The Charts That Prove Obama Doesn’t Set Gas Prices

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"The Charts That Prove Obama Doesn’t Set Gas Prices"

America produces 200 times as much oil as Germany, but our gas prices rise and fall in tandem (we pay far lower gas taxes). Source:  Energy Information Administration and NY Times.

The public understands Obama isn’t to blame for high gasoline prices, as recent polls make clear. Even the Wall Street Journal and Cato Institute agree: “It’s not Obama’s fault that crude oil prices have increased.”

But as the NY Times pointed out Sunday, facts don’t stop the GOP:

The issue of gas prices has not only been misunderstood but thoroughly distorted by relentless ideological spin from industry and its political allies, mainly Republican. Hardly a day goes by that some industry cheerleader somewhere — be it Gov. Bobby Jindal of Louisiana or Senator James Inhofe of Oklahoma — does not flay President Obama for driving up oil prices by denying the industry access to oil and gas deposits and imposing ruinous environmental rules. Senator John Barrasso, a Wyoming Republican, said last week that Mr. Obama should be held “fully responsible for what the American public is paying for gasoline.”

The Times put together some great charts using EIA data. They make clear 1) oil prices are set on a global market and 2) the strategy of “Drill, Baby, Drill” adopted by the GOP and President Obama has succeeded at increasing production and decreasing dependency on foreign oil — but it has unsurprisingly failed at affecting global markets.

In 2005, oil imports accounted for nearly 60 percent of America’s daily consumption. In 2010, for the first time in recent memory, imports were less than half of consumption, and last year, imports were only 45% — 8.6 million barrels a day of the 19 million consumed. Source: EIA

This is no surprise to anyone who follows oil market analysis. In fact, back in 2009, the U.S. Energy Information Administration’s issued a report that examined the difference between full offshore drilling and continued restrictions. In 2020, there is no impact on gasoline prices. In 2030, US gasoline prices would be three cents a gallon lower.  Woohoo!

The bottom line is clear, as the NY Times points out:

With developing countries like China and India demanding more petroleum, prices are likely to stay high. That’s reality — no matter what the Republican spinners say. Only a rounded policy mix of greater fuel efficiency, steady production and the aggressive development of alternative fuels can protect American consumers against what could be even greater price shocks in the years ahead.

Sen. Bingaman (D-NM) made this same point in a major presentation last year: “We become less vulnerable by using less oil.” Grist has a great new chart from Bingaman:

Bingaman: gas prices and U.S. oil production

We’re not going to substantially change U.S. gasoline prices through more drilling and more domestic production. We can protect ourselves and our economy from rising prices and oil shocks — and, of course, catastrophic climate change — only by reducing oil consumption.

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35 Responses to The Charts That Prove Obama Doesn’t Set Gas Prices

  1. Zach says:

    One could argue that US prices determine global prices since we’re the largest oil consumer by far. A better chart might stack gas prices up against stock market indices; both are essentially proxies for expected economic growth. It’s not a perfect comparison, obviously.

    • Mike says:

      No, Zach, US-based market speculators like Goldman Sachs and Wells Fargo set the price of oil on the global market. It’s cheaper for the US because the refineries are here and we drill here. Most elsewhere there is no drilling and all the oil has to be imported. The simple fact that we consume half of what we produce is responsible for that big gap in prices.

      • Brad says:

        Speculators are nervous about instability in the middle east. If the US produced its own oil by opening up federal controlled lands and off shore, that nervousness would be immediatley mitigated. Even before any production began!

        • steve says:

          Brad,

          with all the oil faucets open, the US product would only increase world production by a couple per cent. Enough to impact price by a couple cents per gallon. I am in a partnership that owns 3 wells in TX. A misconception is that there is enough equipment to drill all available leased land. That is not the case, we are often waiting for equipment which is commonly leased. Much leased land sits idle until the companies can get to a particular lease or the price of crude goes up to make a well economically feasible. There is a huge differential in the cost of drilling in different formations. Everything is vastly oversimplified in the political arena when it comes to oil prices and gas prices.

