Home » Money » Gasoline, an Explosive Issue

Gasoline, an Explosive Issue

The editor of an online publication revealed more than a little frustration.  “Whenever we ask for a piece on the economy,” he told me over lunch, “We either get a story on how nothing is happening or on gas prices.”  This was in the summer of 2010, which we now know was close to the bottom of the economy and the point where everything was just starting to turn around.

There wasn’t anything happening then, except for gasoline prices.  They went up and down in a kind of rhythm that defied just about everything, as they do today.

The normal fluctuations of something as basic as gasoline can become a partisan issue, at least to the extent that one party has something to capitalize on.  This election year, however, the constant up and down of the price of gasoline won’t make it because people don’t know who to blame, they are less dependent on gasoline, and it has the potential for serious blow-back on the Republicans.

Anyone paying attention knows that there are many things that go into the price of gasoline.  According to a recent Washington Post poll, people are indeed paying attention.  The public is confused at best, casting blame pretty far and wide.  The largest single group are those who “don’t know” why the price of gasoline is currently rising.  People understand that unrest in Syria and Iran are issues, too.  Taken as a whole, the voting public comes down the middle on this issue and understands it is complicated.

That’s not to say that the Republicans aren’t trying, however.  Gingrich has told the world that if he were President he’d have the price down to $2.50 a gallon, a claim so ludicrous it was immediately laughed down.  There are still cries of “Drill here, drill now!” which suggest that if we only produced a lot more oil in the US we would have lower prices.

This is, of course, ridiculous because the oil we have remaining tends to be in places that are more expensive to tap – why they were not tapped earlier.  As soon as the international price of oil goes down any holes sunk deep in the Gulf of Mexico, for example, will be left dry.  The free market is wonderful that way – oil will never just suddenly run out, but will gradually become more expensive.

People are reacting to that market, too.  February saw the best sales of new cars since this phase of the Depression started in 2008, and the vast majority of these cars are classed as “fuel efficient” (30 miles per gallon highway or better).  Such cars now make up 40% of those sold by GM, up from just 16% just three years ago.  The economy is not as dependent on the price of gasoline as it has been largely because individual consumers are taking action.

Even though the public understands the free market and gasoline, there is more trouble for gasoline prices as an issue.  President Obama has fired back with about as much subtlety as the Republicans, calling on an end to special tax breaks for oil companies.  The implication is that in the “blame game,” which often substitutes for actual debate, oil companies are the ultimate villains.  That may be true, but it will take a bit more effort to make it stick.

As discussed before, the decline in demand for gasoline has left US refineries with excess capacity – which is being filled by exporting refined gasoline for the first time in decades.  That only makes sense, but it opens up an examination of the refining industry and how they make money.  This leads naturally to the Koch Brothers, whose Koch Industries is the largest refiner of gasoline, entirely private and shielded from the public eye, and a gleeful backer of all things Republican.  Their “Americans for Prosperity” think-tank is the center of the Republican spin machine these days, which explains the “Drill, baby, drill!” rhetoric in the first place.

Democrats have long wanted to flush out the Koch Brothers, but they have proven difficult to pin down.  They make excellent villains, however, if they come out into the open.  Making gasoline prices a big issue is probably the best open invitation to publicly vilify the Koch Brothers and make them the symbol of not just gasoline prices but everything that is wrong in US politics now.  The potential for blow-back is amazing, if this issue is handled well.

Back in 2010 it was easy to write a piece on gasoline prices, in part because nothing else was happening.  That’s not true today as a cautious recovery may be taking shape as the economy has restructured and leads with job creation.  There are simply better stories than gasoline prices, in part because the free market has worked pretty well and fuel economy is increasing, decreasing the importance of the price of fuel.  What remains are some shadows that if the right was smart would stay in the dark as long as they can keep them there.

26 thoughts on “Gasoline, an Explosive Issue

  1. In an odd kind of way, these cyclical rises in the price of gasoline benefits the alternative fuel program I work with. People often don’t consider cleaner-burning alternatives to gasoline or diesel until they feel the pain at the pump. Then they take action, or at least become more interested in our message.

    • I agree, over the long haul people have come to understand that it’s only going to go up and we need alternatives. I worked in an alternative fuel program for a while, trying to make a burnable liquid from corn stalks. There is a lot of research that needs to be done in these areas, and we’re just scratching the surface of what can be done. Meanwhile, the free market is working pretty darned well at raising the price slowly, so we can get off the stuff. There is always hope!

  2. Great picture!! Somewhat flawed article (sorry). I would suggest people read Bill McKibbin’s article on fracking in western Pennsylvania. Part of me thinks things are not working well. I really would like you to write more on this. One interesting idea would be the use (miles per year of large vehicles vs. small vehicles). I have heard of where some commuters buy a small vehicle where dad uses it for his daily work ride. And yes there are the gross figures of American use of gasoline is down as some of the fleet gets upgraded into better engines and vehicles. I still thinks that the new pickups are gross in their size even with their better motors and the fact that I would secretly like one for an occasional weekend. We are seriously thinking of buying a new Honda Fit as all three of our vehicles are over 13 years old with a 150k miles. Sorry for my rambling as this issue can go on and on as it touches on the economy, domestic and international policy.

