Gas Prices, Obama, and You
The negative consequences of higher gas prices seem not to receive the attention which I believe they deserve. According to the chart which I link here, the average price of a gallon of gas on, or around, the date when Americans went to the polls in November 2008 was $1.61. Due to possible infringement issues I’m not reproducing the image of the chart in the body of this article and thus I recommend you open the chart using another tab. Interestingly, as readers might note, we do see a rather precipitous drop in the price of a gallon of gas during the months leading up to the election. I think we can all agree that whether or not there was a political purpose in arranging for the drop, it obviously didn’t do Senator McCain much good. In any event, I bring the phenomenal retreat in gas prices during the period to the reader’s attention in an effort to proactively respond to those who might suggest that my views are of a completely partisan nature.
I’m going to lay my cards on the table, as it were, and provide the reader with my reasons for publishing this article. In the next few paragraphs I will provide information which I believe to be extremely relevant in any discussion related to the economy, the impact of the stimulus packages, and the possible motives behind the actions of both political parties in the past. Perhaps more importantly, I will also suggest how the ideologies of the two candidates for the Presidency may affect those policies in the future. Make no mistake, the future cost of energy is, if not the single most important issue, certainly as important as any other, when discussing the future health of our economy.
Prior to delving into the possible “how’s and why’s” of our increasing cost of energy, it might be prudent to take a look at the impact of rising, or falling, gas prices on the economy of the United States as a nation. According to the US Energy Information Administration, the United States consumed around 134 billion gallons of gas in the year 2011. If we multiply the gallons consumed by just ten cents, we find that the economic effect is to decrease the purchasing power of the consumer by 13.4 billion dollars annually.
Although, incredible as it might seem, this may not sound like much when one considers the truly astronomical numbers one finds in the Federal Budget, the figures might become more meaningful when one factors in the actual price increase consumers have been experiencing which has been as much as two dollars per gallon compared to the aforementioned time of the most recent Presidential election. As a result, if we multiply the 13.4 billion dollar figure by twenty we find that the total dollars being sucked out of the economy could be as high as 268 billion dollars annually which is certainly a significant amount in anyone’s book.
This amount is not only higher than the additional revenue that some have predicted should the Bush Tax Cuts be allowed to expire, but it represents additional money in the pockets of the consumer with no corresponding decrease in revenue for the Federal Government. In other words, should the Bush Tax Cuts be allowed to expire it’s true that, at least in the short term, there may be additional revenue reverting back to the Fed’s, but one must agree that this is at the expense of those who will be required to pay the additional tax. I make this comparison simply to illustrate the sum of money involved and not to take a position on the Bush Tax Cuts themselves. My point is that the gasoline price increases I reference have a serious negative influence on the national economy while providing very few auxiliary benefits. This contrasts with the debate over whether to let the Bush Tax Cuts expire in that it is assumed that any additional revenue accruing to the Federal Government will stay within our national borders even if it impacts the particular group of taxpayers negatively. In sum, bringing the price of energy down would have a much more positive impact on the consumer and the government than letting the Bush Tax Cuts expire.
In viewing the chart previously mentioned, supporters of President Obama might be tempted to suggest that I am making a case for him to “blame Bush” once again for his travails. Although I certainly agree that President Bush should be held to account on the issue, I do not agree that President Obama should be absolved of all blame. It has been an ongoing theme of the left that energy prices should be allowed, and even encouraged, to rise for reasons pertaining to their political agenda. As I have shown above, the rise in energy costs cannot help but have a negative impact on the economy, but it that very affect that the left deems to be positive. From their perspective, a slowing economy has a number of environmental and political benefits. The only fly in the ointment is the need to win elections during those times of economic retrenchment. I would thus suggest that whether one looks at President Obama’s policies related to the oil industry, ranging from the BP spill to the proposed pipeline, or his “investment” in green energy sources, one can see that his ideological position favors higher, not lower, energy prices in the future. If one wishes to view further evidence supporting what I have suggested one can almost sense the glee which the author of a piece published by the Earth Policy Institute attempts to keep hidden as he approvingly analyzes our imminent future.
Nothing I have suggested above should be taken as an endorsement of the Bushes. In the case of both the father and the son, the net result of their policies was to see a real and sustained increase in the price of a gallon of gas at the pump. I would suggest that much of the cost of both wars was borne by the American consumer at the pump, as opposed to the more widely referenced figures one finds in the Federal Budget. This leads me to once again refer to the chart on gasoline prices and another factor which the reader may not have previously considered.
I direct the reader’s attention to the fact that we see the beginning of a sustained price rise in February 2008. The significance of this date may not be immediately evident, but it happens to coincide with the date when the Bush Stimulus package was enacted. The American consumer may not have immediately factored in the resulting drop in the value of the dollar, but obviously those in the oil industry were not quite as sanguine. Interestingly, energy prices are no longer considered in all “inflationary indexes” as it is suggested that the volatility in price somehow skews the results. Isn’t it comforting to note that one of the prime influences on the economy, including a significant influence on the rate of inflation, is no longer factored into the indexes designed to measure the…..rate of inflation. Allowing for the manipulation of oil prices in anticipation of the upcoming 2008 election, and thus discounting the drop as one reflecting the existence of a trend, one sees that with the continuation of the Federal Reserve's policy of stimulating the economy the price of gas continued to reflect that new reality. I would therefore suggest that one can see, using gas prices as an example, what the true impact of the stimulus was, and will continue to be, as those outside the country simply reflect the new reality of what the dollar is worth.
There is no way of knowing what President Romney’s energy policy will be. I link here his proposals and his claims as to what he might do. In doing so I am not endorsing his candidacy, nor am I suggesting they reflect the policies he is likely to enact should he be elected. I simply present them for your consideration. I tend to agree with many of his proposals, but as we all know, campaign promises seem to have a habit of being forgotten when the candidate wins the office he seeks.
Thank you for your time and interest.