BINGAMAN: The starting point for the [Senate briefing by oil experts] was one fundamental truth: the primary driver of the price for gasoline at the pump is the price of crude oil. This chart [above] was one of the key ones used by EIA Administrator Newell. It shows the price trends since 2005 for gasoline (in yellow) and crude oil (in green)…. [F]or the last 3 years, gasoline price movements have exactly tracked global crude oil prices. The idea that our gasoline prices are high today because of some policy of the Obama Administration is just not supported by the facts….
The bulk of the discussion at the briefing that we held on Tuesday about high oil prices was about what is going on in the Middle East and North Africa. It should be obvious that this is the major force driving oil prices…. As you can see from this chart [below], oil prices are very sensitive to these kinds of developments….
But what can Congress do to help ease the burden of high prices for U.S. consumers, when oil prices are determined mostly outside our borders? I think a realistic, responsible answer has to be focused on becoming less vulnerable to oil price changes over the medium- and long-term. And we become less vulnerable by using less oil.
Senator Bingaman (D-NM), who is not known for his eloquence, gave a better speech on oil last week than President Obama ever has. Why? Why are Democrats so lame in talking about this potentially winning issue?
Grist’s Dave Roberts offers his answer in the repost that follows the chart.
Bingaman tells the truth about gas prices, is lonely in doing so
by David Roberts
So I’m reading in Politico about Democratic fecklessness. (Yes, half my posts begin this way.) The problem is, whenever gas prices go up, Republicans benefit. They have a simple, powerful message ready to go, right off the shelf: drill here, drill now, pay less. Not enough drilling: that’s why gas prices are high. Drilling more: that’s how to lower them.
If a Republican is president, congressional Democrats and hippie enviro groups are blocking new drilling. If a Democrat is president, he and his cronies in Congress are pandering to liberals by blocking new drilling. It’s the same every time, so it’s all but inevitable that as gas prices rise they’re trying to tag Obama the “pay more at the pump” president.
In response, Democrats … flail. Every time. They say “we can’t drill our way out,” but they pretend like we can get out by punishing commodity speculators, opening the strategic reserve, or implementing “use it or lose it” gimmicks. They accept the fundamental falsehood at the root of the conservative position — the way to lower gas prices is increase supply of U.S. oil — and then reject the most obvious implication of that premise, i.e., we should drill more.
The result is hesitant, incoherent, poll-driven mishmash. In other words, vintage Democratic messaging.
Into this fog last week came a beam of light in the form of an extraordinary speech from Sen. Jeff Bingaman (D-N.M.), which didn’t get the attention it deserved. Bingaman is not normally a talky guy. He’s not a McCain or Lieberman, on Sunday talk shows so often they keep toothbrushes in the green room bathrooms. Nor is he given to grand political gestures. He’s cautious by temperament (to a fault, I’d argue). Despite his reticence, though, he is among the very few senators who actually understand energy.
Apparently, he finally had enough of the overheated, unmoored ideological fantasies that pass for public discussion of gas prices. So he dropped some knowledge.
First, he explained that the price of gas follows the price of oil. Then he explained that the price of oil is set on the global market. It is largely unaffected by domestic policies like EPA carbon restrictions and Gulf oil permitting. It is only barely affected, and only at the margins, by U.S. supply, which flows from just 2 percent of the world’s reserves. (After all, U.S. production has been rising even as oil prices rise too.) The price of oil is shaped by supply constraints in petrostates, demand growth in developing countries, OPEC policy, and unrest in the Middle East. None of those, you’ll note, take place in America.
What follows is an inescapable conclusion (my emphasis):
But what can Congress do to help ease the burden of high prices for U.S. consumers, when oil prices are determined mostly outside our borders? I think a realistic, responsible answer has to be focused on becoming less vulnerable to oil price changes over the medium- and long-term. And we become less vulnerable by using less oil.
That’s it. That’s the crux of the matter. If we want to solve our problems with oil, we have to use less of it. That simple truth is what centrist Democrats generally refuse to tell their constituents. [NB: I took out a chunk of the original post that was here; I botched some facts making an inessential point.]