          • Brad says:

            Yeah, I get that about drilling on private land… What does it cost for a rig? $10 grand per day?

            My point was about federal lands and offshore… Our government’s policy, and the effect that it has on current refined motor vehicle fuel prices.

            If our federal government would “open all of the faucets”, speculators would freak out and sell short. Gasoline and Diesel prices would plummett.

            I guess that the royalties from all of that oil and gas revenue will go where? I suppose that our U.S. Congress can figure out how to spend it.

          • DonB says:

            Brad, your comment implies there is NO amount of facts that could change your mind.

            But there are HUGE tracts offshore that HAVE been leased and the oil companies have not even begun EXPLORATION. They are waiting for the price of oil to rise enough that extraction will be profitable.

            With the exception of some areas where fracking has allowed extraction for less than PREVIOUSLY projected, this applies to the areas you wave your arms at.

            And just how do you like the weather these days? Wait until the rest of the summer plays out before you answer (or better yet, wait a few years as the negative effects of Climate Change will be much more apparent then). See Jeff Masters:

            http://www.wunderground.com/blog/JeffMasters/comment.html?entrynum=2059

    • Scott says:

      No. One couldn’t argue that.

      To argue that, you have to present facts that anchor your argument to the concept that US oil consumption is the prime factor that determines the prices of oil.

      You can never argue that because you will never find that to be true. That fact doesn’t exist.

  2. facts lean left says:

    Oh,no, cue the hand-wringing and pearl-clutching of conservatards once again destroyed by facts.

    • I love it!!!!!!keep going!!!!

    • James says:

      I don’t understand the left/right, conservative/liberal debate. The same stuff was said when Bush was President, and Clinton before him. And what’s changed? Not a damn thing. So, maybe the left/right construct is manufactured?

  3. Robert Levi Marenda says:

    Looks like this chart proves beyond a reasonable doubt that Republicans are liars and cannot be trusted.

  4. fitley says:

    Now let’s see a chart of how many times a day Newt lies about this. It would go off the chart at inbred hillbilly rallies that Newt loves. They think Newt’s got book smarts.

  5. langostino says:

    This article is clearly wrong.

    It has been irrefutably proven that rising gas prices are the fault of a Democratic president, no matter who is in office. Proven.

    It has also been irrefutably proven that falling gas prices are the result of tireless work by a Republican president, no matter who is in office. Proven.

  6. PatrioticLiberalJoshuan says:

    You mean Socialist Europe can’t even control gas prices?

    /snark off

  7. Bill Moore says:

    Warmer weather here in Nebraska not only means more chance of thunderstorms, but improving fuel economy in our plug-in Prius conversion. Daily fuel economy risen from low of around 55 mpg to 68 mpg. This is one way to use less gasoline; of course, it isn’t cheap. Telecommuting, biking, living closer to where you work is even better.

  8. Dawn says:

    It’s easier for the right to blame President Obama, then to admit that it is their precious free market is driving up prices.

  9. Alex says:

    Hi,

    I just looked at the EIA statistics website and could not find gas-price data beyond 1996. Could somebody tell me where the pre-1996 data comes from? Thanks!

  10. rmwarnick says:

    Sadly, we have no charts that show how President Obama delivered on his promise to create a green economy.

    • John in Canada says:

      Didn’t he just have to wave a magic wand ?

      The best thing Obama has done is to reduce the root causes of the downward spiral that is the USA. Bush was making everything worse exponentially! You are lucky he wasn’t in office another year.

    • Scott says:

      That’s quite an amusing swipe at reality. The facts are that he upped the CAFE standard, allowed money to be injected into GM, which saved them and allowed them to develop and now market the Volt. In addition, more than $6B has been spent on trying to lift green tech into the future.

      Your argument would best be served if you would demand that he get rid of the CORPORATE WELFARE that the major oil companies get from YOU, the taxpayer. They make record profits, but are still pulling your pockets inside out to take your tax money. Why?

      Because YOU are letting them do it.

