President Obama seems to be enjoying some good luck in that the economy appears to be picking up just in time for his re-election campaign. While the economy is still weak by almost any measure, growth is likely to be in the 2.5-3.0 percent range for 2012. This should lead to the creation of close to two million jobs and a modest drop in the unemployment rate.
That is not much to cheer about in an economy that is still down close to ten million jobs from its trend level, however compared to the recent past, this is good news. And research shows that voters tend to focus primarily on the direction of change. This means that if the unemployment rate is falling and the economy is creating jobs at a respectable pace throughout the year, President Obama stands a very good chance of being re-elected in November.
This explains the decision of the Republican Party to focus on the price of gas. The price of gas has long played a pivotal role in US politics. High gas prices will be forever a symbol of the economic malaise of the Carter presidency in the late '70s. The drop in gas prices under President Reagan was associated with a resurgence of America's political and economic power.
The fact that both the rise in the price of oil in the '70s and the subsequent decline in the '80s had little to do with domestic policy decisions and much more with international politics (e.g. the Iranian revolution in 1979) mattered little. President Carter got the blame for events beyond his control and President Reagan got the credit.
The Republicans are hoping to benefit from this pattern again in the fall election. Gas prices had plummeted following the economic collapse in 2008, falling as low as $2.00 a gallon, half of their pre-recession peak. However, in the last two years, they have been on the rise as the world economy recovers and instability in the Middle East and the possibility of a war with Iran threaten the oil supply from the region. Gas prices are almost certain to soar past $4.00 a gallon in the peak summer driving season.
The Republicans are hoping to blame this rise in the price of gas on President Obama's environmentally friendly policies. As a matter of logic, there are two basic problems in this story.
First, President Obama's policies have not been especially friendly to the environment. He has opened up large portions of previously protected coastal areas to drilling. Oil production has risen substantially in his three years in office and is now back near the peaks reach in 2002. While some areas do remain protected, even if every last piece of land and coastline had been opened to drilling on his first day in office, it would not have increased production much beyond current levels.
The other problem with the Republican complaints is that production in the United States really does not matter much for the price of gas. Oil prices in the United States depend on the world market, not just supply and demand in the United States.
US production is roughly eight million barrels a day, it accounts for less than 9 percent of a worldwide market that is close to 90 million barrels a day. Even if US production could be increased by a third (an almost impossible increase) it would only increase world supply by 3 percent. This would lower the price of oil by 7-8 percent. This is not trivial, but it is not the difference between $2-a-gallon gas and $4-a-gallon gas. In other words, there is nothing that the United States can do in terms of its domestic production that would bring gas prices down to the levels that would make many American car owners happy.
The other part of this story is that US proven reserves are in the neighborhood of 20 million barrels. After that, absent major new discoveries, production will plummet. At our current rate of production, we would exhaust them in around ten years. If we could somehow increase production by a third that would bring the date of exhaustion to just seven years in the future. This would mean that we would be seeing sharply lower production levels before the end of President Drill Everywhere's second term.
That is the arithmetic of the situation, but the Republicans are betting that they can get away with their story nonetheless. The public is almost completely ignorant of the dynamics of world oil markets. It is widely believed that prices are determined domestically and that if upscale environmentalists did not get in the way, we could drill out enough oil so that gas prices would be cheap again.
Since the media consider it to be their job to report what candidates say and not access its accuracy, it is likely that the public will go the polls believing that we can again get cheap gas if we just destroyed the environment. The reality is that we have the ability to do the latter.
Truthout Is Preparing to Meet Trump’s Agenda With Resistance at Every Turn
Dear Truthout Community,
If you feel rage, despondency, confusion and deep fear today, you are not alone. We’re feeling it too. We are heartsick. Facing down Trump’s fascist agenda, we are desperately worried about the most vulnerable people among us, including our loved ones and everyone in the Truthout community, and our minds are racing a million miles a minute to try to map out all that needs to be done.
We must give ourselves space to grieve and feel our fear, feel our rage, and keep in the forefront of our mind the stark truth that millions of real human lives are on the line. And simultaneously, we’ve got to get to work, take stock of our resources, and prepare to throw ourselves full force into the movement.
Journalism is a linchpin of that movement. Even as we are reeling, we’re summoning up all the energy we can to face down what’s coming, because we know that one of the sharpest weapons against fascism is publishing the truth.
There are many terrifying planks to the Trump agenda, and we plan to devote ourselves to reporting thoroughly on each one and, crucially, covering the movements resisting them. We also recognize that Trump is a dire threat to journalism itself, and that we must take this seriously from the outset.
After the election, the four of us sat down to have some hard but necessary conversations about Truthout under a Trump presidency. How would we defend our publication from an avalanche of far right lawsuits that seek to bankrupt us? How would we keep our reporters safe if they need to cover outbreaks of political violence, or if they are targeted by authorities? How will we urgently produce the practical analysis, tools and movement coverage that you need right now — breaking through our normal routines to meet a terrifying moment in ways that best serve you?
It will be a tough, scary four years to produce social justice-driven journalism. We need to deliver news, strategy, liberatory ideas, tools and movement-sparking solutions with a force that we never have had to before. And at the same time, we desperately need to protect our ability to do so.
We know this is such a painful moment and donations may understandably be the last thing on your mind. But we must ask for your support, which is needed in a new and urgent way.
We promise we will kick into an even higher gear to give you truthful news that cuts against the disinformation and vitriol and hate and violence. We promise to publish analyses that will serve the needs of the movements we all rely on to survive the next four years, and even build for the future. We promise to be responsive, to recognize you as members of our community with a vital stake and voice in this work.
Please dig deep if you can, but a donation of any amount will be a truly meaningful and tangible action in this cataclysmic historical moment.
We’re with you. Let’s do all we can to move forward together.
With love, rage, and solidarity,
Maya, Negin, Saima, and Ziggy