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The great debate over oil prices and who is to blame



Published: Mon, March 12, 2012 @ 12:00 a.m.

The debate between economists and politicians over whether a president can control gasoline prices will continue until automobiles no longer run on gasoline. And the debate will shift to the price of whatever it is that cars are running on then.

But there can be no debate over this: neither party can have it both ways.

When Barack Obama was seeking the presidency in 2008, gasoline prices were high, and candidate Obama was not averse to putting the blame on President George W. Bush.

By the time President Obama took office, prices had fallen dramatically, but not as a reflection of Bush energy policy in the latter months of his presidency. Gasoline prices fell because it was the economy that was in the tank.

Generally speaking, gasoline prices are a reflection of what’s happening on the world stage, whether it is Iran threatening to block the Strait of Hormuz or speculators and oil companies reacting to that or some other news.

Republican presidential candidates are of nearly one voice in blaming Obama, and one of them, Newt Gingrich, even says that he could have prices down to $2.50 per gallon in two years. President Bush saw the price of gasoline fall from more than $4 a gallon in July 2008 to less than $2 in January 2009. But the Dow Jones Industrial Average was on a downward spiral at that point, bottoming out at 6,547, almost exactly half of what it is today, three years later.

Pain at the pump

Today’s rising Dow, however encouraging it might be for the economy in general, is not much consolation to the man or woman who is paying $5 more to top off the tank of a mid-sized car today than it cost at Christmas time.

To someone on a budget, that’s $5 that won’t be spent somewhere else, and a loss in discretionary spending produces a drag across the economy. Not to mention the psychological effect it has on every consumer who feels a pinch at the pump.

The administration says U.S. oil production is at an eight year high. But what’s also going up are oil exports. That’s not surprising, since, as we said, oil from which gasoline is refined, is not a national product, but an international product. “Drill, baby, drill” is a catchy phrase, but it isn’t a solution to U.S. energy demands and costs when the product of drilling is shipped to China.

There is no quick or solitary solution to the problem of increasing energy costs. A combination of increased production and decreased demand, through conservation and shifting to alternative sources of energy, holds the best long-term prospect for success.

In the short term, Obama should give serious consideration into tapping some of the 700 million barrels of oil stored in the nation’s Strategic Petroleum Reserve. Tapping as little as 5 percent of those reserves can have a dramatic effect on what speculators are willing to risk. And lower prices for oil translate into lower prices for gasoline.


Comments

1legend33(169 comments)posted 2 years, 6 months ago

I blame Betras!!!

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2VINDYAK(1799 comments)posted 2 years, 6 months ago

Obama had opportunites beginning in 2008 to encourage additional oil exploration, drilling new wells and construction of new refineries. If he had done so back then, we would not be in the situation we are in now. But he chose not to do anything specifically because he promised the green energy industry that he would change the way Americans consume energy. In less than 4 years, he has promised to change the way America consumes energy!

Converting to new enery sources is nearly impossible to do in such a short period of time because industry, government and the public are not prepared or willing to go this route at this time. Changing our primary energy demands takes time. Time for industry to develop sustainable alternatives. Time for people to accept these alternatives. And time for these alternatives to be proven over time, not by force or by political promises.

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