Sunday, March 18, 2012

When It Comes To Gas Prices Republican Pres Candidates Believe in Government, Not Market

Gas prices are up and politicians are noticing.  Here's what three of the Republican presidential candidates are saying.  

Newt Gingrich will provide Americans with $2.50 gas if elected president.  (I think he's working on a time machine.)

"When [Obama] ran for office he said he wanted to see gasoline prices go up," Romney said on Fox News Sunday.
Romney said Obama should fire the three top officials who oversee energy and environmental matters - Energy Secretary Stephen Chu, Interior Secretary Ken Salazar and Environmental Protection Agency Administrator Lisa Jackson.
"This gas-hike trio has been doing the job over the last three and a half years and gas prices are up. The right course is they ought to be fired," the former Massachusetts governor said.
This comes from a Reuters article which follows this with:
Energy experts say that the price of gasoline is largely set by global markets, not government policies, and Obama has accused Republicans of pandering on the issue. Still, Obama and British Prime Minister David Cameron have discussed releasing strategic oil reserves to ease gas prices

Rick Santorum's take:
"We went into a recession in 2008 because of gasoline prices. The bubble burst in housing because people couldn't pay their mortgages because they were looking at $4 a gallon gasoline."

"And look at what happened," Santorum continued. "Economic decline. Here we are again, trying to struggle out of a recession with Barack Obama and the federal government on the backs of business, not letting them grow. And now we have energy prices again, why? Because of government policy. Government policy is trampling the American spirit."
I know that if I mention that the Republican party is the champion of the private sector and the market system and they should be looking there for answers, not government, they would, of course, say that government regulations were stifling the private sector.   (They don't often talk about government subsidies to business disrupting the market, mainly it's regulations that keep them from polluting or mistreating their workers.)

Do I have more faith in the power of the market than the Republican presidential candidates?  It seems like the oil companies are doing quite well under these government regulations.  (Check out the 2011 profits for Exxon and Shell, for example.) 

The White House says the government can't do a lot, it's a world wide market.   
But as the President explained (again) today, more drilling is no quick fix or silver bullet. More drilling here in the United States isn’t enough to bring prices down or meet our energy needs, and here’s how we know:
First of all, we are drilling. Under President Obama’s Administration, America is producing more oil today than at any time in the last eight years.We’re operating a record number of oil rigs, and the President has opened millions of acres for oil and gas exploration both on and offshore that will help bring even more of them online. But prices are still high.
Then there’s the issue of basic math. America consumes more than 20 percent of the oil the world uses each year. If we drilled every square inch of the country and tapped our entire supply, the most we could come up with would only total with about 2 percent of the world’s known oil reserves.
We won’t be fully in control of our energy future if our strategy consists of drilling for the 2 percent of oil we have but still buying 20 percent we use—especially if we have to buy that oil on a world market where prices --which are already subject to short-term spikes when political conflict or natural disaster affects supply--will only keep rising as global demand for oil explodes.
I'm guessing the Republican voters - especially those who drive a lot in low mileage vehicles - would rather blame Obama for the gas prices than their own fuel consumption behavior.

The most basic market principle is supply and demand.  We are only a relatively small portion of the world wide oil market, (though our consumption is disproportionately high.)  As the people in the rest of the world increase their oil consumption, prices will continue to go up.  So if Americans want to spend less on oil, they're going have to do more than elect pandering candidates.  They're going to have to apply market principles, like lowering their demand and finding alternatives to high energy use.

This may involve a brain workover for those stuck in old habits.  Here are some alternatives.

Biking and Walking

I've said it before, but biking and walking are forms of transportation that really are doable, even in the winter in Anchorage.  It does take a different mindset.  We have to stop our entitlement mentality - as Americans we are entitled to drive as much as we want.  It doesn't mean you bike or walk to work every day, but you can set targets, like, "Once a week in the summer."  Or "On sunny days in the summer."  Or "When I don't have to make three stops coming home."

Walking a three or four mile round trip isn't all that hard either and doesn't take all that long.  Count it as your exercise for the day. (You can reward yourself with a Big Mac.)  Google maps will show you how far each trip you make really is.  Under a mile?  Try to walk for sure.  Once you start thinking this way, walking and biking become an easy substitute for driving when the weather and riding surface are ok and you have enough time. 

The Bus

I suspect key reasons for not riding the bus are:
  • total lack of information on how to ride and what the schedule is
  • belief that buses are for the poor, and are dirty and dangerous (that, of course, would put people into that famous 'elitist' category - I'm too good to ride the bus)
  • they take too long to get places
The first is easy to fix.  Most city bus systems have pretty good websites now.  The best ones, like Portland's, have trip planners where you can put where you are starting from and where you want to go and they'll give you some possible routes, with bus numbers, times, and how far you have to walk to get to and from the bus stop. And a map!  Here's "How to Ride" the Anchorage's People Mover.

