There are some preposterous fibs about gas prices that need dispelling. Both Democrats and Republicans have felt the need to attribute gas prices to presidents over the years, which has fueled some heated political debates (pun intended). Republicans like to ask the question, “Are you better off now than you were four years ago?” Those famous words were first spoken by “Republican Jesus” Ronald Reagan to win the election in 1980 against President Jimmy Carter. Republicans continue to use the phrase in tandem with current gas prices. The answer is obvious to any car owner, because no one likes to spend more on fuel.
The oil prices have little to do with presidents and more to do with supply and demand (warning: economic jibber-jabber to follow). The University of Chicago’s Booth School of Business recently polled a panel of 41 economists. They were asked if they agreed with the following statement: “Changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies.” Would you believe that not a single one of them disagreed with that statement?
Consider that the U.S. holds only two percent of the world’s oil reserves while consuming a grand total of 20 percent of the world’s oil. Although domestic production is at its highest level since 2003, the U.S. still is and will always be a small player in oil production. Simply put, we don’t have as much oil, nor could we produce as much as everybody else. Stupid. Even if oil companies produced more oil domestically, they would still sell to the highest global bidder.
The average price of oil during the Bush administration in February 2001 was $1.69 a gallon. By June of 2008, the prices had skyrocketed to $4.05 a gallon. A few months later it plummeted with the rest of the global economy to a $1.69 a gallon. President Bush could not have controlled those prices anymore than Lady Gaga’s outfits.
Newt Gingrich says he could put gas prices at $2.50 a gallon. He might as well change the price of milk, dog food or tampons. The reason all these statements are ridiculous is because no single person can dictate individual pricing on commodities.
Would you like a practical way to reduce the prices of oil? Hmmm, I don’t know, maybe we can reduce the amount of oil we consume (eureka!). When we reduce the amount of oil we consume, then the demand for oil is reduced (supply and demand). This leads to the oil companies’ having too much oil and the need to sell it at lower prices. President Obama’s administration has raised the requirements of fuel efficiency for auto-makers in the U.S., but this can only help marginally.
Those same economists, cited earlier on gas prices, agree 40-to-1 with the statement that “A tax on the carbon content of fuels would be a less expensive way to reduce carbon dioxide emissions than would a collection of policies such as ‘corporate average fuel economy’ requirements for automobiles.”
This could be slightly controversial, because raising taxes to Republicans is the same as drowning puppies and babies. N. Gregory Mankiw, Harvard economist and economic adviser to Mitt Romney, is the main proponent of this policy. He has a whole list of ways this would better the country and lessen the burden of gas prices, but that’s for another article.
The bottom line is that the president (Republican or Democrat) does not influence gas prices.