Gas prices have been on the rise for 24 days now, with average prices hovering at record highs. Not only does that mean pain at the pump for consumers, it means a whole bunch of politicians on the campaign trail promising lower gas prices.
Newt Gingrich, struggling to stay above water in the GOP presidential primary races, has been a shining example, embarking on a "$2.50 Gas Tour" to bring back low gas prices and realign the nation's energy priorities.
According to his campaign website, the only reason we don't already have $2.50 gas is because of "bad government policies." He aims to fix the system by cutting through the red tape and regulations preventing oil development in the United States so that "no future president will ever bow to a Saudi king again and so every American can look forward to $2.50 a gallon gasoline," he said in a recent debate appearance.
With average gas prices hovering around $3.74 a gallon, Gingrich's promise might sound good to a lot of people struggling to make ends meet. But is there any chance Americans could see those kinds of gas prices again, or is Gingrich just pandering to consumers feeling pinched at the pump?
It all goes back to crude oil prices. According to the Energy Information Administration, oil prices make up about 70 percent of the price Americans pay at the pump. The trouble is politicians have few levers to pull when it comes to influencing the price of oil.
"Oil is a global commodity with a global market price," says Paul Bledsoe, senior adviser at the Bipartisan Policy Center in Washington, D.C., who emphasizes the only way to bring down oil prices would be to bring huge new supplies on the market quickly—not a likely prospect, he says.
But what about the untapped oil supply here in the U.S.? While much has been made of increasing oil production at home to offset rising prices, the truth is, Bledsoe says, the few million barrels or so the U.S. would be able to add to global oil supply in the short term wouldn't make much of a dent on oil prices now.
"The ability of the U.S. to hugely expand production such that it would impact the price of oil any time soon is practically nil," Bledsoe says. "It's such a big market that even if we could develop more domestic production and add a few million barrels to global production it would have little effect except on the margins."
The only other options would be to convince Saudi Arabia—holder of about one-fifth of the world's proven oil reserves and the largest oil producer, according to the EIA—to use its already-depleted spare capacity or tap into the United States' strategic petroleum reserve, Bledsoe says.
[Read: 5 Easy Ways to Save at the Pump.]
But even that might not solve the problem of higher oil prices and ultimately steeper fuel costs.
"It's really tricky because that could panic the markets more," he says. "You're producing more but you're taking that little bit of spare capacity off, too."
The bottom line, according to Bledsoe, is that there's no way for the U.S. in a short period of time to pump up oil supply enough to affect global oil prices enough to drive gas prices down to $2.50. "There is no surefire way to reduce the price of gasoline significantly in the near term," he adds.
But the fact that $2.50-a-gallon gas is probably impossible at this point might not end up making much of a difference for Gingrich. Simply floating the concept before voters who might already be feeling their budgets squeezed by high gas prices could help him garner support on the campaign trail.
The effects of Gingrich's arguably sensationalist gas promise could already be panning out for the comeback kid. According to a recent Gallup poll, the former speaker enjoyed a little bump in support in late February. Whether or not his play on gas prices can sustain that momentum is another question.
mhandley@usnews.com
Twitter: @mmhandley
Reader Comments Read all comments (3)
Ronald Stein of CA 5:35PM March 05, 2012
Mandy Cat of FL 5:58AM March 05, 2012
Ed Lagniappe of TX 10:08PM March 02, 2012