Memo to Voters: None of the Candidates Will Lower Your Gas Prices; A Glance At Clinton’s “Plan”

One of the oddities of current elective politics is not who the media covers, or in what tone they cover them, but rather the insipid approach to issues most people find important. For instance, gas prices. Andrew Leonard wrote about gas prices and the presidential election at Salon earlier this week. To his credit, he states the obvious: Presidents cannot lower gas prices.

But Leonard’s piece is an exception. In the explosion of meta analysis of presidential politics, it’s become more chic to talk about what voters are voting for than to write about the reality on the ground. The role of the press and commentators has somehow transformed from what Thomas Jefferson called ” the best instrument for enlightening the mind of man” into a virtual Oracle at Delphi, working only on predictive functions rather than analytical ones. For instance, today Hillary Clinton is actually holding a campaign event at a Pittsburgh gas station. From her press release (which we will post shortly):

Hillary Clinton will visit a gas station in Pittsburgh to discuss her plan to offer relief from skyrocketing gas prices that are hurting the pocketbooks of families in Pennsylvania and across the country. At the Curran Gulf Gas Station, Hillary will be joined by the owner, Jay Curran, gas station employees, and Janice Hodge, a local resident who has been forced to cut back on other household expenses due to the high cost of gas.

“I think it’s time we kicked the oil men out of the White House. Unfortunately, despite a lot of talk about clean energy, Senator Obama voted for Dick Cheney’s budget-busting tax breaks for big oil. And Senator McCain opposes eliminating them,” said Clinton.“I will provide solutions to offer relief from record gas prices, end our addiction to foreign oil, protect the planet, and create millions of new jobs.”

This is all complete nonsense. And it would be nonsense had Barack Obama or John McCain said any of it as well.

First, her entire plan for lower gas prices is a long term plan. There is little if anything a President can do in the next 8 years to lower gas prices. (As Leonard mentions, one possibility is releasing the Strategic Oil Reserves, but that’s just a terrible idea; first, the price lowering may not be noticeable, and second, taxpayers would just have to spend money to buy enough oil to fill up the reserves again after they were released. What’s the point of that, exactly?). Now, some of the ideas in the long term plan may be good ones (or may be bad ones, depending on your politics) but absolutely none of them will have any substantial impact on gas prices in the next decade barring some major technological breakthrough.

Moreover, the charge about Cheney and Bush being oilmen and thereby manufacturing high gas prices is the biggest canard out there (That no one ever tries to refute for some reason). First, note the logical inconsistency with what I wrote right up top: if higher gas prices causes a party to lose elections, why in the world would Bush and Cheney want higher gas prices? The logic just doesn’t follow.

Furthermore, the language about tax breaks for big oil has absolutely nothing to do with big oil. It cannot logically even be intended to be. Anyone who has taken a basic economics course knows that raising taxes on a provider will not likely lead that provider to lower prices. The mere concept is absurd. It’s rather an attempt to connect emotionally with the audience - “they are screwing you, well I will screw them” sort of thing. Unfortunately, no company is going to lower prices for fear of rescission of any of these tax breaks. Nor does Clinton even claim that to be so.

The actual reason for higher gas prices is twofold: high costs for both crude oil and refining costs. (Clinton actually mentionedthe emergence during the past decade of two other major consumers of gasoline, India and China. (And no, Carl Levin is not any more than marginally right). Katrina revealed the problem with refineries, as the damage that some took in the storm was a significant reason for subsequent higher prices. Recent news indicates very complicated problems with oil production:

Energy experts cited numerous underlying causes for the rise in energy prices, which have persisted despite a weakening American economy. American demand for gasoline has slipped about 50,000 barrels a day (out of total daily consumption of more than 20 million barrels) so far this year because of the slowing economy, but consumption in China, in India and in the oil-producing countries themselves continues to rise. Traders are also concerned about possible production cuts by the Organization of the Petroleum Exporting Countries.

