Is Obama to Blame for High Gas Prices? >
Obama Is Not the Only One to Blame for High Gas Prices
Much is out of the president's hands, but what he can do he must do better
March 2, 2012
About Nicolas Loris:
Nicolas Loris focuses on energy, environmental, and regulatory issues as a policy analyst in the Roe Institute for Economic Policy Studies at the Heritage Foundation. Before joining Heritage in June 2007, Loris was an associate at the Charles G. Koch Charitable Foundation, immersing himself for a year in a market-based management program.
Blaming President Obama for high gas prices is like blaming LeBron James for the Miami Heat's loss in last year's NBA finals. There are too many factors at play to place blame on a single individual. But just like LeBron, President Obama has come up short.
[How High Gas Prices Could Help Obama.]
Most of what's happening is out of the president's control. That's because the single biggest factor driving the gas prices is the price of oil. The Energy Information Administration reports that, in January, crude oil prices accounted for 76 percent of the price of a gallon of gas.
Crude is sold in the global market—and global demand is up. And while U.S. demand has fallen due to a weak economy and a warm winter, China and India are buying crude at a blistering clip. Asia surpassed North America as the world's largest petroleum-consuming continent in 2008. And that consumption will only increase as China and India's economic growth continues to outpace ours. That puts upward pressure on crude prices, which ultimately get passed through at the pump.
The Federal Reserve also deserves its share of blame. Oil trades in U.S. dollars and the Fed's easy money policy has weakened the value of the dollar. It now takes more dollars to buy the same amount of oil in the U.S.
[What Obama and Ben Bernanke Should Do About Gas Prices.]
With respect to oil and gas production, President Obama ignores the bad administrative decisions and takes credit where credit's not due. He touts that oil production is the highest it's been in eight years.
Increased oil and gas production in the U.S. is a great development, but this is largely a result of increased production on private lands in North Dakota, Texas, and Alaska. On federal lands and offshore, the story is much grimmer. Last year, oil production dropped 14 percent on federal lands and waters, including a 17 percent dip in the Gulf of Mexico.
Production from federal lands and offshore could have increased fuel supply, exerting downward pressure on oil prices. Instead, executive decisions by this administration have severely restricted producers' access to these areas and slowed the permitting process to an anemic crawl.
[Republicans Aggressively Gouging Obama Over Gas Prices.]
It would be unfair and disingenuous to lay all blame for high gasoline prices at the president's doorstep. But by restricting access to exploration and production, Mr. Obama's policies have certainly helped drive gas prices to artificially high levels.
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- Other Arguments
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#123896
Yes — The administration has done little to reduce oil prices
DANIEL SIMMONS, Director of State Affairs at the Institute for Energy Research
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#213684
Yes — The president should know there are viable options on the table
DOUGLAS HOLTZ-EAKIN, President of the American Action Forum
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#311282
Yes — Domestic energy production has increased despite president, not because of him
CHRISTOPHER PRANDONI, Federal Affairs Manager of Americans for Tax Reform
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#4130133
No — Only by lowering our gasoline and oil consumption can we protect against high gas prices
DAVID FRIEDMAN, Senior Engineer and Deputy Director of the Union of Concerned Scientists' Clean Vehicles Program
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#593104
No — Presidents get blamed for world market changes that occur during their time in office
PETER VAN DOREN, JERRY TAYLOR, Senior Fellows at the Cato Institute
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#684103
No — We need to prepare for a world with permanently higher gasoline prices
SEVERIN BORENSTEIN, E.T. Grether Professor of Business Economics and Public Policy at U.C. Berkeley's Haas School of Business