  11. From Peru says:

    This shows two things:

    1)The GOP is on the side of the free market only when it serves its purposes. For the “drill,baby, drill” policy to work, you must de-globalize the oil market. Then the North American market could benefit from the regional increases in supply. But to do this, oh no! You must mess with Wall Street…

    2)A price on oil will not work magically to orient the consumers towars clean energy. Gasoline is much more expensive in Europe because there it is heavily taxed. However, this has not cut CO2 emissions from oil in a notorious way. I suspect that more aggressive policies are needed, like planning the % of renewable power and the fuel efficiency of vehicles. The stardards should be mandatory for car and power plants companies.

  12. Oh my gawd the hand wringing from the rightie republican party.I did not bash bush for the rise in gas prices back in the day,and here we have assholes like gingrich pushing shit to gullible saps as far as 2.50 a gallon gasoline…go ahead newtie,please keep up the insane “moon colony” crap.Your stupid lemmings will love it.

  13. The Oracle says:

    “Gas prices everywhere plunged in the 2008 financial crisis; they rebounded after OPEC nation cut production later that year.”

    Strange. No mention of oil futures speculators and how their unrestricted speculative activity drove up oil barrel and gasoline prices just before the 2008 market bust, by some estimates as much as 40 percent.

    No mention of GW Bush, Congress and the Federal Reserve bailing out in 2008 both the Wall Street “housing bubble” gamblers and the oil futures speculators (gamblers and speculators overlapping, often working at the same Wall Street firm, so bailing out one bailed out the other).

    So, OPEC nations cutting production caused gas prices to rebound toward the end of 2008? Somewhat. Oil barrel prices had plummeted along with gasoline prices after the 2008 financial crisis hit, with oil barrel prices dropping to where they were when Texas oilman GW Bush became president, while gasoline prices in the U.S. dropped below $2.00 a gallon, so OPEC decided that constricting supply would drive up prices again. However, at the same time OPEC did this, unrestricted oil futures speculation also rebounded as U.S. taxpayer money kept Wall Street and the oil futures speculators from cratering even more. So, while OPEC was taking oil off the market, the bailed-out oil futures speculators were also taking oil off the market, constricting the supply end even more, consequently driving up prices again (with the oil futures speculators figuring that if they, and OPEC, could drive up prices, then their oil futures could be sold down the road at a hefty profit, which did happen).

    So, while I totally agree that “drill, baby, drill” is a deception and will have no immediate downward effect on energy prices, I also realize that neither will alternative green energy (which I fully support). Since the last record-high gasoline price spike in 2008, the bailed-out oil futures speculators are the primary upward-pushing force on oil barrel and gasoline prices.

    Dodd-Frank in 2010 sought to address this, placing limits on oil futures speculation, driving down energy prices, but Republicans are blocking its implementation. Of course (hits forehead). Just like the 2008 financial crisis placed inadvertent “limits” on oil futures trading, Dodd-Frank does the same but more permanently, which is why Republicans and their oil industry backers (i.e. the oil futures speculators) are so against Dodd-Frank. Nothing can be allowed to get in the way of the rampant and runaway greed. Enough is enough.

    • John in Canada says:

      People love to blame speculators but speculators don’t drive consumption. If demand falls, prices will fall independently of speculation.

      Speculators only win when their guesses are better than everyone else’s. Speculators will only make enormous profits if the markets are rigged. Good luck selling that to Newt and the boys.

  14. CarolO says:

    How soon they forget!

    April 21, 2008—Gasoline prices jump to a record $3.50 a gallon in some parts of the U.S.

    May 15, 2008— While many people were shocked at $3 a gallon, they were not prepared for what was about to happen as prices shot up to nearly $4 a gallon. Public hysteria sets in as consumers begin using Gas Buddy to find the lowest gas prices in town.

    May 21, 2008—Oil price skyrockets to $130 a barrel. Holly cow!!!

    June 9, 2008—Retail gas prices rise above $4 per gallon.

