Lovely graph from the Washington Post:
Although the partisans on both sides look like dolts here, obviously on this issue Democratic hypocrites outnumber Republican hypocrites. (This may be a case where Republican skepticism of the Federal government’s ability to do anything has served them well.)
So, partisanship aside, what’s the right answer?
It’s hard to say, because the question is pretty unspecific.
I mean, obviously the Obama Administration could push for eliminating the Federal excise tax on gasoline, which would save 18.4 cents per gallon. But technically, that’s not Obama doing anything — he’d just be asking Congress to do something. Plus, it’s not exactly “reasonable” to eliminate the revenue for the Highway Trust Fund — what will pay for the highways?
Plus two, when Americans think about lower gasoline prices, I think most imagine a return to 2009 or 2010 prices — that is, a cut of over a dollar per gallon — not an eighteen cent cut.
Republicans tend to say that we just need to increase gasoline production, and all will be swell. But the US’s oil stock is just too meager to effect gas prices (gas is an international market, not a local market). A chart from Senator Jeff Bingaman (via David Roberts) illustrate this well:
So basically, the correct answer is “no,” regardless of which party controls the White House. Gas prices are almost entirely set by worldwide supply and demand, something the President cannot control.
However, as Senator Bingaman argues, we can reduce our vulnerability to gas prices by lowering our dependence on gasoline.
If we want to reduce our vulnerability to world oil prices and to volatility of world oil prices, the most important thing we can do is to find ways to use less oil. One of our colleagues gave a good speech a few years ago in which he advocated that we ‘produce more and use less.’ Well, we are doing a pretty good job of producing more and we need to do a better job of using less.
We could do much better on the ‘use less’ part of the equation without affecting our quality of life. We can do that by being more efficient in our use of fuel and by diversifying our sources of transportation fuel away from oil.
More efficient cars and alternative fuel sources don’t lower gas prices,1 but they do make higher gas prices hurt less. And there is a lot that Congress could do to help this process along.
Of course, the survey question was about what the President could do. And here, again, I suspect the answer is: not that much. It might be helpful if Americans, and the media, would stop asking what the celebrity-in-chief can do, and instead talk about what the government can do.
- They technically do lower gas prices, by lowering demand — but again, it’s a worldwide market. I’m not sure that changing what we drive in the US would have a visible impact on prices at the pump, because the effects of changing cars in the US might be swamped by the actions or inactions of the rest of the world. [↩]
To me, the big difference between what Obama can do and what Bush could have done is, Bush was an oilman, in bed with other oilmen, holding hands with Saudi princes and whatnot – that was pretty much his area of “expertise.”
Well, you would think that there would be some local effect to increasing crude oil production due to the savings of having to transport the crude. I don’t know what percentage of crude oil price is transportation, I admit.
The other thing that people tend to forget is that a major contributor to gas prices is refining capacity. I would not be surprised to find that refining is much more of a bottleneck than crude production.
It’s funny, Elayne, but back in the 2008 election there were many prominent Democratic politicians (including the then-Speaker of the House) running ads featuring backdrops of signs showing gas selling for the outrageous price of $1.72/gallon and saying it was because Bush was buddies with the oil men and was arranging things to their benefit. So we got rid of that guy – well, we didn’t, actually, he hit his term limit – and put in someone who WASN’T a buddy of the oil men. And – gas prices have gone up even more proportionately in 3.5 years of Obama’s term than in 8 years of Bush’s term.
Maybe we need someone who’s buddies with the oil men again.
That production graph doesn’t really tell us that there’s no relation between oil production and oil prices. It doesn’t account for the demand for oil, which has gone up as India and China have started using more. Plug that factor in and I bet you see more of a link between oil production and oil prices.
Also, oil production in the U.S. can be increased not just fractionally but by multiples.
Me, I’m all for using less. I’ve said it before – in 100 years people will say “What? They used to BURN this stuff?!!” But right now the major thing I’ve seen the current Administration do is help rich people – who I’m arbitrarily defining as people who can afford to spend $35K on a car – buy electric or hybrid cars by subsidizing them with my tax money. Me being someone who is looking to buy a car right now and can’t afford to spend more than about $22 tops for a new car, so I’m completely out of the hybrid/electric market.