World supplies have been trimmed by substantial cutbacks in production in Iraq and Nigeria in recent weeks. Nigeria alone has lost about 10 percent of its daily production since guerrillas stepped up their sabotage and kidnapping of oil workers in the Niger Delta at the end of last year. Some analysts fear that OPEC could cut production further when it meets next month to counter the prospect that a softening world economy may eventually weaken demand and push prices down.

As Leonard notes, Bush tried to convince OPEC to lower prices to no avail. So it’s hard for me to see how any of the three candidates would have better luck. Do they claim to have incriminating photos of OPEC members doing outrageous sex acts or something? Who knows.

This is not just a short term trend that is going to be magically erased. (For instance, see this BBC article of 2004 and this one of 2008).

But let’s take a look at strategies proposed to lower gas prices, starting with Hillary Clinton’s plan she is touting today at an actual gas station. Bold words are the actual elements of the plan copied verbatim. Commentary is mine.

1. Investing $150 Billion in Clean Energy, Including Establishing a $50 Billion Strategic Energy Fund to Demand that Oil Companies Invest in Clean Energy. This is going to have zero effect during the next two terms barring an amazing technological breakthrough, and even if there was a major breakthrough tomorrow, the existing technology means implementation of the breakthrough would probably be a long term process, not an overnight event; look at all the other changes in transportation technology.
2. Increasing Vehicle Fuel Economy Standards to 55 Miles Per Gallon. As president, Hillary would raise fuel economy standards to 40 mpg in 2020 and 55 mpg in 2030. And this will do what during the next four or eight years? Exactly. More research and development, better cars being developed, but gas prices will stay high in the interim if every other factor stays the same.
3. Putting 2,000 “Plug-In” Hybrid School Buses on the Road. I’m not sure the demand for diesel by 2,000 school buses has a strong correlation to high gas prices. Just a hunch on my part.
   
4. Accelerating the Production of “Plug-In” Hybrid Electric Cars – Hillary will also work to ensure that Plug-In Hybrid Electric Vehicles (PHEV), hybrid car with powerful batteries that can be plugged into any regular outlet, are available to individual drivers. When I first read this header, I thought it sounded great, but how would the President do this? It’s a great plan for a CEO of a company, less for a government official. Here’s what Clinton says in the body: Hillary would invest in research and stimulate demand for the first commercial PHEVs by: (a) Investing $2 billion in research and development to reduce the cost and increase the longevity and durability of batteries; Research Development - Great in the long run, pointless in the here and now. Any such actions taken during Bill Clinton’s administration would likely only be affecting the country around now. Research is just a slow and painful process, in any field. (b) Offering consumers tax credits of up to $10,000 for purchasing a plug-in hybrid; First, I feel compelled to point out that Hillary’s plan here on gas prices is identical to Rudy’s plan for health care. But to the point, this would probably lead to a marginally higher number of hybrids on the road, but there would still be high usage of gasoline. I can’t imagine so many people would use the tax credit as to change gas usage dramatically. For an example: Imagine who it is that pays $10,000 worth of taxes, and imagine how many of them would be willing to drive a hybrid but do not already. It’s not a long demographic list. (c) Adding 100,000 PHEVs to the federal fleet by 2015. Fine long term strategy, but it will not impact gasoline price costs during a Clinton administration.
5. Increasing production of biofuels to 60 billion gallons by 2030. How? Which ones? That’s left unsaid. It’s widely understood now how inefficient ethanol is (sorry, Iowa) and there’s no alternatives mentioned. Even so, it’s a long term strategy at best.
6. Providing Immediate Relief from Upward Pressure on Oil Prices by Freezing Additions to the Strategic Petroleum Reserve. Well this makes economic sense and is immediate. Buying less should lead to more supply, and lower costs. That’s good. The bad is that this is such a minimal measure that it will probably not have a tenth of the effect as the war in Nigeria mentioned above.
7. Calling on the Federal Trade Commission to Investigate Market Manipulation in Wholesale Oil Prices. See what I mentioned above about Clinton wanting to show she will fight for people. She’s calling for an investigation because a commodity is expensive. I’m not sure having the oil companies rack up giant legal bills is the quickest way to lower prices. Unless there is a smoking gun warranting an investigation, I’m not sure what the point of an investigation is. Or rather, I’m not sure what the point of selling an investigation as a means of lowering gas prices is. I have no real problem with investigating, but it seems unlikely to change anything.

