W*GS
04-29-2006, 07:47 PM
Lexington
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Apr 27th 2006
From The Economist print edition
George Bush fails to defend an inalienable right: cheap petrol
http://www.economist.com/images/20060429/D1706US0.jpg
You know something is afoot when Ted Kennedy and Bill O'Reilly start singing together. The senior senator from Massachusetts and the pundit-in-chief of Fox News can usually be relied upon to produce nothing but discord. But when it comes to rising prices for gas—petrol, as Brits insist—they are in perfect harmony. Americans are being ripped off at the pump! “Greed-heads” are manipulating the market and gouging the little guy! Something must be done!
Such sweet agreement spells big trouble for George Bush. There is a lively debate in America as to whether the “penumbras” and “emanations” of the constitution include the right to abortion. But, as Steven Hayward of the American Enterprise Institute points out, there is no debate as to whether these penumbras and emanations include the right to cheap petrol. Americans are convinced that the rising price of petrol—the average price of a gallon has reached $2.90 and some places are charging more than $3—is nothing less than a violation of the rights they won from George III; and they have no doubt that the people doing the violating are the oil companies. Aren't the oil companies making record profits? And didn't the chairman of Exxon, Lee Raymond, just get parting “compensation” worth about $400m? “Does everybody love Raymond?”, asks Mr O'Reilly. “I don't. I think he's a greed-head.”
You can quibble for as long as you want about the economics of all this. You can point out that the price of petrol is fixed by global forces—from rising demand in India and China to political instability in Nigeria and, particularly, Iran—rather than devilish CEOs. You can point out that, so far, rising petrol prices have had remarkably little impact on the economy. The oil shocks of the 1970s sent inflation soaring and tipped the world economy into recession. Today the American economy is motoring along on a full tank, with low inflation, low unemployment and rising consumer confidence. You can point out that Americans don't know how lucky they are—a gallon of petrol costs $6.40 in Britain. You can even argue that it is their fault for driving gas-guzzling SUVs and living in McMansions miles from anywhere.
But you might as well hold your breath for all the difference it makes. No less than 69% of Americans think that the rise in petrol prices has already caused them either severe (23%) or moderate (46%) hardship. Nearly two-thirds think that the president has a lot of influence over the price of petrol. The result is that a presidency that has already been battered by Hurricane Katrina and bruised by the Iraq war is being bombarded by soaring petrol prices. Mr Bush's approval ratings are at an all-time low of 32%; economists are warning everyone that the price of petrol will rise higher as the summer driving season starts; and pundits are suggesting that Mr Bush may be a Republican Jimmy Carter, destroyed by Middle Eastern terrorists and rising oil prices. All he needs is a cardigan and a liking for the word “malaise”.
The Democrats have seized the opportunity to bash Big Oil with predictable relish. Herb Kohl, a senator from Wisconsin, has introduced a bill to prevent petrol companies from colluding to keep prices high. Big Oil has “unquestionably enriched itself during this period of high prices,” he says. Carl Levin, a senator from Michigan, has urged Mr Bush to impose a windfall tax on the oil companies' “obscene profits”. On April 20th the Democratic Congressional Campaign Committee recommended that candidates for office hold campaign meetings at petrol stations—and pledge that as members of Congress they will “fight for families...not the oil and gas executives”.
And those stalwart friends of big business, the Republicans? Naturally, they have fired a few shots at the Democrats. How can the Democrats have the nerve to complain about rising petrol prices when they have systematically blocked attempts to increase the production of oil? And when they want to bring in “green” taxes that will push the price of petrol much higher? But for the most part they have contented themselves with me-too company bashing. Bill Frist and Dennis Hastert, respectively the majority leader in the Senate and the speaker of the House, have called for an investigation into “price fixing” and “gouging”. Arlen Specter, a senator from Pennsylvania, is also talking about a “windfall-profits tax” and an antitrust investigation. Other Republicans have threatened to summon oil executives to Capitol Hill for a grilling.
Low presidential reserves
The best that can be said for Mr Bush is that he has avoided making obvious mistakes. He was much faster off the mark than he was over Katrina, delivering several speeches on the subject of high petrol prices. He produced a four-point “practical plan”, which at least gives the impression of activity. And he sounded the right populist notes about fighting fraud and manipulation and depriving oil companies of some of their tax breaks. But his speech was essentially bluster and hot air. What he offered was a combination of empty gestures (calling a temporary halt to feeding the strategic petroleum reserve, when deposits to the reserve are less than 30,000 barrels a day in a country that consumes 21m barrels a day) and sensible ideas that will take decades to have any effect.
Most of Mr Bush's disasters are largely his own creation: Iraq because he chose to invade the country, Katrina because he ignored the warnings beforehand and was lamentably slow to respond afterwards. But petrol prices are different. Mr Bush can't rig the international oil markets. He can't pretend that his administration is not top-heavy with oil men. And he can't change the subject, particularly as the summer driving season approaches. The Bush family has reaped more than its fair share of benefits from Big Oil over the years. This summer, it is proving a dangerous friend to have.
Copyright © 2006 The Economist Newspaper and The Economist Group. All rights reserved.
