Gingrich's $2.50-a-gallon gasoline farce
The Kansas City Star
Will someone please wake up Newt Gingrich and explain how the world of pricing works for oil?
Gingrich is trying to revive his moribund GOP presidential campaign with a Facebook petition calling on people to sign it if they are in favor of moving back to $2.50-a-gallon gasoline.
It’s well-timed, I’ll give Gingrich that much.
The price of gasoline is going up around America, prompting Republicans to start highlighting that fact in their battle with President Barack Obama and fellow Democrats for votes this fall.
Here’s what the petition says:
“We the undersigned petition President Obama to act immediately to lower gasoline, diesel, and other energy prices and reduce our dependence on overseas energy sources from unstable countries by enacting Newt Gingrich’s plan to lower gas prices to $2.50 per gallon, including the immediate authorization of the Keystone XL pipeline and aggressive development of more North American oil and natural gas.”
Now for a few facts that make Gingrich’s idea a farce.
First, authorizing aggressive development of U.S. petroleum fields wouldn’t create a single extra gallon of gasoline for many years - up to 10 or more, especially if you’re talking about despoiling the Alaskan Arctic area. Drilling for oil in Alaska or the Gulf takes time, as does setting up transportation systems.
Second, the president of the United States - no matter which party - has almost zip power over the international price of crude. No one “sets” the price. But the Middle East countries have had the power for many years to jack production up and down to help set ceilings and basements for the cost of petroleum.
Finally, even completing the Keystone pipeline - which would increase the flow of oil to the U.S.- isn’t going to bring in enough to have much if any influence on the cost of oil around the world.
Remember, the United States uses about 19 million barrels of oil a day. And other countries use about 62 million more.
Drilling for domestic crude could - in a decade or so - produce a fe more million barrels of oil for consumption in the United States. But that’s not going to bring $2.50-a-gallon gasoline back to U.S. service stations.