voters are skeptical of the electric car, especially the MyCar in my view at this point, not due to anything mechanical or the like, strictly because it is different.

    But you start getting sustained oil prices over 4 bucks a gallon and people start rethinking what they have been thinking. Give me $5 a dollar gallon black gold and MyCar is beginning to look like…well, “Who stole my car dude?” a very funny movie at times, really well acted in my view.

    At 6 bucks a gallon, every politician in America will want to be seen as part of the solution, not part of the problem. The SUV will stay in the garage. Electric Cars could get a real boost.

    Ironically, the Saudis and others know that. But I doubt they are worried about “going electric” really hurting them in the short run. But it would help Virginia coal guys since you got to build out the electric grid, run a lot by coal right now although natural gas would seem to be a sleeper too.

    Then again, you got solar and other forms of clean energy.

    I got to assume 6 buck gas hits some price point.

    So Terry starts in the driver seat given the politics, his reputation as an alternative energy guy if he does it right.

    $6 a gallon gives him a chance to change the debate in his direction.

    Cuccinelli could be right there behind him though, if he plays the populist card like he can. The AG has the ability to expose the what’s wrong, unlike Terry who plays on the how to fix side.

    But since people are paying for the gas at the pump, Terry’s is more abstract whereas the AG gets to be where the rubber meets the road. But he needs facts and this takes time to get.

    Bolling could find himself Bolling Alone on this issue, looking for a way into the story.

    Of course, we got to hope it doesn’t happen. 6 buck gas is brutal for a lot of people in a lot of ways.

    Think about it: Newt Gingrich thinks he looks like an savior by promising an energy plan that makes gas $2.50 a gallon.

    That’s become the new GOP rallying cry?

    If $2.50 is the best the Drill, Baby, Drill party says we can do if we do everything they want – then that tells you $6 a gallon is possible in the near future if Iran is willing to play Russian Roulette the Russian way, with five of the six chambers loaded.