For someone running for office on the strength of his knowledge and experience in the free-market economy, Mitt Romney sure is spouting a lot of ignorant nonsense. Romney has used the same epithet—“doesn’t understand the economy”—against both President Obama and Newt Gingrich.
But Romney is contradicting basic economic facts on the campaign trail this week. He has adopted Gingrich’s demagogic strategy of blaming President Obama for rising gas prices. On Sunday Romney told Fox News there is “no question” Obama’s policies are responsible for prices at the pump. “He said that energy prices would skyrocket under his views, and he selected three people to help him implement that program. The secretary of energy, the secretary of interior and EPA administrator. And this gas hike trio has been doing the job over the last three-and-a-half years, and gas prices are up.” Romney has repeated those comments at campaign events on Sunday and Monday.
Romney, of course, is pulling a bait-and-switch when he claims Obama stated a goal of raising gas prices. Obama did say that his cap-and-trade proposal would raise prices of electricity, which Romney conflates with gasoline by collectively lumping them as energy. But cap-and-trade did not pass. Romney fails to specify which policies Obama has enacted that have raised the price of petroleum, because there aren’t any. The only argument Republicans such as Romney and Gingrich can muster is that Obama has rejected some proposals to drill for oil or build pipelines in environmentally precarious locations.
Aggregate domestic oil drilling has actually risen under Obama. But that doesn’t matter. Suppose it had declined. Oil is a global, fungible commodity. As demand increases in industrializing nations such as China and India, prices are sure to rise eventually. Global supply of oil is finite, so there is no way that global demand can increase indefinitely without prices going up.
You’d think from listening to Romney and Gingrich that they were ideological fellow travelers of Hugo Chávez. After all, their proposal to reduce American gas prices would help only if we nationalized the oil industry. If we continue to operate as a free-market economy, then ExxonMobil will sell the oil they drill here to the highest bidder, not necessarily the American consumer.
Even if we did nationalize the oil industry, increased drilling would have a limited impact on prices. We account for about 25 percent of global annual oil consumption, while we have only 2 percent of the world’s proven oil reserves.
So there are two possibilities: either Romney doesn’t understand how the economy works, or he is just a dishonest craven panderer. Considering that he holds two advanced degrees from Harvard, counts on Harvard professors as economic and foreign policy advisers and cites Harvard professors in his speeches—while bashing Obama for “taking advice from the Harvard faculty lounge”—my guess is that the answer is the latter.
By: Ben Adler, The Nation, March 20, 2012
Republicans have sought to frame the Keystone XL pipeline as a job-creating project being thwarted by “radical environmentalists.” Is it? A new Cornell University study claims that the pipeline could actually have a negative impact on the economies of the states it would pass through.
“In the national debate, job creation has been set alongside environmental concerns in a rigid either-or fashion,” says Sean Sweeney, one of the study’s authors, “But oil spills also kill jobs, they consume resources, they have an impact on health, and can also lead to a lower quality of life.”
The range of estimates of jobs vary widely. TransCanada claims the pipeline will create 20,000 jobs. A State Department report estimates that only 20 permanent operating jobs would be created in the six states along the pipeline route. By comparison, those same states are home to robust agricultural, ranching and tourist industries that are dependent on water and vulnerable to environmental contamination. Across the six states agriculture employs 571,000 workers and tourism 780,000; the total revenue from those sectors, respectively, is $76.3 billion and $67 billion.
Sludge not crude
Tar sands oil — known in energy circles as diluted bitumen — may be more damaging to environments and communities than regular crude. Said Sweeney, “Diluted bitumen is an irregular substance — it runs thick and thin, hot and cold. It’s basically a sludge, not like regular crude — it behaves differently.” Tar sands also seem more likely to spill than conventional crude: The spill rate for diluted bitumen in the northern Midwest between 2007-2010 was three times the national average for conventional oil. This may be because the heavy, corrosive material puts greater stress on pipelines.
The already existing Keystone I pipeline, which runs 2,100 miles from Alberta to Illinois, began operating in 2010; in the two years since, 35 spills have occurred. In the pipeline’s first year of operation alone, its spill rate was 100 times TransCanada’s projection. All told the amount of tar sands oil being transported through the United States has more than tripled in the past decade to 600,000 barrels in 2010. Keystone XL, if built, would add another 830,000 barrels per day.
John Stansbury, a professor of civil engineering at the University of Nebraska, analyzed spill data from the Keystone I pipeline to estimate that 91 spills would occur over the course of 50 years of Keystone XL’s operation — close to two spills each year. In a worst-case scenario, he says, a spill could contaminate 4.9 billion gallons of groundwater in Nebraska’s Sand Hills with benzene, a known carcinogen.