Current gas price in Germany is 1.67 € per liter. That’s 8.43 dollars per gallon. Germany is in the upper third for European gas prices, but the last time I checked, the average was aroung 1.57 € per liter, and even the lowest (in Rumania) was 1,24 € per liter.
Not that rising gas prices aren’t still a problem in the US, but sometimes perspective is good.
Those European prices are driven purely by taxation and local variations in formulation requirements (mostly the former). As Amp says, oil prices are set in a world market; if it’s $11 in Illinois and $1 in Indiana, look to government for the explanation of the difference.
Thanks for this post, Amp. When I saw it I groaned inside, for I have been arguing about oil and gas markets for what seems like weeks now, and was wearily girding the old loins to come beat you about the head and neck (now THERE’S a mental image) for repeating tired and discredited cliches…and instead I find you posting pretty much what I have been saying for a long time. May you find more receptive ears and brains.
And with joy I find that we CAN disagree, or at least argue, about something. You say:
More efficient cars and alternative fuel sources don’t lower gas prices,a but they do make higher gas prices hurt less. And there is a lot that Congress could do to help this process along.
Like what?
We’re already encouraging manufacturers to improve fuel efficiency via technological and design, with the slowly but surely escalating CAFE standards. There might be a little more speed of improvement to be gained, but not a whole lot; they’ve already got incentives to do better. More incentive = more effort only where effort is very low; we’re at high-effort now.
Congress can encourage consumers to choose more fuel-efficient vehicles in a few different ways, but nearly all of them are political suicide: nobody wants to go in front of the Congress and say “hey, let’s kick the Federal excise tax up by eight bucks a gallon, that will definitely encourage the Prius and Focus buyers.”
So where do you see an opportunity for government policy to spur significant improvement over the status quo (which is significant improvement year over year already)?
Ron F –
“Me being someone who is looking to buy a car right now and can’t afford to spend more than about $22 tops for a new car, so I’m completely out of the hybrid/electric market.”
I bought a 2010 Prius, base model, former rental with 29K miles on it (and therefore a little factory warranty left), for $22K in September, in the hottest market for used Priuses in the country. That’s before selling my old car for $3700.
Just a data point. I really, really like my Prius, and really, really like getting 40-48 mpg when gas is nearly $4.50 in my area.
Not saying you made a bad choice, Elusis, but the actual longevity of Priuses is an open question, simply because they haven’t been around long enough for us to see what the empirical service life is. You may well have spent $22k for a car not worth a fraction of that amount, because if it turns out they only last six years, you’ve bought one with a third+ of its useful life gone.
Pretty good (mainly pro-Prius) piece about this:
http://editorial.autos.msn.com/article.aspx?cp-documentid=542377
And actually it’s not so much the used lifespan, it’s that with it being a former rental, you don’t really know whether it got used for five four-thousand-mile highway cruises (which wouldn’t put much wear on the battery) or twenty thousand one-mile uphill drag races (which would).
Long story short, it isn’t NEW or close to new, and Ron wants new. And for new you’re looking at a lot more than the $22k he has.
(Ron, the OPTIMAL solution is for you to send me your $22k and let me “invest” it for you while you drive your beater for another year. At the end of the year, I will send you literally dozens of dollars. Maybe. If I can’t find a use for the dozens of dollars while I’m spending your twenty grand on women and song.)
Some of the niftiest cars on the market right now are the recent Madzas. They have recently redesigned their gas engines to get far better mileage. You can get 40 MPG and use regular gas and get good horsepower and do it without a hybrid at all.
I confess that sometimes I wish the government would just nationalize the car industry. Not really, of course–there’s too much involved—but still…. why on earth do we need to have so many different manufacturers making 150 different car models which use 150,000 different non-exchangeable parts?
If you only built 2 or 3 of each model type, and if you forced car companies to share their design information so that you had the “best” available design for every car… well, you could build cheaper and better and safer and better-mileage cars. You could standardize equipment (is there any serious reason not to have the same window motor in each of them?). You could make them cheap enough to start requiring older car owners to trade up.
It’s a pipe dream, of course. But it’s a good one.
