Democrats to Cut Gas Prices

Today the Democrats announced their “100 Day” strategy to win over voters in the midterm elections this fall. The slogan for the campaign is particularly energizing–“A New Direction for America” The new initiative begins this Saturday, exactly 100 days before the November election, with the “Democratic Reunion: 100 Days, 100 Voters, 100 Actions.” It remains unclear as to how the Democrats plan to take over the Congress with a mere 100 votes; maybe its the 100 actions that take up the slack. Lack of imagination on the part of the DNC marketing team notwithstanding, the 100 Day strategy intends to focus on “a compilation of positions the party has staked out over the past few months on income, national security, energy, education, health care and retirement accounts.” The Dems are expected to draw much attention to “inflated” gas price as a key to their energy policy agenda. Sure, gas prices concerns will resonate with the American populace, but to rail on the Administration as the source of high gas prices is nothing less that a cheap populist appeal. It would do the Democrats well to look at some facts before they talk about helping out Americans at the pump.

Economics 101: High demand + low supply = High Prices. And that is exactly what we have. The US by far consumes the highest percentage of fossil fuels of any nation, but others are catching up. Most notable is China, which has maintained the higest rate of increase in consumption, having surpassed Japan in 2003 for the dubious distinction as the world’s second-largest oil consumer. China’s struggle to ensure a steady stream of oil is well documented, and very concisely so in this BBC article. Now China consumes nearly 7 million barrels per day and is projected to overtake the US in about 2020. If highway contruction indicates a trend, then take into consideration that the Chinese have over tripled their miles of highway in the past couple of years. So if the US is using over 20 million barrels per day and China uses 7 million and counting, we can safely assume that demand is very high. If production matched demand, then no problem would exist save the obvious negative environmental impact. But as we know the US has built no new refineries since the 1970s, meaning it is really difficult to increase supply. So it is simple economics. Republicans don’t set oil prices-the market does. Higher prices at the pump reflect the realities of supply and demand in today’s market.

And this all under the assumption that today’s gas prices are killing us. In reality, we are actually quite spoiled. Compared to the rest of the world, gas is a real bargain for Americans. Europeans often pay six or seven dollars per gallon! Now that might drive more of us to go out and buy a new Honda Civic as your author has; but at three dollars per gallon many Americans can still afford to keep their SUVs humming along. Speaking of humming, General Motors’ poster child for fuel inefficiency, its Hummer division, saw sales up almost 60 percent in May. To further put things into perspective, looking at prices adjusted for inflation shows that we are paying less per gallon than we did at the heigh of the Arab oil embargo of the 1970s.
So get real, Democrats. You cite a poll in which Americans said they “preferred Democrats to handle gas prices.” A note to the DNC: you can no more control gas prices than the Republicans. A key plank in the Democrats’ energy policy is the commitment to “a comprehensive policy that makes America less dependent on foreign oil, and ultimately energy independent by 2020.” How are they going to wean us of foreign oil? Are we do begin drilling in Alaska? Yes we can provide incentives for fuel efficiency. We must in fact. But the market ultimately will be responsible to make this change happen. Up until this point, consumers have shown that demand is not there to support hybrid cars, for example, as evidenced by most manufacturers of these vehicles scaling back production. But this is changing.

Retooling of the US economy to cut oil consumption will be a lengthy process, and I think both parties realize the need to look in that direction. In the meantime, oil prices may stay the same or rise some. But it is not a function of evil “Big Oil” being in cahoots with Dubya et al. It the market that drives prices. And even so we have it perhaps too good. So get real, Democrats. I’m calling you out on this one. I’m sure at least 100 voters will too.