    • Thanks! This is a very complex issue that I decided to write about from a narrow perspective – and it still ran long! You’re right that fracking is at best controversial and in need of a lot more research and probably regulation – but that is mainly for natural gas, which I generally support tapping more. I covered that in another post. There is a lot of value in switching to a methane based economy, rather than petroleum, because it sets up systems that alternative fuels can “plug into” as they come along in many cases.
      As for fuel economy, it has been going up dramatically lately, which is a great sign (link to Bureau of Transportation Studies). I guess I should have included that link in the post itself. But this is very good news all around.

  3. Good blog, but it does raise more questions than it answers. I guess it makes no sense to make gas prices a political issue because they have been going up steady for a long time. I always heard that China is using more oil and that is driving up the price so we have to expect that to always be there. I think you are right that the market is working and people mostly know that. It would be a shame to mess that up when it does seem to be going well if a bit painful at times.

    • Thanks. China, Malaysia, Indonesia, India … the whole developing world are using more all the time. That’s why Brasil’s energy independence is so important for them – it guarantees economic growth no matter what happens around the world. But I do agree that things are going well if a bit painful – a good way of putting the problem. Its like a scar that is healing, but very itchy all the time. :-)

  4. People do understand that these things are complicated but they want more information. I agree that there is a lot more to be said on this issue but you covered the basics here. It is worth a lot more in the future. I also agree that there is hope especially if people don’t think that the government somehow is why prices keep rising.

    • OK, you’ve convinced me – I’ll think more about petroleum and what it means to the world. There are dozens of sub-topics and y’ins (y’all?) are hitting many of them in the comments.
      But no, people don’t blame our government for this – or apparently expect it to solve the problem. That does seem good.

  5. I say if the repugnicans want to talk gas prices bring it on – this is an issue they will lose – america is onto thier corporate masters and not going to take it any longer – the sleeping giant of the 99% has been awakened!

  6. The Koch Brothers are a problem for the Republicans. The Recall of Scott Walker will be the first test as to whether they can be made into an issue. That is where they have been flushed out into the open the most. Walker was elected with a lot of support from the Kochs and they became visible in an election for the first time. They will play a big role in the recall whether they want to or not.
    I have to say they have pushed the Republican agenda far too much in their direction for my taste. It has not been good for the party to have that much control in the hands of these two. There is a solid Republican message that needs to get out but it has become too one-note because of the Kochs.

    • Interesting take, and I did forget about the recall election. The Koch Brothers have been quite prominent in Wisconsin, which has always puzzled me. I wonder how much of that has sunk in to the consciousness of the general public, however. They make a great bogeyman IF they are “flushed out” and visible. That’s a big IF to me, however. People have to feel it for it to work. But as Alinsky said, “Pick the target, freeze it, personify it”. They are the personification of the target if it can be made to stick.
      Nice ending on the Republican Party. I do wish we had the “old” party back – the one that could make a deal and actually govern. I know there are many people in the party who agree with this – but don’t know what to do about it. Good luck if you’re willing to be one of them. I mean it.

  7. Good comments all (including E K as well and thanks for the graph). The recent New Yorker has a big article on Wisconsin and Scott Walker (and Koch to some degree) I think it was a little light but it did have some interesting history and profiles. Well back to the graph I think a truck between the Ford Ranger and the now humongous fairly effecient Ford 150 may be could have succeeded. it seems we traded the the 150 up and negated some of the gains. What I am basically saying give me an old 150 body with a new improved engine. God I am starting to sound like one of the car talk guys.

    • I think you are right that Ford has a gap in its product line, which makes the closing of the Highland Park Plant here in St Paul seem even stranger. Then again, Ford has been in great shape as car companies go, so they seem to know what they are doing. I can sound like Tom & Ray Magliozzi (sp?) all the time if you let me (especially Tom, sadly).

  8. The new yorker article is locked on the internet but they have another one involving the koch bros. Mckibben is available in the new york review of books. One more suggestion look at the trailer for the chinese film “disorder” and you can see the kind of traffic they deal with over there.

    • I think that the Koch Brothers are in for a lot of publicity they’d rather not have this year. I’ve always been one to exercise caution going after them in the past, but I think the background has been laid for a big surge forward in demonizing them. Raising the issue of gas prices is kind of like lighting a big stogie while filling your tank. :-)

  9. I think we are much more mature as a nation then we were just a few years ago. Polticians still do no want to talk about things like this too openly but I think they can and should. People want the truth.

    • I think you are right. That might be why Barataria’s traffic has been increasing dramatically lately, too. There seems to be a hunger for substantive discussion of complex issues and fresh perspectives that the regular press is just starting to catch up on. More is always better, so we have to encourage everything we can!

  10. An excellent article by David Frum in Newsweek – “Why Rush is Wrong”. The whole article is worth reading, but I especially like this at the bottom of page 2 to the top of 3:

    “The conservatism we know evolved in the 1970s to meet a very specific set of dangers and challenges: inflation, slow growth, energy shortages, unemployment, rising welfare dependency. In every one of those problems, big government was the direct and immediate culprit. Roll back government, and you solved the problem.
    Government is implicated in many of today’s top domestic concerns as well … But the connection between big government and today’s most pressing problems is not as close or as pressing as it was 27 years ago. So, unsurprisingly, the anti-big-government message does not mobilize the public the way it once did.
    Of course, we can keep repeating our old lines all the same, just the way Tip O’Neill kept exhorting the American middle class to show more gratitude to the New Deal.”

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