Elayne Riggs said:
This is what I was going to say. It’s not a matter of “Democratic hypocrites outnumber[ing] Republican hypocrites” so much as it is: “The former president has/had an immense number of family and business ties to the oil industry while the current president is stuck working almost solely within the bounds of government.”
gin-and-whiskey said:
That’s not really all that impressive when standard transmission non-hybrid Honda Civics have been getting mileage like that for the last 8 years or so and have excellent horsepower.
Not so fast. Gas prices are almost entirely set by worldwide anticipated supply and demand. And a president could influence anticipated supply – by, hypothetically, launching an ENDLESS FUCKING WAR IN THE MIDEAST.
Look at the graph. Where do we find the largest divergence between oil supply and gas prices? Now consider:
– 9/01: Al Quida (in Afghanistan, mind you) attacks the US.
– 11/01: Bush says, “If anybody harbors a terrorist, they’re a terrorist. If they fund a terrorist, they’re a terrorist. If they house terrorists they’re terrorists…If they develop weapons of mass destruction that will be used to terrorize nations, they will be held accountable. And, as for Mr. Saddam Hussein, he needs to let inspectors back in his country to show us that he is not developing weapons of mass destruction.”
– 1/02: Bush declares Iraq part of the “Axis of Evil”: “States like these, and their terrorist allies, constitute an axis of evil, arming to threaten the peace of the world….And all nations should know: America will do what is necessary to ensure our nation’s security.”
– 9/02: Bush tells UN, “If Iraq’s regime defies us again, the world must move deliberately, decisively to hold Iraq to account. We will work with the UN Security Council for the necessary resolutions. But the purposes of the United States should not be doubted. The Security Council resolutions will be enforced — the just demands of peace and security will be met — or action will be unavoidable.”
– 10/02: Congress approves Joint Resolution for Iraq War.
And the price of gas doesn’t drop again until the economy collapses.
GiW, if you have the government steal the car companies from their owners and investors by nationalizing them it’s nice to think that the government will then start creating a small and efficient number of car models that meet consumer’s needs while saving a lot of money due to efficiency of production. But that definitely is a pipe dream.
What you will get is a small number of car models produced whose production will meet the needs of government bureaucrats, elected officials and political contributors – those needs including making sure that their relatives and supporters are all employed at not-too-demanding jobs, that the production facilities and contracts are determined due to political considerations instead of economic ones and that the kinds of car models produced and their performance and features are a function of what various political pressure groups think they should have instead of what the consumers actually want to spend their money on.
RonF:
I know someone in my neighborhood who bought a 2011 Honda Insight about six months ago. She got it for just over $21k, and got it from the dealer. It had few enough miles on it that it was sold as essentially new and qualified for the extended warranty from the dealer.
The deals are probably there if you look for them. It’s just a matter of personal enterprise, individual initiative, Good Old American Know-How (like How To Make a Phone Call), and not relying on anyone else to bail you out of that sticky car-buying situation which poor people sometimes find themselves in.
That’s the glory of a free market economy.
Grace
It’s a pipe dream, of course. But it’s a good one.
Then why did the Soviet Union make such shitty cars?
Editor isn’t working, so “edited” to add:
Yes, there are advantages to standardization and the imposition of uniform best practices. But absent market incentives, standardization tends to center around “cheapest” or “easiest”, not “best”, and “best practices” development comes screeching to a halt because there is no innovation. Sure, we could have one standardized window motor, and maybe (through some miracle of good government) it would be the “best” one for 2012.
Who’s going to be developing the hundreds of different window motors that allowed us to experiment and find “best” in 2012, for the 2020 models? The 2040 models? The 2060 models? In 2060, you’ll end up with a perhaps slightly-tinkered with 2012 model. Whereas in the market-based parallel universe, they’ve got nanomotors that run on unicorn smiles and emit serotonin breezes to make drivers happy and nonconfrontational on the road, and cost eleven cents.
You can make a command system work for things like tanks and jet fighters, because the people making the tanks and jet fighters are keenly aware that the other side is feverishly developing new and better stuff; even the Soviets managed, with a healthy dose of industrial espionage, to more or less keep up with us. There’s competition in such a system because “the bad guys” might be innovating, so you can’t afford to stop.
