By Andre Michael Eggelletion
Tea Party/Republican presidential hopeful Michele Bachmann (R-MN) promised voters that they would pay only $2 per gallon for gasoline if she is President. In remarks on a campaign stop in South Carolina Bachmann said "Under President Bachmann you will see gasoline come down below $2 a gallon again… That will happen." I can tell you now that the only way we will see $2 gas anytime soon, is if the economy enters another period of major contraction. I’ll talk about that later in this opinion editorial.
What is Michele Bachmann trying to pull?
Mrs. Bachmann is trying to out-“slick” Gov. “Slick Rick”. “Slick” Rick Perry wanted you to believe that Ben Bernanke was calibrating monetary policy to help President Obama get re-elected, which is a lie. Bachmann wants you to believe she can control gas prices as president, which is another lie. I know that there is a huge difference between campaign rhetoric and actual governing but this lie takes the cake. If Bachman really believes what she said, then she’s crazy. If she doesn’t know that no single individual, not even the president, can control gas prices, then she has no business in the White House.
Bachmann is trying to blame Obama for gas prices
Bachman also pointed to the increase in gas prices during Obama’s term of office. "The day that the president became president gasoline was $1.79 a gallon. Look what it is today" Bachmann said. But this is false, and I say more on that later. Bachmann and other conservatives also want you to believe that President Obama could have eased gas prices if he had allowed more drilling for oil. This too is false. It would take years for the United States to produce and stockpile enough oil to offset cuts in OPEC production that would be sure to come. Quite simply, the oil producing nations of the world are not about to allow falling oil prices to hurt their economies.
Gas prices during the Bush years
Careful study of this chart on gas prices since 1979 reveals some interesting facts. On January 15, 2001, five days before George W. Bush took the oath of office and became the 43rd President of the United States, the average U.S. price of gas was $1.66 per gallon. Gas prices peaked at $4.35 per gallon on July 15, 2008. Why didn’t Rep. Bachmann talk about the hardship on families caused by this $2.69 increase in gas prices under President Bush?
Why did gas prices fall during the last 5 months of President Bush’s final term?
Gas prices fell $2.32 per gallon during the final 5 months of George W. Bush’s presidency to $2.03 per gallon on the day Barack Obama became president. Rep. Bachmann’s claim that gas was $1.79 per gallon on January 20, 2009 is false. The reason for the drop in gas prices at that time was that there was a dramatic decrease in demand. Remember, at that time, the entire planet earth was experiencing the worst economic contraction since the Great Depression. It is typical to see demand for gasoline fall during even mild recessions; businesses and individuals simply drive less. But the Great Recession of 2008 brought about the kind of nose-dive in spending, especially in gas consumption, usually associated with depression level conditions. In short, Bush screwed up the economy so badly that the average American could no longer afford $4 and in some places $5 per gallon for gas.
Who controls gas prices?
Gasoline prices are heavily influenced by demand. Oil prices are also contingent on geo-political stability, as well as trading activity on Wall Street in the crude oil market. Anyone who believes that these markets can be controlled for political, or any other purpose, by a single individual is delusional.
Why did gas prices increase under President Obama?
The reason gas prices rose during President Obama’s term thus far, from $2.03 to the current $3.60 per gallon (a $1.57 increase), is simply because the economy has improved and demand has increased. Not only has demand risen in the United States, it has risen tremendously in areas of the world where heavy investment in enterprise is taking place; mainly China and India. Likewise, the Arab Spring in the Middle East also helped oil prices to rise.
The only way Bachmann can bring back $2 gas?
As I indicated at the beginning of this editorial, the only way to get gas prices back to the $2 per gallon level is if the economy has another major contraction. Had the United States not raised the debt ceiling, and the U.S. actually defaulted on its sovereign debt, the economy would have contracted to such a degree. Likewise, as much as I hate to say this, if the Fed does what some in this country want to see it do right now, which is stop printing money, the economy will contract and we may see $2 gas. That does not mean the United States could or should think we can live on the Federal Reserve’s printing press forever. The plain truth is that the economic policies we hear from people like Bachmann and Perry are like using a sword instead of a scalpel to perform the surgery this economy needs. Their policies will abort the recovery and lead to a deflationary spiral in not only gas prices, but prices for goods and services that would lead to massive lay-offs and firings. If a business cannot optimize its prices, then it will start downsizing. If a Republican is elected president in 2012, and does what they are saying they will do, then they would put this country into a second Great Depression.