Why? Because Democrats are always running scared. They’ve been scared off of the demand-side message by pollsters who tell them voters don’t like conservation, and by conservative concern trolls who invoke Carter, and by Beltway media CW drones who tell them that the message will lose the morning.
But in the end, you cannot out bullsh*t a bullsh*tter. Dems are never going to win a war of id-driven manipulation against the Frank Luntzes of the world. The Luntzes and the Gingriches will always be more shameless. They’ll always go farther, lie bigger, pander more. Voters may not like extremists (and they sure hate congressional Republicans), but no one, not even much-heralded (if largely mythical) independents, likes prevaricating poll-watchers. At least Republicans mean what they say!
The only thing Dems have going for them is that the demand-side message is correct. The truth is on their side. Domestic oil drilling will create some jobs and pump temporary economic stimulus into certain areas (as any heavily subsidized industry would), but it will not meaningfully affect global oil prices or the price of gasoline. The only way to be safer from oil shocks is to use less oil.
Rather than the Republican Lite message they’re using now, centrist Dems should follow Bingaman’s lead and tell the truth, calmly, without hype or partisan rancor, but firmly. The American people might even appreciate being treated like adults.
– David Roberts
Hear! Hear!
Related Posts:
- Drill, baby, drill fails: Oil prices soar in spite of sharp increase in U.S. production under Obama
- Pro-pollution conservatives torture logic to blame Obama’s policies for higher gasoline prices
- EIA: Full offshore drilling will not lower gasoline prices at all in 2020 and only 3 cents in 2030!
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Dave Roberts has been really good lately. Between him and Joe, we receive all of the essential information on energy that we need.
“The only way to be safer from oil shocks is to use less oil.”
ABSOLUTELY! But just safer…not safe from oil shocks.
That top graph is awfully optimistic. With continued unrest in Middle East countries almost guaranteed, Palestine provided a demonstration to remind us that they are still not happy, I don’t see how prices can be expected to stay that low. Many “experts” are predicting $5 a gallon in the US this summer.
The worrying thing is that oil at $9 a gallon does not appear to have any noticeable effect on consumption. There is a ready made laboratory called Europe where this hypothesis has been tested and proved true. We are paying about £1.35 a litre in the UK for unleaded.
“And we become less vulnerable by using less oil.”
——————-
The statement is a bit inane. Like the words emblazoned on the bronze statue of Emil Faber, founder of Faber College in the movie “Animal House”, in which he is quoted to say; “Knowledge is Good”.
The problem, as with the fictional Mr. Faber’s statement, is to get people to actually believe it.
The problem is that when Democrats start talking about reducing demand, it quickly gets translated into tax hikes on gasoline (when it is already too expensive) and taking away people’s SUV’s (aka taking away people’s freedom to drive what they want).
No Democratic politician wants to be labeled a tax raising, freedom hating, communist/socialist/Marxist liberal.
Is the difference between the price and the acquisition costs that existed between 2005-2008 the reason that all those “Price Gouging” stories sparked up (that seem to be absent in the past year despite similar costs)?
Per-capita oil consumption in the UK is about half that of the US. However we pay about twice as much for gas at the pumps.
You might imagine that this high tax regime makes us less vulnerable, but I am not convinced. The problem is that we have a government that is hooked on the tax revenue. If oil gets so expensive that significant demand is destroyed then our already huge public sector deficit gets even wider. At the same time the high oil price pushes us back into recession and tax takes elswhere drop.
High tax on oil is not really the answer. Cutting consumption is.
Robert (#3) says: “The worrying thing is that oil at $9 a gallon does not appear to have any noticeable effect on consumption.”
Actually you have that exactly backwards. Here are the tonnes of CO2 per person per year:
6.0 tCO2 in USA
2.1 tCO2 in UK
1.9 tCO2 in EU-27
Perhaps you meant to say that $9 gas only cuts consumption by 60%.
The correlation between the price of gas and the amount used is very robust. The correlation between the price of gas and the quality of life is missing fortunately.
I read this piece of BS in the Houston Chronicle. It was one of those little factoids that reporters pepper their stories with that are absolutely wrong, but become real to the majority of readers just because it is repeated so often. That is that after H. Katrina gas prices rose because oil production in the Gulf of Mexico was shut in. The next sentence was a discussion of how if Obama doesn’t approve drilling permits more quickly we could see another price spike. When in reality, the Katrina price spike was caused by a loss of refining capacity, not a lack of oil, and so the nation suffered a shortage of refined product.
