Daniel Kish is the senior vice president for policy at the Institute for Energy Research.
President Barack Obama has about as much control over retail gas prices as Iranian President Mahmoud Ahmadinejad. Which is to say, he's partly responsible for the pain Americans are feeling at the pump. The diminutive Iranian tyrant may well put the choke hold on the Straits of Hormuz and send oil prices into the stratosphere, but only President Obama can end the embargo on American oil that his administration has put in place.
To be fair, numerous factors go into the price of gasoline. Federal, state, and local taxes account for about 12 percent of the price of gasoline. Refining oil into gasoline adds about 6 percent and local service stations add 6 percent for overhead. That leaves 76 percent of the price of gasoline that is tied directly to the price of crude oil.
[See a collection of political cartoons on gas prices.]
U.S. presidents can have a tremendous impact on the price of oil. In fact, on July 14, 2008, President Bush announced the end of a moratorium on offshore drilling in the United States. While he was speaking—before a single permit was granted or a single drilling platform was built—the price of oil dropped $9.26 per barrel. Contrast that with President Obama's record. On Jan. 20, 2009—the day President Obama took office—oil was selling at $38.74 a barrel and the average retail price of gasoline was just under $1.90 a gallon.
Today, however, oil is trading over $108 a barrel and gasoline is approaching $4 a gallon nationwide. What's happened in the last three years? For starters, the Obama administration has cut oil production on federal lands by 11 percent last year and has issued 35 percent fewer permits annually than the Bush administration. Moreover, none of the offshore areas President Bush opened in 2008 will even be offered until 2017 under the president's plan.
[See a collection of political cartoons on energy policy.]
At every turn, President Obama has signaled that he will limit the supply of American oil from federally controlled lands both onshore and offshore. Those signals are as important in setting the price of oil futures as Ahmadinejad's saber rattling in the Persian Gulf. One man wants to control the Persian Gulf, the other the Gulf of Mexico. Neither seems to care much about the hit on American pocketbooks.
And if the administration wants to prove me wrong, let the president publicly embrace drilling in Arctic National Wildlife Refuge or pledge to open the coasts of California and Virginia, and let's see what happens to the price of gasoline.
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