Thursday, June 12, 2008

Democrats and Oil Just Don't Mix.

It would be hard for anyone alive not to know that gas prices are at an all time high. I would bet a gallon of gas that gas prices are going to factor big in the election this year. Everyone running for election or re-election this year is going to have to address the price of oil.

So, what do we do about the price of gas? To solve any problem, we must first find what may be the cause or causes of said problem. If the Republicans have any brains, they will make the argument that gas prices are directly the result of a Democratic Congress. Don't believe me? Sit back and prepare to be dazzled.

I did a little homework (something most members of Congress and the Senate fail to do). The price of a gallon of gas on January 22, 2001 was $1.46 per gallon. On June 9th, 2008, the price of a gallon of gas is $3.98. Today, most people are placing the average price of gas around $4.00 or $4.05 per gallon. It would be easy to look at this and say, "Well, we have two oil men in the White House, it must be their fault!" Of course, one would think that oil men would understand perfectly well how oil prices work. But lets dig a little deeper (no oil pun intended).

Over the course of the Bush Administration, the price has gone up 63% over seven years! That translates into 9% per year! Before my Democratic fans get outraged, I have more numbers to share. The price of gas on January 23, 2006 was $2.31 per gallon. That translates into an increase of $1.67 since Speaker Nancy Pelosi, Sen. Reid, and the Democratic Congress took over. Again, on a per year basis, Pelosi and Reid can claim credit for a 21% increase per year in gas prices! And, worse still, if we give Bush credit for all the gas increase before the Democratic Congress, he gets 86 cents over 5 years. I think Pelosi and Reid still win.

Some of you out there might think I am skewing numbers to my own benefit. Let me end with a question based on what the Democrats want to do, and what most Republicans want to do.

Question 1 (Democratic Plan). Many Democrats are in favor of a "wind fall profit tax" on oil companies. What do you think this would do to the price of a gallon of gas?

Question 2 (Republican Plan). Most Republicans are in favor of domestic drilling. If Pelosi, Reid, Obama, and Clinton had a press conference tomorrow and said they would remove all obstacles to domestic exploration of oil, what do you think would happen to the price of a gallon of gas?

17 comments:

Saint said...

Question on the windfall tax - would any of that money go into my pocket, or just go to uncle sam to spend how he sees fit?

Andy D said...

Most of the proposals I have seen would call for the tax to be invested in alternative fuels. So, the government would tax a business to then invest in a direct competitor to that business.

But if the oil companies have to pay a windfall tax on their product, what will the consumer have to pay at the pump?

Andy D said...

It occurred to me after having this article posted for about 12 hours that I had made a mistake. The Democratic controlled Congress took office in January of 2007, not 2006. I haven't changed the original article because it has been reprinted elsewhere. Gas was 20 cents cheaper in 2007 then 2006 for the same week, so my analysis is still valid. The new numbers would be:

Change in gas price under Bush (2001 to 2007): $0.65 (31% or 5.2% per year)

Change in gas price under Pelosi, Reid, et al (2007 to today): $1.87 (47% or 23.5% per year)

Sorry for any confusion.

Anonymous said...

I worry about expensive gasoline the same way I worry about expensive cigarettes or expensive prostitutes.

It's time to kick the habit. We'll all feel a lot better when it's over.

And, Andy. When you calculate the cost of gas, why don't you throw in the cost of our military operations in the Middle East?

Or you could factor in how much more supply there would be right now if Republicans had passed the Democratic proposals for increased fuel efficiency. We wouldn't have burned all that supply in those stupid SUV engines. Instead of being up there in the atmosphere heating the planet, that carbon would either be in the ground or at your local gas station.

There's no way Repubs are going to look good on oil policy.

Anonymous said...

It occurs to me that maybe some of the winfall tax would actually be returned to the same oil companies for research into alternative energy sources, but of course only after the government has siphoned off about 50% of the money to administer the program and build bigger government, and of course isn't that always the goal......Ever Bigger Governmentwith with more waste.

Mrs. Familyman said...

You've oversimplified an issue once again, Andy.