Premium pressure
Apr 27th 2006
From The Economist print edition
George Bush fails to defend an inalienable right: cheap petrol
http://www.economist.com/images/20060429/D1706US0.jpg
You know something is afoot when Ted Kennedy and Bill O'Reilly start singing together. The senior senator from Massachusetts and the pundit-in-chief of Fox News can usually be relied upon to produce nothing but discord. But when it comes to rising prices for gas—petrol, as Brits insist—they are in perfect harmony. Americans are being ripped off at the pump! “Greed-heads” are manipulating the market and gouging the little guy! Something must be done!
Such sweet agreement spells big trouble for George Bush. There is a lively debate in America as to whether the “penumbras” and “emanations” of the constitution include the right to abortion. But, as Steven Hayward of the American Enterprise Institute points out, there is no debate as to whether these penumbras and emanations include the right to cheap petrol. Americans are convinced that the rising price of petrol—the average price of a gallon has reached $2.90 and some places are charging more than $3—is nothing less than a violation of the rights they won from George III; and they have no doubt that the people doing the violating are the oil companies. Aren't the oil companies making record profits? And didn't the chairman of Exxon, Lee Raymond, just get parting “compensation” worth about $400m? “Does everybody love Raymond?”, asks Mr O'Reilly. “I don't. I think he's a greed-head.”
You can quibble for as long as you want about the economics of all this. You can point out that the price of petrol is fixed by global forces—from rising demand in India and China to political instability in Nigeria and, particularly, Iran—rather than devilish CEOs. You can point out that, so far, rising petrol prices have had remarkably little impact on the economy. The oil shocks of the 1970s sent inflation soaring and tipped the world economy into recession. Today the American economy is motoring along on a full tank, with low inflation, low unemployment and rising consumer confidence. You can point out that Americans don't know how lucky they are—a gallon of petrol costs $6.40 in Britain. You can even argue that it is their fault for driving gas-guzzling SUVs and living in McMansions miles from anywhere.
But you might as well hold your breath for all the difference it makes. No less than 69% of Americans think that the rise in petrol prices has already caused them either severe (23%) or moderate (46%) hardship. Nearly two-thirds think that the president has a lot of influence over the price of petrol. The result is that a presidency that has already been battered by Hurricane Katrina and bruised by the Iraq war is being bombarded by soaring petrol prices. Mr Bush's approval ratings are at an all-time low of 32%; economists are warning everyone that the price of petrol will rise higher as the summer driving season starts; and pundits are suggesting that Mr Bush may be a Republican Jimmy Carter, destroyed by Middle Eastern terrorists and rising oil prices. All he needs is a cardigan and a liking for the word “malaise”.
The Democrats have seized the opportunity to bash Big Oil with predictable relish. Herb Kohl, a senator from Wisconsin, has introduced a bill to prevent petrol companies from colluding to keep prices high. Big Oil has “unquestionably enriched itself during this period of high prices,” he says. Carl Levin, a senator from Michigan, has urged Mr Bush to impose a windfall tax on the oil companies' “obscene profits”. On April 20th the Democratic Congressional Campaign Committee recommended that candidates for office hold campaign meetings at petrol stations—and pledge that as members of Congress they will “fight for families...not the oil and gas executives”.
And those stalwart friends of big business, the Republicans? Naturally, they have fired a few shots at the Democrats. How can the Democrats have the nerve to complain about rising petrol prices when they have systematically blocked attempts to increase the production of oil? And when they want to bring in “green” taxes that will push the price of petrol much higher? But for the most part they have contented themselves with me-too company bashing. Bill Frist and Dennis Hastert, respectively the majority leader in the Senate and the speaker of the House, have called for an investigation into “price fixing” and “gouging”. Arlen Specter, a senator from Pennsylvania, is also talking about a “windfall-profits tax” and an antitrust investigation. Other Republicans have threatened to summon oil executives to Capitol Hill for a grilling.
Low presidential reserves
The best that can be said for Mr Bush is that he has avoided making obvious mistakes. He was much faster off the mark than he was over Katrina, delivering several speeches on the subject of high petrol prices. He produced a four-point “practical plan”, which at least gives the impression of activity. And he sounded the right populist notes about fighting fraud and manipulation and depriving oil companies of some of their tax breaks. But his speech was essentially bluster and hot air. What he offered was a combination of empty gestures (calling a temporary halt to feeding the strategic petroleum reserve, when deposits to the reserve are less than 30,000 barrels a day in a country that consumes 21m barrels a day) and sensible ideas that will take decades to have any effect.
Most of Mr Bush's disasters are largely his own creation: Iraq because he chose to invade the country, Katrina because he ignored the warnings beforehand and was lamentably slow to respond afterwards. But petrol prices are different. Mr Bush can't rig the international oil markets. He can't pretend that his administration is not top-heavy with oil men. And he can't change the subject, particularly as the summer driving season approaches. The Bush family has reaped more than its fair share of benefits from Big Oil over the years. This summer, it is proving a dangerous friend to have.
Copyright © 2006 The Economist Newspaper and The Economist Group. All rights reserved.