When Republican U.S. Rep. Steve Scalise, of Metairie, criticizes President Barack
Obama’s energy policy, Scalise likes to point out that gasoline prices were $1.79 per gallon when Obama was elected and are $3.58 today.
The same could be said, however, about former President George W. Bush, who entered office with gas prices at $1.47 a gallon and rose to $4.10 at the pump.
What can a president do to affect gas prices? The answer most likely is found not in the Middle East oil fields but on Wall Street.
Fueling the gas price rise are speculators, who purchase a barrel of oil at a fixed price betting that it will rise and they will earn a fat profit.
Amy Jaffe, of The James Baker Institute of Public Policy at Rice University in Houston, said the most impact Obama would have on gas prices is by cracking down on cheating speculators, better known as “market manipulators.”
The Commodities Futures Trading Commission regulates speculators and though they have had recent hearings and public input on problems on Wall Street in regard to them, the Obama administration has been slow in cracking down on problem agents.
“They said they were going to do something about it,” Jaffe said. “The administration didn’t do anything.”
Larry Goldstein of the nonprofit Energy Policy and Research Foundation in Washington, D.C., agrees. Goldstein has been monitoring the industry for 30 years.
“We have rules and regulations,” Goldstein said. “Enforce them.”
Scalise agrees that speculators play a critical role in the process and that Obama could affect the price of gas by calling for more domestic production.
Scalise and the remainder of the Louisiana congressional delegation decried the Obama five-month ban on drilling that occurred after the BP Deepwater Horizon disaster.
Scalise and company are also calling for the issuance of more drilling permits in the Gulf of Mexico, criticizing the administration for slowing permits, which they have called a “permitorium.”
If drilling in the Gulf was more robust, speculators would have little choice but to bid lower on the price of a barrel of oil, Scalise said.
“The speculators, who the president loves to beat up on, look at this current policy and say, ‘Wait a minute. America is shutting off its known supplies, their demand is increasing, so that means it’s going to be a high price,’ and so the speculators are able to go in and run up the price,” Scalise said.
The shutdown of Gulf oil drilling takes up to 200,000 barrels a day out of circulation, Goldstein said. And though it would take five to 10 years for oil drilled today to reach the gas tank, every barrel has a impact.
“A supply increase anywhere means a price decrease everywhere,” Goldstein said.
If that is the case, the dearth of supply now can be blamed on Bush and his predecessor, President Bill Clinton.
“If they would’ve started it back then, we’d see that oil today, that would be in our pipelines,” Scalise said.
Jaffe stated that any blame placed on Obama could equally be piled on Bush.
“It doesn’t matter who it was,” Scalise said. “I’m not going to defend somebody else’s bad policy, but I know today that the policy this president has is destroying jobs and running up the price at the pump.”
Obama could get some much needed help on the commission. He recently was able to nominate his first appointment to the five-member panel, which will have three Democrats.
Jaffe agrees that promoting more drilling in the Gulf today sends a message around the world that America is willing to produce more of its own oil.
“It doesn’t mean that it isn’t the policy we should do in the long term,” Jaffe said of expanding drilling. “It’s going to call attention to that.”
Gerard Shields is chief of The Advocate’s Washington bureau. His email address is GerardShields@aol.com.