You dismiss the argument that Bush's administration is responsible for the high price of oil and turn around and conclude that it must be the fault of the Democratic congress.

The figures you quote do not prove any causality one way or the other.

You don't address any of the ACTUAL factors such as:
- the increase in global demand for oil
- the lack of a cushion in the market against supply interruptions - including violence in the Middle East (hmmm.. Iraq war, anyone?)
- OPEC strategy
- market speculators
- the fact that existing US refineries can't keep up with demand - and that most US citizens don't want a new oil refinery built in their backyard, but they'll continue to drive their Hummers.

I wasn't "dazzled" by any of those relevant facts in your "homework."

I'm absolutely not a fan of Bush, nor am I a fan of the Democratic congress who can't seem to accomplish much of anything. But if you're going to mount an argument based on "facts," I'd hope you'd do a little better than throwing figures around that don't prove or disprove anything.

Andy D said...

Nice comment Anon,

Mrs. Family, I don't disagree that those factors play into the price as well. Uncertainty in the market, such as war in Iraq, or a nuclear Iran, will definitely drive up price. However, we were at war in Iraq and Afghanistan for a number of years now. I think the impact of the war can be felt in both the price before and after the Democrats took over office.

My point is that Democratic policies don't lead to lower gas prices. Most of the policies today's DNC embraces lead toward higher energy, oil, and gas prices.

Mrs. Familyman said...

So prove it.

And when I say that, I mean using an argument using logic rather than statistics that neither prove or disprove your argument.

If you can't do that, I can't respond here anymore, it will truly be a waste of time.

The way you've framed your argument makes as much sense as saying that the gas prices went up because a majority of Congress wore blue neckties instead of red ones every other Tuesday. Show me the cause and effect.

My point is that high gas prices are the result of a myriad of complex issues, some that the US has control over and some they don't. To blame it on one party or another misses that point entirely.

Andy D said...

Mrs Family, I think I have done a good job.

First, I pointed out the change in gas prices over the first five years of the Bush Administration, then the change during the Democratically controlled congress. Many of the issues that you site, such as the War in Iraq were present during all of that. The war in Iraq was going much worse before the January 2007 prices I use.

I am not saying that the sudden high gas prices are solely based on the Democratic Congress. However, I do believe Pelosi and Reid get some credit for it. I also want to point out that the Democrats don't have any ideas that will lower the cost of gas. That is the reason for the last two comments on the original post. Democrats have zero ideas for lowering gas prices.

If you don't wish to correspond here anymore, I can't force you to change your mind. However, you will always have a spot here you can return to and express your views, or disagree with mine.

Mrs. Familyman said...

Sorry Andy -

I appreciate that you've made an effort to provide a forum for civil discussion of topics of the day.

But if you can't see how the statistics you quoted don't actually prove your point, then I'm afraid that discussions with you are rather pointless. You've offered no additional proof that those statistics are a result of the Democrats' policies - only figures that may or may not be coincidental.


Good luck with Political Friends.

Andy D said...

I will be sorry to see you go Mrs. Family. On the off chance that you review this last comment, you might find this piece from The American Spectator. They have come up with a top 10 reasons why current gas prices are Dem's fault.

pack04 said...

My first reaction would be to think that your argument Andy is a waste of time. This is a serious issue and trying to lay blame is an awful idea because it does not solve anything.
I still believe that to be true but in thinking about this I agree with what you are saying.
In 2006 democratic across the country ran on getting troops out of Iraq. They got in and control. Since 2006 the democratically controlled congress has voted for and allowed an increase in the war budget. That to me does not seem like they want to get out of Iraq. Now it is 2008 and the Iraq war is still an issue and the main man for the democratic party says we are getting out of Iraq when he wins. Have the democratic in congress continued to fund the war in Iraq to keep this an issue so that in the debates they can attack "Mr. Bush's expensive war?"

As for gas prices, I agree with Mrs. Familyman that there are many issues effecting the price of oil, two major ones are speculation and a weak dollar. How do we fix that? I believe our leaders need to give the American people some confidence. I am extremely disappointed that President Bush has not done that. I am also disappointed that the other leaders of our country, Speaker Pelosi, Senator Reid, Senator Obama, Senator Clinton and Senator McCain to name a few have done nothing either. The democrats know that a poor economy and high gas are bad for the republicans and it seems like they are okay with those things being bad till November. That is...well I can not even think of a word to describe.