The threat the pipeline poses to Nebraska’s Ogallala Aquifer, which provides 30 percent of the irrigation water in the U.S., has been much-discussed, but the pipeline would also cross another 1,747 bodies of water, including the Yellowstone and Missouri Rivers and the Carrizo-Wilcox aquifer, the third largest aquifer in Texas.
If Keystone were to leak — or worse, rupture — the consequences could be serious. In July 2010, a pipeline operated by the company Enbridge ruptured — the company has never explained why — spilling 1 million gallons of tar sands oil into Michigan’s Kalamazoo River. The oil drifted 40 miles upstream, causing 145 reported instances of illness and health problems for people living in the riverside community of Marshall, Mich. Marshall residents living within 200 feet of the river were eligible for a buyout program; about 130 people sold their houses to Enbridge, leaving some areas uninhabited.
The Kalamazoo cleanup has cost $725 million so far — twice as much as Enbridge estimated — and the river remains closed to fishing, hunting and other recreational activities over a year and a half after the spill occurred. Officials in the Calhoun County Health Department have said some bitumen will likely remain in the river “indefinitely.” Sweeney points out that the rural areas along pipeline routes are unprepared to cope with spills. “They had to bring someone in from the Gulf to deal with Kalamazoo,” he explained.
While the Kalamazoo spill was the biggest-ever tar sands spill, pipeline spills occur with startling frequency. In 2011 alone, there were 600 reported pipeline incidents. TransCanada’s website argues that “if they do occur, pipeline leaks are small,” yet pipeline spills caused 17 deaths and 68 injuries, and over $335 million in property damage. In 2010, when the Kalamazoo spill occurred, the damages from pipeline spills topped $1 billion. While pipeline spills don’t get the attention of disasters like the Exxon-Valdez and BP, they point to a familiar pattern of underestimating risk and underpreparing for disaster.
TransCanada insists that it will comply with all federal regulations, and construct and operate Keystone XL “to the highest industry standards.” Danielle Droitsch, an attorney with the National Resources Defense Council, argues that we don’t know enough about diluted bitumen to be able to transport it safely. “We’re building these pipelines as if they were conventional oil pipelines,” she said. “We don’t have any special regulations in place to deal with the fact that these are tar sands pipelines and they are very different. Until we have a new regulatory system in place there are no safety measures proposed that would make this pipeline safer.”
And in the meantime? “There’s no question this pipeline will spill — it’s a question of when.”
By: Allyssa Battistoni, Salon, March 19, 2012
Eight months before the fall elections, Republican strategists are in a dour mood.
-The economy has begun to gain traction.
-Their leading candidate for president, Mitt Romney, is universally viewed as an uninspiring poster child for the one percent, with no core values anyone can point to except his own desire to be elected.
-Every time Romney tries to “identify” with ordinary people he says something entirely inappropriate about his wife’s “two Cadillacs,” how much he likes to fire people who provide him services, or how he is a buddy with the people who own NASCAR teams rather than the people who watch them.
-The polls show that the more people learn about Romney, the less they like him. The Republican primary road show doesn’t appear to be coming to a close any time soon.
-Together, Bob Kerrey’s announcement that he will get into the Senate contest in Nebraska and the news that Olympia Snowe is retiring from the Senate in Maine, massively increase Democratic odds of holding onto the control of the Senate.
-The Congress is viewed positively by fewer voters than at any time in modern history — and two-thirds think the Republicans are completely in charge.
-Worse yet, the polling in most presidential battleground states currently gives President Obama leads over Mitt Romney and Rick Santorum.
The one thing Republican political pros are cheering right now is the rapidly increasing price of gas at the pump and the underlying cost of oil.
The conventional wisdom holds that if gas prices increase, it will inevitably chip away at support for President Obama — and there is a good case to be made. After all, increased gas prices could siphon billions out of the pockets of consumers that they would otherwise spend on the goods and services that could help continue the economic recovery — which is critical to the president’s re-election.
But Republicans shouldn’t be so quick to lick their chops at the prospect of rising gas prices.
1). What you see, everybody sees.
The sight of Republicans rooting against America and hoping that rising gas prices will derail the economic recovery is not pretty.
The fact is that Republicans have done everything in their power to block President Obama’s job-creating proposals in Congress, and they were dragged kicking and screaming to support the extension of the president’s payroll tax holiday that was critical to continuing economic momentum.
