April 25, 2006 By: Phil Singer, DSCC
#1. When George Bush took office in January 2001, the average price of a gallon of gas was $1.46. Today, the price is $2.91, a 100 percent increase over the course of the Bush presidency. [AAA Fuel Gauge Report, 4/25/06]
#2. Under Bush’s watch, U.S. dependence on foreign oil has increased by nearly one billion barrels. [ EIA, U.S. Imports by Country of Origin and Annual Energy Outlook 2006]
#3. Senate Republicans killed a Democratic proposal to make gas price gouging a federal crime. Without making price gouging a federal crime, the federal government can only prosecute oil companies if they can prove collusion to control markets, a standard that is nearly impossible to meet. [S. 2020, Vote #334, 11/17/05; Seattle Post-Intelligencer, 11/18/05]
#4. The Bush Federal Trade Commission has looked the other way when it comes to price gouging. Even during Hurricane Katrina, when price gouging was rather evident, the FTC investigation "found no evidence of collusion among oil companies in the 2005 gas price surge.” [ San Francisco Chronicle, 4/25/06]
#5. The GOP Congress has ignored oil and gas monopolies: Since 2001, the Senate Judiciary Committee’s Subcommittee in charge of overseeing mergers, led by Mike DeWine,has held just one hearing - two years ago - to examine high gas prices.[ USA TODAY, 4/25/06; Judiciary Committee Hearing Schedule, accessed 4/25/06]
#6. The GOP Congress has turned a blind eye to holding executives from the nation’s richest oil companies accountable. In November, when executives from the nation’s richest oil companies testified before the Senate Energy and Commerce Committees, Republican leaders refused to force them to testify under oath. [Cantwell Release, 11/8/05; CNNMoney, 11/9/05; Fox News, 11/17/05, CNN 11/17/05]
#7. Republican lawmakers who crafted the 2005 energy bill showered billions in tax breaks on oil and gas companies that that they later testified under oath they do not need. [Bloomberg, 7/29/05; Video Clip of March 2006 Oil and Gas Hearing, available here]
#8. In December, Senate Republicans – with Cheney casting the tiebreaking vote – adopted a budget package that included $20 million in cuts to Renewable Energy Systems and Energy Efficiency Improvements Program. [Vote 363, 12/21/05; House Budget Committee, Democratic Caucus Analysis, 12/22/05]
#9. Oil and gas companies are constantly lining the pockets of Washington Republicans and GOP candidates. In the 2004 election cycle alone, the oil and gas industry contributed more than $20 million to Republican candidates and incumbents. In the 2006 cycle, this number has already topped $6 million. [Center for Responsive Politics, accessed 4/24/06]
#10. The White House’s failure to properly plan for the war in Iraq has caused a disruption in the pre-war supply of 900,000 barrels of oil a day from Iraq, the largest single supply disruption that is leading to spikes in the price of oil. [CERA, 4/24/06]
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10 comments:
Can we get this on the front page of every newspaper in the country? OK, then how about the New York Times and The Deseret News.
Actually, gas prices are high because global oil prices are high. Unlike the oil hike of the late 1970s, however, today's oil prices are a demand rather than a supply phenomena. What is driving up the price is increased global consumption. The surge here, however, is not from the United States but rather from India and especially China. These are two nations's whose populations dwarf the United States. As their economies grow they demand more energy and buy more oil, which drives up prices. China in particular is absolutely exploding economically, which is what is costing American's more at the pump. We have high prices because of supply and demand rather than Bush's and the Congress's refusal to institute what are essentially price controls.
The good news about the growth of the Chinese economy is that it is largely export driven, which leaves the Chinese with a huge amount of dollars. They are mainly using these to buy government securities, which is why Bush et all have been able to run huge deficits without an interest rate spike. In other words, high gas prices suck, but the Asian economic growth that is driving them is at least allowing American's to get cheap home mortgages. Of course, lower interest rates end up getting reflected in home prices, so it is not clear you get much gain out of that either...
Real economics is much more complicated that dumb sound bites, isn't it?
