While Newt Gingrich travels the country extolling the power of a magical plan to
lower gasoline prices (perhaps revolving around unicorns towing our cars), a simple fact: the Republican agenda will lead to increased gasoline prices at the pump in the near, mid, and long term while undermining American security.
While there are a plethora of other elements, let's narrow down to just four key Republican agenda items:
The situation with Iran is difficult and this post will not offer a magical solution to dealing with Iranian nuclear ambitions. The pressure on Iran (embargo) and the potential for military action (by Israel or the United States or some coalition) against Iranian nuclear facilities is leading to increased speculation with a 'war fear tax' already on global oil prices. While President Obama (and most of the world's leaders) are emphasizing the importance of seeking a diplomatic and peaceful resolution, if possible, even while making clear a military action might become necessary, the Republican presidential candidates are far more bellicose (as per a prominent Mitt Romney OPED several weeks ago). This bellicosity is already influencing that 'war fear tax' with global trader concerns that a Republican President would abandon diplomacy and escalate to a 'shock and awe' campaign. While incredibly hard to pin down directly, some experts postulate that a strike on Iran would massively increase U.S. prices at the pumpin the blink of an eye. Simply put, want $6 gasoline at the pump, strike Iran. Now, such strikes might be necessary but no one should pretend that going it will cost virtually nothing to go to war with Iraq (oops, Iran). Thus, Republican rhetoric re Iran is already contributing to market jitters over a potential war and thus increasing prices. And, living up to that rhetoric with an actual strike would have an immediate spike impact on prices which, dependent on Iranian reaction to the strike (imagine an attack on Saudi oil facilities), could drive oil prices above $250 barrel.
Counter to fact, Keystone XL pipeline is promoted by the American Petroleum Institute, US Chamber of Commerce, and the Republican Presidential Primary candidates as some form of magical solution to gasoline prices at the pump opposed by President Obama. The reality: the price of crude for U.S. Midwestern refineries is significantly lower than the global price of oil due to, in no small part, the costs of moving Canadian Tar Sands crude into refineries that serve the world market rather than the U.S. domestic market. And, this has real impact on fuel prices: "spot gasoline was 55 cents cheaper in Chicago than in New York." The Keystone XL pipeline is intended to resolve this pricing differential and provide a path for those Canadian tar sands exploiters to earn in the range of $10-$15 more for every barrel they sell by putting the oil on the world, rather than upper Midwest, market. Thus, building Keystone would actually lead to higher prices at the pump through much of the Midwest (and higher average U.S. prices) in the near-to-mid-term.
The
"Drill, Baby, Drill" rhetoric purposely ignores that the Obama Administration is overseeing the greatest boom in drilling activitythe nation has seen since serious record-keeping began decades ago and focuses on burning up even more rapidly the nation's fossil fuel reserves. Expanding beyond that activity could, in the mid-term term, perhaps increase U.S. production slightly (some analysis suggests in the range of 250,000 barrels/day by the 2020s -- less than oil production has already increased during the Obama Administration) and thus foster lower gasoline prices, considering the world market, of perhaps 1-2 cents per gallon. However, the United States only has a few percent of world oil reserves. "Drill, Baby, Drill" is based on accelerating exploitation of America's depletable resources which will increase dependence on other nation's for U.S. liquid fuel demands over the longer term (as prices go up even more).
Without even considering the impact of truck and other large
vehicle standards, thestrengthening of the light-vehicle CAFE standards via Obama Administration working with the automobile industry is projected to reduce U.S. oil demand by 2.2 million barrels / dayby 2025 (or about 40 percent of current U.S. production and in the range of ten times what might occur from a no-holds barred "Drill, Baby, Drill" regime ignoring environmental consequences). Very simply, if we believe that rather simplistic capitalistic of "supply/demand curve", this reduction of U.S. demand (negagallons) is a direct equivalent to increased supply and should reduce overall fuel prices(and thus save money not just for those driving the higher mpg vehicles but for everyone who goes to the pump). This value stream has been, by the way, almost uniformly ignored when discussing the payoff from CAFE standard strengthening -- in fact, this 'indirect' savings might be three (or even more) times greater than the direct savings that drivers will have due to having to buy fewer gallons of gasoline. (And that calculation, of course, doesn't even begin to account for the externalities of America's oil addiction from security costs to health issues to environmental impacts to ...) Simply put, the opposition to strengthening CAFE standards over the years has lead to greater 2012 US oil demand, higher gasoline prices, and increased US vulnerability to global oil price and supply fluctuations . Opposing tightened CAFE standards is an argument for extending this problem indefinitely into the future.
As noted, the above are only four examples.
Examining the 'there there' behind Republican political rhetoric and policy priorities leads to an inescapable conclusion: The Republican Agenda is to increase oil company profitability while increasing gasoline prices at the pump.