Oops - the rah-rah energy bill touted as the answer to the energy problem....won't do much at all, it seems. More chaos and contradictions on the domestic policy front.
The Magic Wands Bush Won't Wave
Thursday, Apr 21, 2005; 11:56 AM
For months, the stock White House response to question about high gas prices has been to call for passage of President Bush's energy plan -- as if the two were related.
So it was a bit of a shock yesterday when Bush himself bluntly acknowledged what's been obvious to most observers for quite a while now: That his energy proposals won't lower gas prices in the short term one bit.
"I wish I could simply wave a magic wand and lower gas prices tomorrow; I'd do that. Unfortunately, higher gas prices are a problem that has been years in the making," he said in a speech to members of the U.S. Hispanic Chamber of Commerce.
"An energy bill wouldn't change the price at the pump today. I know that and you know that. It will help us make better use of the energy supplies we have. It will make our supply of energy more affordable and more secure for the future."
But wait. Is there really nothing Bush could do about gas prices in the short term?
The dynamics of gas prices are enormously complex, and the conventional wisdom has indeed been that the recent run-up in prices is just the market at work, responding to long-term supply and demand factors. If you buy into that explanation, then it's hard to see how the government could do much about it in the short term.
But some alternate views are now emerging. They suggest that maybe there are some things Bush could do -- that, in short, Bush has some magic wands around, he's just choosing not to wave them.
Here, according to what I've been reading lately, are some of the things Bush could conceivably do to conjure up lower prices:
• Develop an exit strategy for Iraq. Fear of continued instability in the Middle East is widely seen as contributing to a "risk premium" that's driving up crude oil prices.
• Tamp down speculation on the oil-trading exchanges, either by re-regulating the markets, raising interest rates, or both. There is some evidence that avaricious speculators have driven the price way above the levels justified simply by supply and demand conditions.
• Do something about the weak dollar. The dollar's dramatic drop against major currencies directly translates to higher gas prices for Americans. (But strengthening the dollar might require serious deficit reduction.)
• Tap the Strategic Petroleum Reserve.
• "Jawbone" producers into increasing production.
• Aggressively investigate the possibility of price gouging by the oil industry.
Bush himself touched on those last two options yesterday: "One of the things we can do to try to help in the immediate term: we can encourage oil-producing countries to maximize their production overseas; we can make sure consumers are treated fairly, that there's not price gouging."
Richard Wolffe and Holly Bailey write for Newsweek.com that, according to officials from oil-producing countries, the United States can affect oil prices significantly on its own.
"Those officials say there are two big factors that have nothing to do with the growing demand from China and the rest of the developing world: fear of instability and financial speculators. 'If you take out the speculators' effect and the fear factor, you should be able to see oil prices $15 less than they are now,' says one senior official from an oil-exporting nation.
"The fear factor rests in large part on Iraq, where Bush has yet to detail an exit strategy in the foreseeable future. It also rests on Russia's political future and its attitude to foreign investors in the energy industry, something President Bush will once again discuss with President Vladimir Putin next month in Moscow.
"As for the speculative element, some oil producers believe that rising interest rates in the United States is the best way to shift the dynamic among the hedge funds to move out of oil."
Ron Hutcheson writes for Knight Ridder Newspapers: "Critics say Bush could provide some relief by releasing oil from the Strategic Petroleum Reserve, the government's stockpile to protect against an oil disruption, but he's resisted that idea. Bush believes the reserve should be used for national emergencies, not to influence prices at the pump."
Julie Mason writes in the Houston Chronicle: "Bush's admission that he lacked the power to lower prices was a notable turnaround. Bush promised as a candidate in 2000 to pressure oil producers to increase supply and drive down prices.
" 'I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply,' Bush said outside of Detroit in June 2000."
But as it turns out, there are signs of some imminent jawboning ahead, this very weekend, with Vice President Cheney taking the lead.
G. Robert Hillman writes in the Dallas Morning News: "Vice President Dick Cheney will confer in Dallas over the weekend with Saudi Crown Prince Abdullah. . . .
"Mr. Cheney and other administration officials plan to meet with him on Sunday, before consultations with President Bush scheduled Monday at his Texas ranch outside Crawford."
As I wrote in yesterday's column, there are some signs that Bush may be hoping for the Saudis to come to his rescue on gas prices. The fact that he's deploying Cheney makes that even more likely.
As for making sure there's no price gouging, I have yet to see any evidence that the administration has taken any recent steps in that direction.
In a piece on my other Web site, NiemanWatchdog.org, consumer advocate Tyler Slocum, director of Public Citizen's Energy Program, says the evidence shows that the oil industry is increasing its profit margins even as the price of crude rises.
Slocum also argues that de-regulation of energy trading has been a boon to fast-buck oil speculators.
Bush Sets a Deadline
Jim VandeHei and Justin Blum write in The Washington Post: "President Bush said yesterday that his national energy policy would not lower gasoline prices anytime soon, but called on Congress to pass it by August to begin weaning the nation from imported oil and transitioning to alternative sources of power and fuel. . . .
"As Bush spoke, the House began debating an energy bill that includes $8.1 billion in tax breaks, mainly for big energy companies; permits oil drilling in part of Alaska's Arctic National Wildlife Refuge; and provides legal protections to producers of the gasoline additive MTBE, which is blamed for contaminating drinking water."
Elisabeth Bumiller and Carl Hulse write in the New York Times: "President Bush demanded on Wednesday that Congress get a long-stalled energy bill to his desk for signing by the summer, even as he admitted that the legislation would do nothing to lower the rising gasoline prices that polls suggest have cut into his approval ratings. . . .
"Mr. Bush's speech was part of a White House effort to portray the administration as proactive on gas prices and to use the public focus on the issue to try to move the legislation, which the president proposed nearly four years ago." |