Non-existentially-critical hardware like cars, on the other hand, will end up in a sludge-choked bureaucracy where, after ten years of vigorous lobbying effort, the core activists in the industry manage to get slight improvements to the headlight bezel shape. If GMAC doesn’t have to compete on innovation with Ford and Toyota and BMW, they won’t.
Robert – I’m aware of all that. You understand the article you linked to mentioned the 100K/150K battery warranties, right? And in the meantime, my brakes don’t need much if anything until about 100K because of how the braking system is constructed, my drive train is warranted to 72K, there are half a dozen parts that regular cars have which Priuses don’t have that won’t be needing maintenance, and Consumer Reports has concluded that the maintenance cost of a Prius is significantly lower than most other cars over its life. (And they did research on 200K plus cars that found that the difference in performance between them and new Priuses is around 2% IIRC.)
So far the only maintenance my car has needed is that something chewed through my washer fluid hoses, which is my landlord’s problem, not Toyota’s.
So what of it? Does RonF want a hybrid or not? I could have had a brand new car for about 27K but I had a very clear budget and stuck to it. Saying “I can’t have a hybrid unless I want to spend 33K” is clearly untrue as Grace points out above (hey Ron: if you join a credit union, many of them have car shopping services that will do the leg work for you!). But you know, for whatever reason hybrids and plug-ins have all this political stuff attached to them, to the point that an American car, made in Detroit, is possibly going to fail because Republicans like to bash GM and clean tech (don’t forget Newt’s snarky comment about how he “can’t put a gun rack in a Volt” for the ultimate in meaningful political commentary!).
I don’t know. My dad, who is a Hoosier car guy (by which I mean he taught auto shop in his local high school for years, expanded his two car garage to a five car garage so he could store and work on his various auto projects, and has actually gone to junkyards to strip cars of parts and mail them to me when my cars needed work), bought all that stuff about “Prius batteries suck, Prius batteries will cost you $10,000 every two years, Priuses are money pits” and was kind of beside himself that he couldn’t talk me out of buying one. Then he visited here last month, coincidentally the same week that “Gas is well over $4 a gallon and may be headed for $5!” news stories all broke, and drove a couple of times while we went around town and down the coast.
Now he’s talking about buying one. He’ll buy new because he can, but I actually got a grudging compliment out of him for my savvy in finding my car at my price.
Like I said, not neccesarily a bad purchase. Just not a new car.
First, understand that choosing a car is not a political issue for me – other than the concept that I should subsidize someone else’s car when they obviously make as much if not more than I do and can afford to buy their own. I’ll gladly buy a hybrid if it makes financial sense.
I hadn’t heard about the kinds of deals you folks are talking about, so maybe I should look around. My choices are somewhat limited by the fact that at 6’2″ I seem to have a swimmer’s body (short legs, long torso) and thus have a hard time finding small cars with sufficient headroom. I went to the Chicago Auto Show for the express purpose of finding a car that cost $20K or so that I can fit into without whacking my head and n /> 5. The cheapest hybrid I saw was $35K, so that’s the number I’ve been working with.
100K/150K battery warranties, eh? Pah. The LEAST number of miles I have driven a car I have bought new is 160K, and I sold it still running. I own 3 vehicles. The two that are daily drivers are at 130K and 150K right now and if they do not both get to 200K I will consider myself as having been cheated with a low quality vehicle. The most I have ever driven a car was my silver 1989 manual transmission Toyota Corolla wagon. I finally retired that at 265K because the body rusted out. What would an out-of-warranty battery replacement cost me? That question is the single major reason why I have not bought a hybrid car, because the answer has been “We can’t tell you what a battery replacement will cost 8 years from now.”
RonF:
I haven’t been paying close attention, since it won’t hit me personally, but I think I recall seeing that for the original Honda Insight you can get an aftermarket rebuilt battery, better than the replacements Honda was installing recently (until they ran out) for about $2000 installed. I’ve had plenty of conventional repairs which cost as much or more, over the years.
You can even save up for it, at least for the Insights – the car will run without the battery. It just gets somewhat reduced mileage.
You drive a car for 100,000+ miles, sooner or later you’re going to need something expensive replaced. At least that’s my experience here on rugged roads in winter salt country.
