Faux “News” in 2008: Presidents Have No Control Over Gas Prices, It’s All Market Forces

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    Thanks to Media Matters for these clips from Faux “News” back in 2008 (when Bush was President and gasoline prices were reaching record highs).

    Following GOP strategy, Fox News is again blaming the Obama Administration for rising gas prices — a claim that has been repeatedly debunked by energy analysts. But back in the summer of 2008 when the average U.S. gasoline price hit a record high of $4.11, Fox said that “no President has the power to increase or to lower gas prices” and the only way to reduce our vulnerability to gas price spikes is to use less oil.

    A few thoughts of my own on the “flip.”

    Having worked at the U.S. Energy Information Administration for 17+ years as a senior world oil markets analyst, I can tell you that Faux “News” was a lot more correct back in 2008 than they are now. The fact is, oil prices are high because of a combination of: 1) surging world oil demand for years now, particularly in Asia; 2) very low world spare production capacity; 3) OPEC countries urgent need for high oil revenues to maintain their welfare states and keep their citizens from rebelling against their authoritarian/repressive regimes; 4) the continued fact that Americans consume huge quantities of oil to propel themselves around a sprawling pattern of development that may have made sense in the 1950s, but almost certainly doesn’t anymore; 5) a recovering world economy driving higher demand and, ceteris parabis, higher prices; 6) constraints on OPEC production for a number of reasons, including political problems, sanctions, etc; 7) a “risk premium” due to tension in the Middle East and elsewhere; etc.

    So, what can a president do to affect any of this? Clearly, the answer is to work with Congress — if that’s possible, which it isn’t as long as oil-company-controlled Republican’ts are in charge, or are able to gum up the works — towards a serious U.S. energy policy (which we’ve never had) that puts us on a steep glidepath towards getting off of oil. And yes, we all know ways to do that: putting in place sharply higher CAFE standards; removing incentives for waste and inefficiency, while providing steep incentives for conservation and efficiency; internalizing the economic, national security, and environmental “externalities” in the price of fossil fuels (can be done in a “revenue neutral” way by cutting other taxes); switching our vehicle fleet as quickly as possible to electricity (generated by clean sources like wind and solar); invest in transit, rail, and “smart growth,” not in perpetuating sprawl, etc.

    Of course, we don’t have this. Instead, we’ve got pandering demagogues like Newt Gingrich promising $2.50 per gallon gasoline, which is utterly absurd on so many levels it’s hard to know where to begin. For starters, I though Republicans believed in letting “the market” work? But now Gingrich wants to use the power of government to somehow (note that he doesn’t specify how, perhaps because he knows he can’t do it?) reduce gasoline prices quickly to $2.50 per gallon? Can he really be that stupid? And no, we can’t “drill our way out of it,” although we certainly can continue the trend we’ve seen during the Obama administration of modestly increased domestic oil production and reduced net oil imports. In the end, though, the United States accounts for around 22% of world oil consumption, but contains only 1.6% of proven world oil reserves. In other words, good luck with a “drill baby drill” strategy, even IF you totally don’t care about the environmental consequences. It simply isn’t the way to go — unless, of course, you’re ExxonMobil, the Koch brothers, or the Republican politicians they’ve purchased.