Senate Majority Leader Mitch McConnell actually announced that his caucus’ number one priority this term was the defeat of President Obama. The sight of Republicans salivating at the prospect of $4-plus per gallon gasoline will not sit well with ordinary voters.
2). Democrats have shown that they are more than willing to make the case about who is actually responsible for rising gas prices — and the culprits’ footprints lead right back to the GOP’s front door.
Who is really to blame for higher gas prices?
-The big oil companies that are doing everything they can to keep oil scarce and the price high;
-Speculators that drive up the price in the short run;
-Foreign conflicts, dictators and cartels — that have been important in driving up prices particularly in the last two months;
-The Republicans who prevent the development of the clean, domestic sources of energy that are necessary to allow America to free itself from the stranglehold of foreign oil — all in order to benefit speculators and oil companies.
The fact is that the world will inevitably experience increasing oil prices over the long run because this finite, non-renewable resource is getting scarcer and scarcer at the same time that demand for energy from the emerging economies like China and India is sky rocketing.
Every voter with a modicum of experience in real-world economics gets that central economic fact.
That would make Republican opposition to the development of renewable energy sources bad enough. But over the last few months the factor chiefly responsible for short-term oil price hikes have been the Arab Spring and Israel’s growing tensions with Iran — all of which are well beyond direct American control.
But with only 2% of the world’s oil reserves, any idiot knows we can’t make ourselves materially more energy independent solely by drilling for more domestic oil. In fact, it is obvious that to have any hope of controlling the prices we pay for energy in the future, we must free ourselves from the dependence on oil in general and foreign oil in particular.
We need an emergency “all of the above” energy independence program that accesses all of the domestic sources of oil that can be developed in an environmentally safe way – plus a major investment in renewable, clean energy sources that free us from dependence on oil – and especially foreign oil.
President Obama has proposed a big first step in exactly that direction, and the Republicans have answered: “Hell no — drill baby drill.”
If they are forcefully challenged by Democrats this year — as I believe they will — that Republican position is simply laughable.
Domestic drilling has increased substantially under President Obama’s administration. And our dependence on foreign oil imports has gone down every year of his presidency. The president has put in place new mileage standards for cars that will save massive amounts of potential oil imports — standards that Republicans have opposed for decades.
But that fact remains, that for all his administration can do on its own to increase energy independence, it is impossible to free America from the stranglehold of foreign oil dependency without the kind of massive national commitment to domestic, renewable energy that must be passed by Congress. The Republicans have said “no” because their biggest energy patrons — the oil companies — oppose a crash program to create renewable energy sources for one simple reason. Every day that we fail to act, the value of their oil goes up — it’s that simple.
If you doubt that Mitt Romney and the Republicans are bought and paid for by Big Oil — just ask the infamous Koch brothers — who finance major Republican “super Pacs” — how much they stand to make personally every time the long-term price of a barrel of oil increases by another dollar.
Simply put, the Republicans have put the profits of their patrons in Big Oil well above the economic and national security interests of the United States of America.
The Republicans even continue to do everything in their power to block the elimination of the astonishing taxpayer subsidy of the oil industry, that continues notwithstanding the fact that big oil companies are more profitable today than any other companies in the history of humanity. And the Republicans do it all the while they blather on about how if we once again install them in the White House, they will bring us $2 a gallon gasoline.
Whoever is pushing those kinds of lines must be studying the techniques of the late, famous circus impresario, P.T. Barnum, who famously said, “There’s a sucker born every minute.”
But in fact, polling shows that American voters simply are not so gullible that they buy either of these preposterous positions.
A final contributing factor that has recently amplified increases in gas and oil prices is the role of speculators.
In a purely competitive market, oil prices should settle in the long run at the marginal cost of producing the next barrel of oil — currently between $60 and $70 a barrel. Oil closed last week at about $106 per barrel and ran up to twice the marginal cost of production during the Bush era 2008 oil spike.
Currently about 80% of positions on oil commodity markets are held by “pure speculators” — who bet on changes in oil prices — rather than “end users” who actually consume oil and use the markets to hedge against price increases.
Academic studies have demonstrated that there is a big speculative premium in oil prices, above and beyond any “risk premium” that might normally develop from fear of some immediate, short-term shortage. That speculative premium could be materially dampened if steps were taken to limit the market’s domination by pure speculators.
The Dodd-Frank Wall Street reform bill — which was opposed by most Republicans in Congress and all of their presidential candidates — allows the Commodities Futures Trading Commission to limit the percentage of market positions held by pure speculators as opposed to end users.
