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February 24, 2012 5:42 PM Gas Price Hysteria

By Ed Kilgore

In one shot at Republican pols that no fair-minded observer would dispute, the president yesterday accused GOPers of “cheering” higher gas prices. Not since the days of the mindless “Drill Baby Drill” chants have we seen so much excitement over pain at the pumps.

As Matt Yglesias calmly explains today, it really takes an amnesiac to yell, as John Boehner has been doing, that gas prices have doubled since Obama took office:

Gas prices are indeed way higher than they were on Inauguration Day. That’s in part because the winter of 2008-09 was the cheapest moment for gas prices that we’ve seen in years. Do we remember what else was going on back then? That’s right—a global financial crisis that tipped the entire world into recession. It turns out that driving to work, ferrying stuff from the warehouse to the store, hauling containers across the Pacific Ocean, and flying around to meetings all takes oil. If you manage to orchestrate a situation in which millions of people lose their jobs, retail sales plummet, stores close, and economic activity generally grinds to a halt, this frees up a lot of extra oil. Cheap oil leads to cheap gasoline, so if you did have a job at the depths of the recession your commute got cheap.

With the global economy beginning to recover, even as countries like China continue to modernize their transportation systems, yes, oil prices are headed back up (helped along, of course, by fears of a war involving Iran, which Obama’s GOP critics are daily blasting him for failing to encourage). But what do you want, asks Yglesias?

[N]othing Santorum or Boehner or Gingrich or Obama says is going to change the fact that the United States is an increasingly small part of the global demand picture. When China, India, or Brazil get richer, their citizens start trading bicycles for scooters and mopeds for cars. They’re flying more airplanes. This increases the global demand for oil and pushes prices up. All else being equal, this is inconvenient for American drivers. But it’s far from clear that it’s on net harmful to the American economy. American firms are hoping to export goods and services to rapidly growing economies. Every time Boeing sells a plane to an Asian airline, that increases the demand for jet fuel and makes driving marginally more expensive. But we’re better off in the fast-growing world than in the slow-growth, cheap-gas world of three years ago.

Unfortunately, turning back the clock to Inauguration Day 2009 is a pretty common GOP objective—when they aren’t trying to turn the clock back to 1964 or 1937.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Mitch on February 24, 2012 6:03 PM:

    Hm. I wonder when that anger is going to be directed at the American oil companies who have been selling gas overseas instead of helping to ease the pressure here at home?

    I mean, it's not like they aren't making record-breaking profits every year, pay no taxes, and receive billions in kickbacks from we taxpayers every year. Wouldn't it be the patriotic thing for them to try and help us out here at home, instead of focusing on making profits by selling gas to other countries for greater profit?

    Oh, wait. It's all Obama's fault. I forgot. My bad.

  • President Lindsay on February 24, 2012 6:13 PM:

    ...a pretty common GOP objective—when they aren’t trying to turn the clock back to 1964 1469 or 1937 1379.

    Gotta be more careful, Ed. You had some digits in the wrong place.

  • President Lindsay on February 24, 2012 6:17 PM:

    Okay, can anybody tell me the html tags that will work for making a strikethrough? It was ignored on my post above for 1964 and 1937. I thought an s (and /s to close) between these would do the trick.

  • Danp on February 24, 2012 6:20 PM:

    Pres. Lindsay: Strike-throughs don't work here.

  • exlibra on February 24, 2012 7:01 PM:

    Danp on February 24, 2012 6:20 PM:

    Pres. Lindsay: Strike-throughs don't work here.
    ~~~~~~~~~~~~~~~~~~~~~~~~

    's right; that's another labor sector that's been outsourced (to India, I believe)

  • jjm on February 24, 2012 8:37 PM:

    Sorry guys, I recall when gas went way over $4.00/gallon in 2008 and fed the economic collapse, since no one could afford to drive out to shop, trucking costs massively more, etc. That was under G W Bush, and I always thought it was because the oil companies were making as much of a killing as they could before the coming demise of the economy.

    Here, I wonder if the oil companies are not themselves motivated to help the GOP by inducing another collapse?

    It won't work as well this, time, however: we are now using a lot less per mile than we used and overall, gas consumption is down. Why? People wised up to the fact that the oil companies would gouge them shamelessly, so they went out and got higher mpg cars, diesels, hypbrids, et al.

  • Joe Friday on February 24, 2012 9:42 PM:

    The American RightWing needs to answer the simple question as to just how "Drill Baby Drill" helps when gasoline consumption, which last year fell below 1980 levels, has recently plunged even further over a cliff:

    Retail Gasoline Deliveries

  • wvmcl2 on February 25, 2012 12:00 AM:

    ...or 1912, in the case of Ron Paul.

  • The Oracle on February 25, 2012 6:49 PM:

    Yes, the gasoline price spike of 2008 ended when the housing bubble finally burst, market liquidity froze, the stock market index plummeted, hundreds of thousands of jobs were lost as the economy contracted AND all the oil futures speculators and investors were squeezed for a short time, relieving speculative inflationary pressure on oil barrel and gasoline prices for a while. IOW, the financial crisis and collapse in 2008 regulated the oil futures speculators during the last year of Bush's presidency, regulated what Bush refused to regulate (set limits on) through the Commodities Futures Trading Commission, which was packed with pro-oil industry pro-speculator "free market" commissioners.

    Bail-outs (billions of dollars) and behind-the-scenes Federal Reserve actions (trillions of dollars) saved "too big to fail" corporations as well as a whole lot of "too big to jail" oil futures speculators. They're back!!!!! A study after the 2008 financial crisis reported that 40 percent of the price of each gallon pumped went to the middle-men oil futures speculators (firms and wealthy individuals. The same is no doubt happening today, and for the same reason, legally-mandated restrictions on oil futures trading not being enforced. Thus, when you look at the price on the gasoline pump while filling up your car, remember that about 60 percent of that price is due to supply and demand, while the remaining 40 percent is due to some oil futures speculators manipulating the oil and gasoline markets for their profit. And any product you buy (like food at a grocery store) that rises in cost, the price increase is probably due to increased distribution/transportation costs that the product supplier is passing on to consumers (you know, to you and your family). Allowing the oil futures speculators to run hog wild, therefore, has a ripple effect throughout our society and the world, driving up costs for consumers of one thing after another, an oil futures trader induced inflationary cycle, solely for the benefit of the 1-percenters, to the detriment of everyone else not members of this elite clique of corporate and wealthy individual gamesters.

    BTW, I miss "This Week In God," one of my favorite weekend must-read web-surfing destinations.