Climbing Gas Prices and the American Consumer

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Jeff Eshelman / Julia Bell
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For Immediate Release
February, 24 2012

WASHINGTON, D.C. - According to weekly estimates from the U.S. Energy Information Administration (EIA), gasoline prices have increased by nearly $2 per gallon since 2009.  This week, drivers are paying an average of $3.56 for a gallon of gasoline-California drivers are paying over $4 a gallon, Long Island, NY $3.91, and Seattle, WA $3.88.

And as the President acknowledged himself in a speech at the University of Miami, these climbing gas prices hurt all Americans.

“Everyone who owns a car; everyone who owns a business.  It means you have to stretch your paycheck even further.  It means you have to find even more room in a budget that was already too tight.  Some folks have no choice but to drive a long way to work, and high gas prices are like a tax straight out of their paychecks.”

What the President failed to acknowledge were his administration’s political actions that have helped these prices escalate, and his administration’s inaction that threatens a summer of $4 dollar gallons of gasoline for American consumers.  As the President noted yesterday, “we absolutely need safe, responsible oil production here in America.” Yet time and again, his energy policies stand to belittle this homegrown production.

Since December 19, gasoline prices have risen by 29 cents to an average of $3.58 per gallon this week, an increase  that will result in an additional $41 billion in household energy consumption for the American consumer. It is no coincidence that over the same timeline the administration has proposed 41 billion taxes on the oil and natural gas industry and supported a projected 50 percent increase in royalty rates on production on federal lands.  Ending 2011, nine separate federal agencies looked to implement new redundant regulations and procedures to delay, if not altogether halt, U.S. oil and natural gas production onshore.  And while only 2 percent of our offshore areas are leased for development-also the result of stifling energy policies-drilling plans take 31 days longer to approve than the historical average.

As the Wall Street Journal points out today, “Mr. Obama has seen the energy sun rise and is crowing like a rooster that he made it happen.” Yet while the President’s rhetoric touts an America weaning itself off of foreign oil, creating thousands of domestic jobs, and spurring American innovation, his action’s aim at the Achilles of American consumers, delaying production, and increasing national dependence on foreign energy sources and volatile gas pricing.

Appearing on Fox Business and CNBC yesterday, IPAA’s former Chairman Bruce Vincent refuted the current administration’s actions, reinforcing our nation’s real need for robust development of America’s oil and natural gas resources for the long term health and security of our energy supply.

“The U.S. government can create an energy policy for this country that helps bring gas prices down…We can create more domestic supplies, not only increasing the supplies worldwide, but also having an influence on our own national security. We become less reliant  on places like Venezuela and Iran for that oil, and source it ourselves, and the added benefit of that is creating jobs and economic activity in this country at the same time.”

Here are some of this week’s headlines from around the nation:

  • ‘Stupid’ and Oil Prices‎. As for domestic energy, Mr. Obama rightly points to the rising share of U.S. oil consumption now produced at home. But this trend began in the late Bush Administration, which opened up large new areas on and offshore for oil and gas drilling that are now coming on stream. Mr. Obama sneered at expanded drilling as a candidate in 2008 and for most of his term has done little to expand it. In early 2010, he proposed to open some new areas to drilling but shut that down after the Gulf oil spill. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven. Over the same three months, the feds approved an average of 4.7 shallow-water permits a month, compared to the historical average of 14.7…Oh, and don’t forget the Keystone XL pipeline, which would have increased the delivery of oil from Canada and North Dakota’s Bakken Shale to Gulf Coast refineries, replacing oil from Venezuela. (Wall Street Journal, Editorial2/24/12)

 

  • Obama to discuss rising gas prices at Florida event. The rising cost of gasoline threatens to crimp consumer spending, which accounts for 70 percent of the U.S. economy, at a time the recovery is gaining strength. Economic concerns are expected to be the top issue in the November election, and the Republican presidential candidates have opened a fresh round of criticism of Obama’s energy policies. The average price for regular gasoline at the pump has risen to the highest ever for this time of year — $3.58 a gallon yesterday, according to AAA data. The average price is 10 cents higher in Florida, a swing state targeted by both parties in the presidential election. Today marks Obama’s 14th visit to Florida since his inauguration in 2009. (Washington Post2/23/12)

 

  • Obama’s gas-price spike. Here we go again. Gasoline prices are rising rapidly and already have shattered the $4-a-gallon mark in California. Industry analysts say the all-time national average record of $4.11 could be shattered this summer…This latest gas-price jolt is predictable. PresidentObamahas done much to impede the supply of petroleum products to consumers. Most particularly, he exploited the 2010 BP oil spill in the Gulf of Mexico as an excuse to clamp down on oil drilling in the Gulf and also along the Atlantic and Pacific coasts. (Washington Times, Editorial2/20/12)

 

  • Surging gas prices threaten to derail economic recovery. “Just as the recovery is finally looking real, surging fuel prices are once again looming as a major threat to the financial health of U.S. consumers and the broader economy…Nationally, drivers started this week paying on average $3.565 for a gallon of regular gas, up more than 5% in the last month…many consumers remain on edge, burdened by heavy debts and very cautious about spending. With high unemployment…analysts say the U.S. recovery remains highly vulnerable to external shocks, perhaps none more so than a surge in gas prices. (LA Times2/20/12)

 

  • Gas price spike pumping up fears. Fears of $5 per gallon gasoline are in the back of some motorists’ minds, jeopardizing the nascent economic recovery…Whether they break a record or not, rising gas prices could stunt the nation’s sluggish economic recovery. Economists say that higher oil prices may have crimped retailsales…The new economic worries are eerily reminiscent of what happened about this time a year ago when political turmoil flared in Egypt and elsewhere in the oil-rich region, sending crude prices sharply higher for months. (Chicago Tribune2/20/12)

 

  • Gas Prices Cloud Obama Campaign Hopes. At an average of $3.58 a gallon, prices are already up 25 cents since Jan. 1, and experts say they could reach a record $4.25 a gallon by Memorial Day. Those higher prices could hurt consumer spending and unravel some of the recent improvements in the economy. And they could also be a daily reminder to voters to question Obama’s contention that he’s making the nation – and them – more secure. While motorists are already starting to complain, many economists see the $4-a-gallon mark as a breaking point above which the economy starts to suffer real pain. Analysts estimate that every one-cent increase is roughly a $1.4 billon drain on the economy. (Associated Press,1/24/12)