Of course, I am one of those troglodyte Republicans who actually believes that gas prices are just like any other price in being subject to suppy and demand. "Subject to" is not quite right, though; it sounds as though we're saying the price of gas would be something different if not for those pesky supplies and the equally pesky demands. That's goofy: a price simply is a function of supply and demand and nothing else. In the case of gasoline, we have increasing global demand (read: China and India) and flat supply, particularly given turmoil in the Middle East. Presto: higher prices. It ain't rocket science.
And, I am also one of those wags who notices things like people who complain about gas prices while waiting in line to buy their Starbucks coffee at, oh, twenty-five dollars a gallon or so! When the price is high for chi-chi coffee, our culture just pays it and pats itself on the back for being so hip and trendy. When the price is high for gas... why, that gives the media a chance to beat up on oil companies and "the rich"... can't miss that opportunity.
So I'm not having a hizzy over higher oil prices. But I do think that any fool can solve the problem with the stroke of a pen. And by "any fool" I mean President Obama.
Consider this article by Will Collier, entitled "Thanks to Obama, Gas Jumps in a Flash." Collier details how gasoline prices spiked in 2008 and then immediately dropped when President Bush issued a Presidential Order permitting offshore drilling off America's coasts. Here's the money passage:
Take a look at this chart compiled by metalprices.com. It’s the price of a barrel of crude oil over the past 5 years.
See that big peak in the middle? That was the last oil spike, in the summer of 2008. Notice how the price hit a high point, then fell off a cliff afterwards?
The day corresponding to that peak, an all-time high of $145.16/barrel, was July 14, 2008. By some strange coincidence, that was the very same day then-President George W. Bush lifted, by executive order, a federal ban on offshore oil drilling.By contrast, what did the Wonder Boy in the White House do? By the Christmas before Obama took office, gasoline was down to $30 a barrel, 80% off its July 2008 peak. But, then, as Collier describes it:
Bush’s order was, of course, immediately dismissed by the “experts.” Reuters waved away the action as “a largely symbolic move unlikely to have any short-term impact on high gasoline costs.” Barack Obama’s campaign lectured that if “offshore drilling would provide short-term relief at the pump or a long-term strategy for energy independence, it would be worthy of our consideration, regardless of the risks. But most experts, even within the Bush administration, concede it would do neither.”
The movement left was even more dismissive. ClimateProgress.org blasted The Washington Post for failing to headline their story about the order “Offshore Drilling Raises Oil Prices.” In response to Bush’s assertion that additional offshore extraction could equal current U.S. production in 10 years, they editorialized: “Yes, and monkeys could fly out of my butt” (emphasis in original).
There was just one problem: reality. Even though, as critics were eager to point out, any additional American drilling was years in the future, oil prices immediately went into free-fall. By Friday, July 18, the price of a barrel of crude had dropped to $128.94, a 12% decrease. A month later, on August 14, the price had fallen to $115.05. In spectacular fashion, Bush’s academic and media critics were proven seriously wrong.
For commodities traders who’d been pricing oil based on a supposition of scarcity, the potential for millions of additional barrels on the market hit like a thunderbolt. The simple act of putting America’s resources on the table popped the oil bubble, and a stunning price drop followed in short order. By election day, November 4, the price of a barrel of crude had plummeted to $70.84 — a 51% decrease in less than five months.
Obama had been president-elect for all of five days when he announced his intention to rescind Bush’s order. Oil prices started going up again in January of 2009 and steadily increasing ever since. Obama Energy Secretary Ken Salazar announced a highly restrictive offshore leasing policy last December, and the Bush executive order was officially reversed on February 8, 2011.There is little doubt in my mind that the price of gasoline could drop practically overnight if America would once again permit aggressive drilling in the Gulf of Mexico, off the California coast, and on the North Slope of Alaska. The environment is wonderful thing to save, if you can afford it; but we can't.
The price of crude that day was $85.85. By April 19, it had risen to $107.18, with no end in sight.
Drill, baby, drill!
P.S. If gasoline prices continue to go up, one odd result could be that it makes Sarah Palin a much more viable Presidential candidate, because she would be the one candidate who could say with credibility "I told you so" about energy costs.