As far as headroom, there’s a guy around here who’s got to be 6′ 2″, though it sounds like he’s got more leg than you do, and he drives an original Insight. Kinda funny to see him fit into it, but he’s not making any effort to avoid scraping his head, and his head doesn’t touch.
Grace
CarMax, in my experience, is an excellent place to do research on buying a car. They have many different makes/models, and are upfront about the prices and Bluebook values. They’re also very nice about letting you test drive different cars. I bought my Honda Civic there 7 years ago and she’s still going strong. It was very important to me to get a car with good gas mileage and a good reputation for long-lasting quality in my price range (she was $16k w/8,000 miles on her.) Carmax also discloses what the vehicle was used for (fleet, rental, private owner) right on the tags.
Good luck getting a great car wherever you get it, RonF!
I love driving my minivan – apparently that’s not a guy thing to say, but I like sitting up high and having plenty of space both in the driver’s area and overall. But it’s getting 18 mpg and that’s not cutting it anymore.
Honda Civic doesn’t work for me, I can’t sit up without hitting my head. CarMax is a good idea, though.
@nobody.really – yes, that’s exactly what I thought, too. Bush could *and did* influence gas prices strongly, but not in a positive way! It’s perfectly reasonable for people to hold the opinion that Bush was also more able to reduce gas prices than Obama, since his administration’s actions put them up in the first place.
FWIW, RonF, my best friend is 6′ tall and her boyfriend is 6’2 or 6’3 I think. He has driven my Prius multiple times, and the two of them often sit in the back together when we go places. They have both spoken very highly of how roomy it feels to them. (I’m 5’1 so I’m no help at all other than to say that my main complaint is that the hood drops off so fast, and I am so short, I can’t see the front of my car which makes parallel parking a bit tricky!)
Oh, and I can get my bike in the back with the seats down and front wheel off with no trouble – useful if you need to lug camping gear. (Wait, are you the Scout Master and Robert is the handsome one? Or do I have that backwards?)
If I don’t have to do a brake job until 100K miles, and then sometime after 150K I have to buy an $800 refurbished or $2000 aftermarket battery, I’m gonna call it good. Fingers crossed!
I am the handsome one, Ron is the scoutmaster.
Although I WAS an Eagle Scout, back in the day.
I do not have the patience or tolerance that it would require to be a Scoutmaster, especially in today’s helicopter-parent environment, and am frankly in awe of civic volunteer types like Ron, who (whether its Scouting, the food co-op, the women’s shelter, or the gun club) juggle people skills and management skills and skill-skills to get it all done. I can barely run my own life.
Fortunately, being so handsome, I can usually get someone to do it for me.
Robert, Robert, Robert – I am disappointed in you. First, while I’m actually an Assistant Scoutmaster (and Pack Committee Member and Crew Associate Advisor and District Commissioner and Merit Badge Counselor and Chartered Organization Representative), I am also the handsome one.
Yeah, if Scouting’s taught me anything as an adult it’s taught me patience. Patience in dealing with the kids who don’t understand that sitting around waiting for Mom to cook your food and wash your dishes doesn’t work when Mom’s 100 miles away and it’s up to you to do those things. And patience in dealing with parents who don’t understand the concept that kids can do a lot of things and will survive the effort if you actually expect them to do it, are willing to watch them fail without interfering and then teach them that the proper response to failure is to review the cause and then try again rather than just give up because failure is bad for your self-esteem.
But most importantly – you are an Eagle Scout. It will not be proper to speak of your status as an Eagle Scout in the past tense until it is proper to speak of YOU in the past tense.
I have stopped using the term “helicopter parent”. Given their attitudes and the ways that they interfere and express themselves I now use the term “gunship parent”.
And one of the things I”m going to relish about getting a compact sedan to drive around in rather than a van is to be able to tell some of these parents “Oh, no – I don’t have that van anymore. Either you drive your van/UAV along with a bunch of someone else’s kids or your kid doesn’t go.” Twenty years I’ve been driving my vehicles and getting them crapped up with dropped food and spilled slushies. I’m still glad to go on the campouts, but it’s someone else’s turn to provide transport.