Already the CTFC has position limits on the percentage of positions that can be held by individual companies or investors to prevent one from cornering the market. Many economists have proposed imposing similar position limits on pure speculators as a class.
Ordinary voters don’t like speculators. But far from supporting limits on speculation, Mitt Romney wants to go back to the “good old days of yesteryear” where wild, unbridled speculation led to the worst economic collapse in 60 years and costs eight million Americans their jobs.
None of this is good politics for Republicans.
Voters don’t want to be held hostage by the big oil companies or foreign oil. They don’t want to have their pockets picked by oil market speculators. They understand that when world oil prices go up, it benefits oil-state dictators: it’s like allowing Iran’s Ahmadinejad to levy a tax on American consumers. And voters sure as hell don’t want to pay a taxpayer subsidy to oil companies like Exxon that made more in profits in one minute last year (about $85,000) than the average American worker earns all year long.
If Republican strategists think they can reverse their fortunes by focusing on the gas price debate, the odds are good they will be wrong.
By: Robert Creamer, The Huffington Post, March 6, 2012
Nothing drives voter sentiment like the price of gas – now averaging $3.56 a gallon, up 30 cents from the start of the year. It’s already hit $4 in some places. The last time gas topped $4 was 2008.
And nothing energizes Republicans like rising energy prices. Last week House Speaker John Boehner told Republicans to take advantage of voters’ looming anger over prices at the pump. On Thursday House Republicans passed a bill to expand offshore drilling and force the White House to issue a permit for the Keystone XL pipeline. The tumult prompted the Interior Department to announce on Friday expanded oil exploration in the Arctic.
If prices at the pump continue to rise, expect more gas wars.
In fact, oil prices are rising for three reasons — none of which has to do with offshore drilling or the XL pipeline.
The first, on the supply side, is Iran’s decision to cut in oil exports to Britain and France in retaliation for sanctions put in place by the EU and United States. Iran’s threat to do this has been pushing up crude oil prices for weeks.
The second, on the demand side, is rising hopes for a global economic recovery – which would mean increased oil consumption. The American economy is showing faint signs of a recovery. Europe’s debt crisis appears to be easing. Greece’s pending bailout deal is calming financial nerves on both sides of the Atlantic, and the Bank of England and European Central Bank are keeping rates low. At the same time, China has decided to boost its money supply to spur growth there.
Neither of these would have much effect were it not for the third reason — overwhelming bets of hedge funds and other money managers that oil prices will rise on the basis of the first two reasons.
Speculators have pushed crude oil to $105.28 per barrel, up 35 percent since September. Brent crude, Europe’s benchmark, is now $120.37 a barrel – also worrisome because many East Coast refineries use imported oil.
Funny, I don’t hear Republicans rail against speculators. Could that have anything to do with the fact that hedge funds and money managers are bankrolling the GOP as never before?
But that’s okay. The gas wars may come to a screeching halt before too long, anyway. So many bets are being placed on rising oil prices that the slightest hint the speculators are wrong – almost any sign of expanding supply or declining demand – will set off a sharp drop in oil prices similar to the record one-day fall on May 5 of last year.
By: Robert Reich, Robert Reich Blog, February 20, 2012
Rick Santorum regularly knocks the stimulus bill that the Democratic Congress passed, and President Obama signed into law, back in early 2009. The American Recovery and Reinvestment Act “cost American jobs,” he told CNN last July. But that didn’t stop Santorum from claiming a tax credit for home efficiency funded through the stimulus plan that year.
According to his 2009 tax form, which was released last week, Santorum claimed a $3,151 expenditure on new exterior windows and skylights, one of the “qualified energy efficiency improvements” for homes that was granted a tax credit through the stimulus bill. The stimulus bill revived a tax credit that had expired at the end of 2007 and increased the amount of money homeowners could claim. This allowed the Santorum family to knock $945 off their taxes.
The purpose of the tax credit was to help homeowners save money by using less energy, while at the some time generating fewer emissions. But the efficient choices can often cost more upfront—hence the desire to create a tax credit to incentivize that kind of expensive upgrade. The measure was also intended to benefit the manufacturing and construction industries by creating more opportunities for them to make and install the windows and other efficient products.
Santorum has made attacking the Obama administration’s energy and environmental policies a prime plank in his platform, implying just last week that the president is some kind of dirt-worshiping hippie aligned with “radical environmentalists.” He’s also used his position on the subject as a way to distance himself from rival Mitt Romney, who has at times shown sympathy for protecting the environment.