Gas prices are high because oil corporations (Exxon)likes paying their executives 400 million dollars comopenstaion packages.
Come on Oman, open your eyes and smell the crude. Your President and your Republican leaders are rolloing in the green because of their policies on black gold, texas tea.
I meant compensation, but you get the point.
Also, how is it good news that the chinese are profiting off of slave labor?
"We can have record deficits because our friends in China are letting us".
Anonymous: It is a question of scale. Are the executive compensation packages large enough to push up the world wide per barrell price of crude to $70+? Remeber, we are talking about an enormous global market here. It takes something larger than even an Exxon executive's salary to move those numbers, something as big as China or India.
This is not to say that there aren't problems with out of control executive compensation, it is just to say that they are not the cause of higher gas prices.
Chinese slave labor is bad, as are deficits. On the other other hand, the effect of this deficit would be much worse if it was having a larger effect on interest rates. It has not. This is something of an odd macroeconomic phenomena that needs an explanation. A large part of that explanation is that the East Asian (especially Chinese) trade surplus is not going home to China but rather is staying in the U.S. in the form of Chinese owned T-bonds.
I actually don't think that there is a doomsday scenario whereby the Chinese suddenly pull out of the U.S. bond market, sending interest rates sky rocketing. There are a couple of reasons for this. First, if they took the money home to China, it would send the value of their currency through the roof, which would have an enormous, negative effect on their export driven economy. Second, if they don't want to take the money home to China for fear of the effect on their currency, it is not clear that there is a better place to let it sit than in the U.S.
Still, at the end of the day, it would be far better if the U.S. lowered its deficit, and more of the foreign capital in the U.S. went to the private sector rather than the government.
Hey Oman How come the oil companies can give 400 million to one guy but can't afford to build any new refineries? I guess it is more important to compensate execs than meet the needs of the public. They have no worries because like you many people have their heads where the sun don't shine and think like you. No wonder the country is going to hell in a hand basket. P.S. It is not good for the U.S. to have a trillion dollar debt to any country let alone China. Also if you think this not a supply problem where have you been living? That is right,in the Republician fantsay world of everything is OK because the right wing political way is the way.
I'm glad Nate is here. Reason is an important tool we Democrats can put to good use in defeating looney Republicans...but that requires that we actually think before we pop off and blame them for every problem in the world.
Oil companies aren't putting off the building of refineries because they pay their executives too much. It is vitually impossible to get a project like an oil refinery built in modern America because environmental regulations and laws (pushed mostly by those on our side of the aisle) make it extremely difficult and expensive.
Yeah...we're wrong sometimes too.
Reason requires that we admit that from time to time. We can take peace in the fact that we're wrong much less often than the bozos on the other side though.
I too appreciate that Nate took the time to respond. I don't agree with everything he said, but I respect his opinion.
By the way, Fox News had their reasons as to why high gas prices are the Democrats fault.
If its on Fox it must be true.
John: Actually, I think that high prices will prompt oil companies to increase production. The issue is not refinaries but crude supply. The indications is that once the price per barrell of crude gets above $70 or so it becomes economical to begin extracting oil from marginal sources -- like Canadian oil sands -- that are enormous but expensive to get at. That is why I think it is unlikely that you are going to get another enormous spike in oil prices.
FWIW, I think that a $400 million compensation package is obscene and represents management looting of stock holders. I'm not quite sure how to solve this problem. I don't think, however, that it has much to do with the price of crude.
Do you have any arguments other than ad hominems?
BTW, what I meant when I said that it was not a supply phenomena like the late 1970s is that the price spike has not been caused by a deliberate contraction in the amount of oil produced, which is what happened when OPEC constricted production in the late-1970s. Then it was not a matter of lots more people using lots more oil. It was a matter of the same people using the same amount of oil but there simply being less of it. Such is not the case today.
There is something pathetically parochial in assuming that a couple of executive salaries can have a massive and sustained effect on the prices in world-wide commodity markets. The world is a much bigger place than that.
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