Why Rising Gas Prices Could Backfire On The GOP In November
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.
Here’s why:
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.
3). Speculators.
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
Speculators, Hedge Fund Managers And “Gas Wars”
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 Cashes In On The Very Tax Credit He Claims To Hate
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.
“Who would be the better person to go after the Obama administration on trying to control the energy and manufacturing sector of our economy and trying to dictate to you what lights to turn on and what car to drive?” Santorum told the crowd at the Conservative Political Action Conference earlier this month. “Would it be someone who bought into man-made global warming and imposed the first carbon cap in the state of Massachusetts, the first state to do so in the country?”
Despite the major boost that the stimulus bill gave to the manufacturing sector, Santorum has accused Obama of “talk[ing] about how he’s going to help manufacturing, after he systematically destroyed it.” The stimulus is also one of the many things Santorum targets when he criticizes Obama’s “radical agenda.” “We’re not like the liberals. Every time we see a problem, we don’t have to find a government program to fix it,” Santorum said on the campaign trail in Michigan this week. “We encourage others to fix it without the government’s heavy hand.”
Santorum has also said he thinks that “all subsidies to energy should be eliminated.” He doesn’t, however, seem to have a great grasp on what those subsidies are, as he also claims that “there are not a lot of them” to eliminate—when in fact we provide about $20 billion worth every year. Nor did he comment on whether the tax credit he claimed just a few years ago would qualify as one.
By: Kate Sheppard, Mother Jones, February 24, 2012
The Hypocrisy And Stupidity Of The GOP’s Hatred Of The EPA
GOP presidential candidate Rick Santorum has taken advantage of his newfound popularity to get on board the Republican war against clean air and water.
According to Santorum, the new EPA rule that will finally place limits on how much mercury the nation’s coal and oil fired power plants can spew into the air —a regulation specifically created to protect young children and developing fetuses from the damage known to be caused by mercury, a dangerous neurotoxin—will shut down 60 power plants in the US and is “not based on any kind of science.”
Nonsense.
What Santorum is not telling you is that we have long had regulations on mercury emissions for other types of emission sources such as waste incinerators. Why? Because it is no secret that mercury is highly damaging to our health, particularly the health of children and developing fetuses. Yet, coat and oil fired power plants, the single-largest source of mercury emissions, were never included in the limits —until now.
Indeed, the only thing not based on any kind of science is Santorum’s determination that causing some private power plant operators to install the technology required to stay within the new emission limits is more important than the estimated 11,000 premature deaths and 130,000 asthma attacks that will be prevented each and every year as a result lowering the level of mercury in the air.
While it may not play well with the GOP base and Tea Party members committed to ending federal government regulations—even when they make sense—the new EPA rules are the result of a peer-reviewed study that has taken twenty years to complete.
But it’s not like one requires a degree in chemical engineering to appreciate that mercury in the air can’t be a good thing.
If you doubt this, just listen to the never-ending GOP complaints over the dangers of mercury escaping from the compact florescent light (CFL) bulbs the government will soon require us to use in place of the highly inefficient incandescent bulbs. While the supposed dangers of mercury from a broken CFL bulb falling to the carpet is enough to motivate conservatives to fill their basements with stockpiles of old-school style light bulbs as if they were preparing for electric-Armageddon, they don’t seem to have a problem with coal plants pouring this neurotoxin into the air where it can cause all sorts of serious health problems for the entire population.
How does that make any sense? You would think that these Republicans and their children breathe different air than the rest of us.
But then, maybe they do. You don’t find a lot of coal burning power plants in upper-class neighborhoods – only the people who own the plants and would prefer not to have to spend the money to upgrade their technology to meet the new standards to protect the rest of their fellow citizens.
While you may wish to argue that the amount of mercury exposure resulting from a busted CFL bulb in your house is, somehow, more dangerous than being exposed to mercury 24/7, you would be wrong. Despite the horror stories being pitched suggesting that people in hazmat gear will be required to clean up a busted light bulb, the truth is a broken CFL bulb will be swept up (not vacuumed) just as broken bulbs have always been swept up. A little more care is required in disposal just as more care is required when disposing of used batteries.
And yet, despite these obviously contradictory impulses, the GOP is ready to shut down the EPA because the agency dared to require power plants to reduce the amount of mercury it pumps into the air.
If this behavior fails to strike you as sufficiently odd, consider the hypocrisy of a man like Rick Santorum—as dedicated a pro-lifer as you will find—who argues, in defense of life, that a physician who performs an abortion should be treated as a criminal and thrown in jail but defends the practice of spreading the very neurotoxins through the air that damage the development of many unborn children along with the many already born children who will grow up to be sickly adults—or worse— due to the illnesses caused by mercury.
If you are going to protect life, then protect all life — not just the ones that will win you some votes. To do otherwise is the ultimate in hypocrisy.
We all understand that, from time to time, the government can get carried away and over regulate. If it can be shown that a regulation is causing far more harm than good, I have no problem doing away with that regulation.
However, when it comes to our health and the health of our children, is over-regulation even possible? Does it ever make sense to balance the need to drive profit against the desire to have healthy children?
The bottom line here is that the GOP has picked the wrong enemy in taking on the EPA. You simply can’t argue that you are pro-life and then be unwilling to protect that life because you believe it is bad for business.
With the exception of the die hard GOP base, it’s a losing pitch as voters just aren’t going to buy it.
And we all know what that means.
By: Rick Ungar, Contributing Writer, Forbes, January 3, 2012
Gingrich Raked In Oil Money After Flip-Flopping On Cap And Trade
2012 GOP presidential contender Newt Gingrich executed a high-profile flip-flop on cap and trade, saying in 2007 that “mandatory carbon caps combined with a trading system” were something he “would strongly support,” before disavowing that position this year. “I never favored cap and trade,” he claimed during a Fox News interview earlier this month.
It turns out that this move was more than politically convenient for Gingrich. As the Washington Post noted today, Gingrich’s climate flip-flop was also quite lucrative, with millions of oil dollars pouring into his now defunct energy non-profit after he announced it:
Within weeks, the money began pouring in from major U.S. energy firms, which eventually contributed more than $2 million to American Solutions’ pro-drilling and anti-cap-and-trade campaign for the next two years, according to a review of disclosure reports and other records by The Washington Post.
The top contributors included Peabody Energy of St. Louis, which gave $825,000, and Devon Energy of Oklahoma City, which contributed $500,000.
Gingrich also has a complicated relationship with oil subsidies, deriding Congress for not cutting them, but also mocking progressives for wanting to cut them.
Gingrich, of course, has been quote cozy with corporate interests in the last few years, making and taking millions from various corporations for work in a variety of areas. And those corporations have seen their investment pay off, as Gingrich has peddled his influence to secure earmarks and push for deregulation. His cap and trade flip-flop is simply part of a larger pattern of Gingrich saying what he needs to say to keep corporate dollars flowing.
By: Pat Garofalo, U. S. News and World Report, December 29, 2011
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