Prius? Well, I’ll be visiting Toyota given that I’ve owned a few and they’ve stood up to my Boston cab driver style of driving and benign neglect model of maintenance pretty well. I’ll check it out. But if I’ve got to put down > $22K it’s not happening.
lilacsigil – either the President owns gas prices or he doesn’t. It’s not a function of what party he belong to. If Bush owns gas going from about $1.10 to $1.72 in 8 years (that was the price on the sign that Nancy Pelosi posed in front of when she was promoting Obama’s candidacy in 2008) then Obama owns gas going from about $1.72 to more than $4.00 in 3 years.
Ron, correction gracefully accepted in the matter of Scouting status. Laughable contention that there is anyone more handsome than me, treated with the scorn and polite derision that it deserves.
If Bush’s foreign policy drove up gas prices, then Obama’s intervention in Libya and sanction-threats against Iran also have. Speculation based on world events plays a role in gas prices. While I had a big problem with Bush’s foreign policy and some problem with Obama’s foreign policy, I don’t think the president should calculate his foreign policy so as to have the least effect on gas prices.
The belief that Bush’s foreign policy was driven by a desire to help his oilman buddies probably explains Democratic hypocrisy on this issue more than it explains Bush’s actually ability to influence the price of gas.
What I find most bizarre is all the supposedly free-market Republican presidential candidates trying to guarantee us $2.50/gallon gas by expanding domestic drilling. 1) It’s a global market. 2) Why do they care what the market price of gas is? 3) It’s a global market.
_____________________________________
Then why did the Soviet Union make such shitty cars?
There’s a Trabbant joke in here somewhere. Let me go with this one: How do you double the value of your Trabbant? You fill up the gas tank!
Since you were so gracious about the Scouting status correction I suppose it’s only polite to permit you to wallow in your illusions regarding the other matter.
The President should calculate foreign policy on what is in the best interests of the United States. Gas prices would be one factor in this, but there are many others.
However, my guess is that America’s foreign policy is calculated on the President’s calculate on what’s most likely to get the President re-elected.
Yes, of course crude oil (and thus gasoline) is a global market. The more crude that gets pumped into that market, the lower prices go. Just ask the Saudis. That’s the reason OPEC was founded. The market has gone through some changes lately as demand in India and China is climbing (at least until China’s economy crashes), but just as rising demand drives prices up, rising production drives it down, even if only to help counteract how high prices would go if production didn’t increase in the face of rising demand.
I do wonder what influence costs of transport of a) crude oil and b) refinery product has on the cost of gasoline. You’d think that if more crude oil was available in the U.S. it would be cheaper to buy locally than having shipped from overseas. I just don’t know how much.
Seriously?
That’s ridiculous.
Developments aren’t made by people who own companies. Developments are made by the people who work for them.
Auto engineers aren’t necessarily going to start dogging it just because they’re getting the same paycheck as they were from Chrysler. Sure, they will if you set up a shitty incentive system. But NIH functionally employs a lot of people, and gets a hell of a lot of value for the money. There’s no reason to assume this will run like the DMV and not like the NIH.
“Best practices” come to a halt when there is a lack of BOTH market AND non-market pressures for development. You can get there perfectly well without market forces.
This is the worry? I ask because you seem to be ignoring the fact that the vast majority of parts in a car aren’t all that important. Window motors are probably a great example, along with wiper motors, seat adjusters, etc. It’s not like the electric motor has changed all that much in the last 75 years.
Right! Because providing these brilliant advances for cheap (as opposed to withholding them based on market, timing, etc.,) and because taking the public benefit into account, is exactly what large market-rate companies are known for. There’s a reason there are unicorns in that universe, you know…
You don’t need to have a command system at all.
Maybe I just haven’t paid enough attention to the news put I really do not understand why gas prices are so high. I fill that oil companies are just raising them for the simple fact that they know people are going to pay for it. I have not seen anything in the news such as oil spills or anything going on, so why the high prices?
Hey RonF – new Prius C can get you into one for <22K, even if you want more than the base model: http://blog.sfgate.com/topdown/2012/04/16/prius-c-toyota%E2%80%99s-newgateway%E2%80%99-to-hybrid-efficiency/
LaQwana – the price is high because global demand for oil is very high, which means every barrel that reaches the market is subject to a bidding war. US demand has actually declined a bit and European demand is flat, but India and China are both in the midst of massively expanding their use of oil in their economies.