I find that much of the absurd world view of the general public is due to their being told lie after lie after lie.
If I were on TV, I’d give a humorous yet factual soundbite for the masses to digest.
“Republicans say we need to drill baby drill to lower oil prices. Let’s say we do that and just drill like heck. We’d probably have some environmental damage, a $20 billion BP spill here and there. But it’s all worth it! Look at this EIA study that says we’ll lower gas prices 3 cents by 2030 by doing so! All for the low low cost of $40 billion give or take $20 billion! And don’t listen to those commie enviros! Those natural gas, electric, and biofuel cars can only replace half the fleet of the US by 2030. So you can listen to those commies and put the oil industry out of business or you can listen to us capitalists and lower oil prices by 3 cents for $40 billion! Yeah!”.
Forgot to mention in my comment above the tonnes of CO2 per person listed are for transportation. Data source is WRI CAIT data for 2007.
USA folks have triple the transport CO2 as UK or EU folks do.
Price of oil matters…and is the biggest carbon tax on the planet right now. It is far larger than any carbon price we could have gotten on oil via political policy. Too bad it isn’t on coal instead.
BBHY #5, if the most vital thing in the universe for Americans is the ‘right’ to drive about in gas-guzzling tanks when they could be walking or driving a more fuel efficient car, then they deserve to, and will, destroy themselves and the rest of us, too. Already Iraq, Afghanistan, parts of Pakistan and now Libya have been devastated to that end, and brutal autocracies still rule in the rest of the Middle East, all to preserve ‘the American Way of Life’ at the expense of the very life of others.
Is this really happening? Are we really selling domestic oil rights to foreign oil companies?!!
It looks like this headline is true:
“Korea, China and India Invade U.S. Oil Fields”
http://www.bloggingstocks.com/2011/03/22/korea-china-and-india-invade-u-s-oil-fields/
We buy Middle East oil because we can’t produce enough of our own AND we allow “…foreign oil companies to invade our oil fields, to explore and extract our natural resources for their benefit.”
It has all become too stupid for words!
Robert wrote (#3): “The worrying thing is that oil (sic) at $9 a gallon does not appear to have any noticeable effect on consumption. There is a ready made laboratory called Europe where this hypothesis has been tested and proved true. We are paying about £1.35 a litre in the UK for unleaded.”
As I recall, when gasoline reached $4 per gallon in the U.S. in 2009, it caused a significant drop in consumption.
See also this (outdated) article which shows a dramatic effect in Switzerland: http://en.wikipedia.org/wiki/Gasoline_and_diesel_usage_and_pricing
Brovo to Senator Bingaman for speaking truth to power. I understand that he will be leaving the Senate at the end of his term. That’s a shame for we need all the help we can get in congress.
As to the eventuality of higher priced gasoline and the effect upon our society I recommend ‘$20 dollars per Gallon’ by Chris Steiner, published in 2009. Chris takes us step by step as gas goes to $5, then $10, then $15 and finally to $20. In each step events take place that are directly related to the amount of increase. Primarily transportation and the corresponding increase in food, work habits and everything that we take for granted today. He explains how Walmart will be one of the largest victims and those who depend on such stores for there livelihoods. The possible demise of suburban life as we know it and employment disruption.
The book is not a gloom and doom tome, but a well constructed analysis of coming events.
Barry #8
I think you missed my point. If you compare the amount of traffic on the road in the UK and the general level of congestion at peak times there is no noticeable relationship with the price of petrol.
In 2008 (with oil at 35$ bbl) we were paying 90p/litre. In 2011 (with Brent crude at $115) we are paying £1.35/litre.
Absolutely no difference whatsoever on the roads! Perhaps it is because such a large part of the price is tax that the cost of oil is much less noticeable in the UK. Most people just say “I can’t do my job without a car”, stick it on the credit card and keep driving.
The whole angst about gas prices in the US seems a bit weird from this side of the pond. How can the population of the richest country on the planet seriously say that $4 gas is expensive?