Another thought: If a "windfall tax" is the way to solve this problem why has this bill not been introduced? Please refer to the US Constitution Article 1, Section 8. "The Congress shall have Power To lay and collect Taxes..." Senator Obama is part of Congress as President he would not be.

While I am on windfall tax can somebody explain to me how taxing somebody for making too much money makes any type of sense. I thought we liked people to succeed. And if the tax is put into place to punish oil companies (tax should not be a punishment, perhaps a fine) from taking too much of our money does it not make sense to give the collected money back to the people the company was taking it from. Seems to me like an indirect tax on the people.

pack04 said...

Oh yeah, if you have a 401(k) or other type of investment take a look at the companies it invests in.

Any oil/energy companies? What happens when those companies take a hit or are forced to limit profits?

Andy D said...

The oil companies and 401k comment is a great one. Few people realize that if they have a retirement fund at work, they are probably evil oil company owners.

Brandon said...

Andy: I've got a quick question for you, how would domestic drilling decrease gas prices?

It would take several years for the off-shore fields to come on-line due to the depths involved and a lack of drilling equipment. By the time the fields come on-line and into full production, they would likely only be taking the place of production lost in the declining Prudhoe Bay and North Sea fields.

It wouldn't be in the interests of the oil companies or their shareholders to increase production enough to cause prices to fall and we lack the refinery capacity to handle any increases in production. Unless you're suggesting a massive subsidy program or nationalization of oil companies (both of which go against what you believe in), it's hard for me to see how gas prices will ever go down.

Andy D said...

I am not suggesting either one. I don't believe in subsidies for any energy industry including oil, and I don't believe the government should take over the oil companies either.

One of the factors driving up oil production right now is speculators betting on the future price of oil. If we decide to allow oil exploration of our natural resources, the production will go up, which will cause the speculative price to drop. I have seen articles that say that the immediate drop would be around $15 to $20 a barrel, with a larger drop over time as the legislation is removed and oil companies start moving in.

It is in the interest of U.S. firms to go after this oil so they can get product on the market and compete with OPEC. Let's pretend that Exxon or BP start drilling off the coast of Florida. It will be much cheaper for the U.S. to get that oil, than for the U.S. to buy oil from OPEC or even Venezuela. The transportation costs alone would be much lower.

I agree with you about the refineries. I believe we need to build more refineries in the United States.

This isn't the only step towards solving U.S. energy problems. However, it is an important first step.

Also, don't fall into the trap of thinking, "Well, since that oil won't be here for another four to ten years, we shouldn't bother going after it." If we had allowed companies to go after this oil in the mid 90's, it would already be online and we wouldn't be having this discussion.

flashfox said...

Well the problem with that is that you can't just base it on numbers alone. You have to draw some real connections, and unfortunately that's a really hard thing to do. But just saying that numbers=guilt, no matter which side you are on, is not good enough. I personally think both sides are to blame, and that to answer your questions, BOTH would raise the price of gas.

Dems: Corporations aren't just going to roll over and go, wow we have record profits, lets give some back! No, they are greedy corporations, and if we tax them more, well that tax inevitably just comes out of our pockets. Clearly not a solution.

Reps: Drilling sounds like a swell idea, more oil = less cost right? Nope. They can't just magically suck that stuff out of the ground, youhave to SPEND money to make that happen. And guess who will foot the bill for all that extra? THe consumer will see prices RAISE to cover oil derricks, new refineries, more employees, more equipment, etc. To top it all off, most experts are saying that this won't even make a dent in pricing until 2030 or so. So by that time we'll all have forgotten and that money that is being saved by having extra oil goes in no one's pocket but the oil companies and the politicians that supported it.


THe answer is research. We need to stop being dependant on oil PERIOD. Just making it domestic isn't enough because when that runs out we're all left scratching our heads. I'd rather spend billions of dollars to figure out how to run our cars on algae than pay for this.