    In the early summer of 2008, when the average price of a gallon of gas in the US topped $4, a wide variety of Fox News figures were quick to push a simple message: don’t blame the Bush/Cheney administration.

  15. novenator says:

    Green energy folks. We need massive public investment in publicly owned renewable energy sources. That will not only be better for the planet, but it will create millions of jobs and lower the demand for fossil fuels (thus, lower prices).

    • James Briggs says:

      Novinator says “We need massive public investment in publicly owned renewable energy sources.” Public investment means GOV. investment, Private means the public invests.
      The GOV doesn’t have the will or the votes to make the power grid national. Republicans would say socialistic.
      The public could invest in themselves. People should produce their own power. the sun shines everywhere, the wind blows everywhere. use it!
      “…it will create millions of jobs” Millions? I wish! I have created 2: me & my partner.
      I’m an Inventor, The Bank said they would loan me millions because they have a whole department for solar & renewable energy. But when I wanted only thousands they said no.
      “…and lower the demand for fossil fuels (thus, lower prices).” I don’t think so because You forgot to include the increasing demand from India & China. As well as the increasing demand from the U.S..

  16. Celeste Kent says:

    Let us not forget that those making such claims about Obama really dont ever let the facts get in the way, they have hated Obama since long before he was elected and they will continue to vilify him after he is out of office and for no good reason.

  17. Keith Walsh says:

    The price of gas in the US is just a GOP ploy to blame the current administration for anything they can…yet they are trying to pass a budget that hurts the poor and helps the rich…I think the only way this economy is going to turn around completely is to vote out any GOP including Ryan, Boehner, and Cantor! Voting for more GOP would be suicidal!

  18. junkwaffle says:

    Back in 2008 when gas prices were going thru the roof under Bush, Fox news was 24/7 saying that the president or any politician can control the price of oil/gas. Hannity, OLiely, the other nimrods too numerous to mention, now say it’s all Obama’s fault. They should be placed in jail for lying to the American people everyday.

  19. AlC says:

    There is no scarcity of gasoline in the USA, it is just that oil refiners find it more profitable to export gasoline than to sell it all to USA consumers for a lower price. The vaunted free market at work. As people switch to cars that get better gas mileage, the oil companies will probably export more gasoline, perhaps raising domestic gasoline prices even more.

    http://www.bloomberg.com/news/2012-02-29/u-s-was-net-oil-product-exporter-in-2011.html

    Also, remember that the tarsands pipeline company refused to commit to keeping that oil and processed gas in the USA.

    Paranoid thought: Is it possible that oil companies are deliberately raising gas prices to keep President Obama from being re-elected?

    • HarryW says:

      Nothing would surprise me, in the right’s promulgation of their *incandescent* hatred of the Black Man in the White House.

  20. Joyful and Cheery says:

    I still don’t understand why this conversation is only about supply and demand of the oil? Isn’t supply and demand of the currency being used to purchase the oil also a major issue?

    I mean seriously, no one talks about this. But you look at the most respected economists of the 20th century and they all warned about inflation due to over-use of the Federal Reserve. I don’t know what the quack Paul Krugman has to say about this, but I don’t really care, I stopped caring after I started thinking for myself and started checking his sources.

    But really you can look at Friedman, Hayek, and even the beloved Kaynes and they all had worries about the Fed being misused and the results of it on inflation. It’s not just gas prices going up, it’s EVERYTHING.

    I mean if you don’t pay attention to what people outside the US are saying, then you might not know this. But the common phrase being used to make fun of the US Dollar is that people are calling it “monopoly money”.

    And no, I’m not just some random Ron Paul supporter. I’m in the process of getting my MBA from an Ivy league business school, and I’ve studied economics under some of the most well known economists of today. No one is listening to the academics on this matter, it’s clear to anyone who takes their studies seriously that those at the top are just hiring sellouts to promote their problematic and incomplete explanations.

    My first time posting on thinkProgress and I am happy that people are at least looking at some numbers before jumping to conclusions, but I have to say going just a bit further and taking the next step will answer all of your questions.