Policy affects price at pump, not politicians
Published: Sunday, January 29, 2012
Updated: Sunday, January 29, 2012 21:01
Imagine what you'd do if you were attending college in a small town 3,000 miles from mom and dad and you heard a speech about peak oil that made it seem like very soon the economy might collapse and the transportation systems we take for granted might no longer be in place. Panic. Disbelief. Garage sale. And then you move back home as soon as humanly possible.
Politicians often try to scare the public into supporting their views by personalizing the politics. Politicizing oil and gas prices is an easy way to get our attention because it affects our wallets. They don't usually go so far as to make you fear you'll never see your family again, but they want you to imagine a world where you could afford to do more because the things you need cost less. And of course they are the ones who will affect that change.
But individual politicians have very little to do with the price of gas. Oil is a commodity, traded in world markets where investors try to guess how much 1,000 barrels of crude oil will cost a year from now. This speculation is based on multiple factors, some of which are geopolitical but have little to do with United States partisan politics. An American Petroleum Institute report explains that like other commodities, such as gold and sugar, oil prices rise and fall based on "worldwide supply and demand conditions."
So what is really up with the price of gas at the pump? According to the API's figures, 67 percent of the baseline price per dollar is the cost of crude oil. Another 25 percent of the cost is made up by the cost of refining the oil and paying excise taxes on it while the final 8 percent goes to the retailer. Of course that varies greatly, because depending on what state you live in, you can pay as little as $0.27 or as much as $0.67 per gallon in combined federal, state and local taxes. Here in Florida we pay about $0.53 in taxes per gallon.
The API report also pointed out that our weaker U.S. dollar means that we feel the pinch of increased oil costs more than nations whose currency is stronger. Increased oil prices and a weaker dollar mean that we're doing less and it's costing us more, so of course we seek to blame those in charge of our economic policies. The website GasBuddy.com charts crude oil and gas prices over time, and in the summer of 2008 the price of gasoline jumped to nearly a dollar more per gallon than it had been in the spring. That made for a strong impression in the minds of voters during the November 2008 presidential election. It may not have been partisan politics that caused the jump in oil prices but it certainly added fuel to their campaign fires.
According to an Oxford Institute for Energy Studies report, "The U.S. constitutes the largest oil market in the world. In 2009, U.S. consumption accounted for almost a quarter of global consumption." This means that our dependency on oil isn't going away any time soon. Everything we purchase has a delivery/fuel surcharge built in to the final price, including the price of gas itself.
We need to find ways to become more self-reliant, produce more of the oil we consume at home and elect politicians who have a keen understanding of our economy. But we can't let economic developments that happen just before elections be the deciding factor on who we vote for. Make your decision based on who might best help our country in the long run.