By Christine Romans
I’m going to tell you a little secret. Presidents can’t really set the price of gas short-term. And maybe not long term either.
Sure, you’ve heard otherwise on the campaign trail. Newt Gingrich says a vote for him is a vote for $2.50 gas (picking up from where Congresswoman Michele Bachmann left off). The president calls those campaign promises about gas prices “phony,” oil traders laugh, and economists shrug.
The way I see it, there are maybe five quick ways to lower gas prices quickly.
• A depression
• Peace breaks out betweenIranandIsraeland theU.S.immediately lifts sanctions
• TheU.S.drops every one of its clean air rules
• Chinagoes 100% solar overnight
• We drain the Strategic Petroleum Reserve
None of those things is happening. On point #5, the president tapped the Strategic Petroleum Reserve last year when Libyan supplies were off the market. That helped for a hot second. The risk, of course, is that oil markets see a move on the SPR as a bullish signal, and it just drives prices up further.
And then there is this uncomfortable fact – gasoline demand has been down in theU.S.recently. How can demand be down and prices be up? Answer: Because headlines from theMiddle Eastand growth in emerging markets matter more than American demand.
We are entering a period in history when theU.S. is not the only engine that moves the needle on the global economy. It matters just as much how much crudeChina,Brazil,Indiaand other emerging markets are guzzling as we are.
Sure, presidents and government could RAISE gas prices quickly if they wanted to by taxing it. Beyond that, their control is much more subtle and long-term.
If the controversial Keystone XL pipeline had been passed, gas prices would probably be exactly where they are now. (That’s not to say it’s not a good idea to diversify our crude supplies and focus on North American sources. )
And investments in renewable energy are long-term, costly and, as we saw with Solyndra’s bankruptcy, political.
Also political: drilling. The GOP wants more drilling on federal lands. And Republicans accuse the White House of slow-walking Gulf drilling permits.
“Do not tell me we’re not drilling,” the president counters. “We’re drilling all over this country.”
The White House reports the highest domestic oil production in a decade. That’s true, but industry insiders credit policies already in place before this administration.
So where does that leave us?
Bottom line for you – the only thing simple about gas prices, is presidents don’t set them. But we certainly feel them.
Richard Florida wrote the book, “The Great Reset”, and is a guest on the show this week.
“Increasing numbers are walking or biking to work or downsizing that house. If we want to make the American economy thrive we have to make the American economy less oil-dependent and that means the most important thing the president can do and we can do is change the way we live.”
What do you think about the politics of gas prices? Weigh in! We want to hear what you think and we’ll read your comments on the show.