The rest of the memo is dedicated to attacking Obama and McCain for standing for Big Oil. My point is not that any of these are bad or unworkable ideas; I’m not an expert in the field and it seems your reaction to them individually would be based on your political or economic views. But just looking at them with heightened scrutiny, it’s obvious that none of them even attempt to address gas prices. It’s pure pandering (or worse) to suggest that a vote for any of the candidates will lower your gas prices.

Barack Obama has never been as fervent as Clinton was today on lowering gas prices. (That could be a whole separate post in itself). Most of his comments on gas come in the context of some long term reform, such as him saying in a speech in 2006, “I’ve had enough of giving billions away to the oil companies when we’re told that we can’t invest in the renewable energy that will create jobs and lower gas prices and finally free us from our dependence on the oil wells of Saudi Arabia.” There is no plan to lower gas prices on his site aside from his energy plan which has a lot in common with that of Clinton’s above.

John McCain for his part has said from time to time that there is no immediate relief, but does raise the specter from time to time on his website, such as in relation to Hugo Chavez threatening to cut off supply.

Even an idiot can see the plans of candidates will not be immediate. See bolded text from this July debate:

Senator Dodd, gas prices are at record high levels. Granite Staters are frustrated. Americans are frustrated. What would you do to reduce gas prices?

DODD: Well, this is a major crisis issue, obviously. Energy, related problems, obviously, problems with global warming, the dependency on the Middle East for so much of our energy supplies. It’s a national security issue. It’s a health care issue. The problems are profound here and require some very strong answers.I also think this issue provides incredible opportunities for us to grapple with and deal with here, if we have the kind of strong leadership in the country. I believe we can make a difference here on reducing our dependency on those sources of energy while simultaneously rolling back the problems of global warning — of global warming.

Today we have the solar — polar caps melting, we have greenhouse gases that are accumulating at record levels way beyond expectations. We really have the dual responsibility here of reducing the polluting effects of depending upon fossil fuels and also allowing us to develop the alternative technologies that would allow us to move beyond this issue. I’ve introduced a plan here that would require a by the year 2017 50 miles per gallon standard for our automobiles. I believe that can be done. We ought to do it immediately, in my view. And a carbon tax, in my view, so that you make the polluting dependencies, the polluting fuels, more expensive and encourage them through the use of revenues collected, to move aggressively on developing the alternative technologies of solar and wind and other sources of energy we could use.

BLITZER: Thank you, Senator, but the question is: What would you do right now to reduce the price of gasoline?

DODD: Well, what we’ve offered already, in fact, and that is, of course, we ought to be saying here that when the price of a barrel of oil gets beyond $40 a barrel, where there’s plenty of profit here, that those dollars ought to be returned to the consumers in a rebate or plowed back into the research that would allow us to develop alternative technologies.But the real way to get away from this here, our dependency on that kind of fuel is causing us serious problems across the board. So it isn’t just a price of fuel issue here, it’s also depending upon polluting technologies that are going to cost us so much.

Even Blitzer gets it! (And even Dodd, who campaigned in most areas like he had nothing to lose, refused to say there’s nothing a President can do immediately to lower gas prices.)

This isn’t particularly a controversial research I’ve done, rather just point out the obvious (as did Leonard). I can only hope mainstream press makes the same observations; if only because the expectation that changing a President will magically solve gas problems is very mistaken.