Clearly, low income folks probably use public transportation more than high income folks.  Though in places with good systems - New York, DC,  and most European cities - public transportation is taken for granted.  You're probably thinking about what you give up and not what you gain.  People who commute by public transportation often see the same people on the bus every day and develop a community.  No parking fees.   If this is your reason for not riding, face your prejudice, take a bus, and find out it's perfectly fine.

The last reason is a particular problem with poorly developed systems - like Anchorage - where population density is low and bus frequency doesn't exist for most routes.  But with a schedule you can avoid the wait.  With a book you can use the bus for a break.  With a mobile phone, you can get things done.  And on some routes, you can get where you want nearly as fast as driving. 

And you can combine the bus with walking and biking.  Most bus systems allow for bikes these days. 

Don't Forget Other Ways To Save Energy

Have you had your home energy audit?

Hang up your laundry.  Dryers are one of the highest energy consuming appliances in the house and the alternative isn't that hard.  I think washing machines save enormous, time-consuming drudgery, but hanging up laundry is not a pain.  European homes are far less likely to have or use a clothes dryer than in the US.   And there are lots of air dry options.

And the Republican candidates are constantly talking about the good old days, so they should embrace clotheslines. 

The Republican primaries are showing how low attention span, lack of accurate factual knowledge, Fox News, fundamentalist religious beliefs, Citizens United, and poor reasoning skills (for starters) affect the candidates' rhetoric. 

Newt, while you're at it, how about pushing the clock back to 34¢ gasoline? 


  1. In Hungary the fuel prices are ca the double of US fuel prices and Hungarian average salary is way less than the US average. To be honest I don't know if we compare salaries on real value (expressed in any material) how much Americans are richer than Hungarians but I am sure they are. Once I saw an article how much time people in different countries work for a hamburger at McDonald's I think. Unfortunately I couldn't find it and it was in Hungarian so I guess it wouldn't have sense to show it. However take a look at the figures part of this article: According to it (let's say Americans work 15 minutes for a Hamburger and Hungarians 60 minutes for one - rounding) so an average American can buy hamburgers while an average Hungarian can buy only one. Let's consider that "Big Mac" is an universal "currency". You get 4 Big Macs per hour while I will get only one and I need to pay double for the fuel. For the simplicity let's forget the laws on marginal utility and consider than an additional Big Mac has the same utility at every level of income. In this case we can say that US fuel is 8 times cheaper than Hungarian one. I know it is a very backward model but emphasises that American economy could (or should) stand rising fuel prices.

    I personally am a great supporter for public transport but as far as I know it is not very advanced in the US. I ride my bike for fun and training and not for transportation.

  2. Ropi, glad to see you have your google name back. Cross-national comparisons are tricky. I've seen the McDonald's comparisons too. They can be misleading because 1) outside the US they could be more, in real dollars, than in the US, or less; 2) the real comparison would be a local food that people consume in country x the way Americans consume Big Macs; 3) the overall cost to live a 'normal' life compared to % of annual income (Europeans tend to have much better vacation leave) would be more accurate. A lot of articles on the most expensive cities are comparisons of costs for a US executive living abroad as he would in the US. But local economies have lots of lower cost options for a good life, but just different from living a first class US life. Even in the US you can stay in a $500/night (or more) hotel room or a $79/night hotel room.

    I don't know how Budapest is set up for bikes (bike lanes, etc.), but Holland and Germany do make it easier to ride a bike as transportation than many places.

  3. Ropi, I also meant to ask if you have a dryer at home or hang up your laundry.

  4. Hang up their laundry? I guess when all the women are home raising their new baby every year, the older kids can give up sports and hang up the laundry. But for now, the average Republican will not even give up their Hummer or their huge truck that won't fit in the parking space so they take two..or more. They think alternative fuels are from Satan, and that Sarah Palin is an energy expert. And you think they will ever dry their clothes on the line?

  5. Well I spent 150 dollars in Prague so a $79/ night room is still expensive to me. However I am quite cheap.

    Yes, we hang our clothes at home and we don't have a machine which cleans the dishes (lavaplatos in Spanish, I don't know its English name) so we don't have electrical device for everything. Why did you ask it?

    We have bike roads but I don't like to ride my bike in the inner part of the city.

    I know it is tricky to compare two countries but inaccurate measures are still better than nothing,

  6. Ropi, I assume $150 in Prague was for several days. I asked about drying the clothes because I'd compared the US with Europe and was using as a data point in Europe. I'd guess every US reader has a dryer (except my mom).

  7. Well, in Hungary it is not obvious that you have a dryer.


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