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Bill Knight - March 8

Bill Knight

As gas prices ignited, a visit to New Orleans raised almost as many questions as Republican presidential contenders’ accusations against President Obama. (“Stop,” they scream of the far-from-perfect chief executive, or, “Start”, apparently willing to blame Obama for everything from Gary Oldman not winning an Oscar and tornados hitting downstate Illinois to Google’s new privacy policy and Los Angeles acquiring a “nuke” – Albert Pujols.)

Besides having flocks of lawyers holed up there for the pending lawsuit against BP, Louisiana has 17 oil refineries (including three of the top 5, which produce 1.3 million barrels a day), but prices were only about 15 cents per gallon cheaper than west-central Illinois. Although demand is at its lowest in almost 15 years, prices at the pump are approaching last year’s high, and at $3.70+ are the highest ever for this time of year. They went up 10 percent in January alone, according to the Consumer Price Index.

 The blame ranges from instability in the Mideast and the unusually cold winter in Europe to an overregulated industry and low refining capacity. However, there’s also speculation and politics. By itself, speculation – where people bet that there’s more bad news ahead, such as summer gas prices taking off like Dale Earnhardt Jr. – adds about $15 to the price of a barrel of crude, according to Oppenheimer analyst Fadel Gheit. Politics adds scapegoating and overreaching – further antagonizing the Mideast.

 Analysts say every penny increase in gas prices costs the economy $1.4 billion, so that inflation and the effect on consumer confidence hurt the modest recovery. Promises of $2/gallon gas are silly, of course, and for all the American Petroleum Institute’s whining, the industry made more than $137 billion in profits last year.

 In fact, drilling is up, improved fuel efficiency (an average of 23 mpg) has led to declining consumption (down 2.8 percent last year alone, according to the Energy Information Administration), and production is up, making oil plentiful (the nation sold more than it used last year). Details:

 * The number of U.S. oil drilling rigs hit a record last month, quadrupling over the past three years. The United States now has more working rigs than the rest of the world –combined.

* Besides enabling the huge increase in domestic energy, Obama also is encouraging conservation. New standards requiring cars and light trucks to achieve an average fuel economy rating of 54.5 miles per gallon by 2025 will cut U.S. oil use by 2.2 million barrels of oil per day by then – saving consumers $1.7 trillion and cutting greenhouse gas pollution by 6 billion metric tons.

* That $137 billion in 2011 profits were enjoyed by ExxonMobil, ConocoPhillips, BP, Chevron and Shell – even though these five corporations produced 4 percent less oil in 2011.

* Every GOP presidential contender and almost every Republican member of Congress has signed a pledge to oppose ending taxpayer handouts to Big Oil – handouts that could add up to more than $40 billion over the next 10 years, according to the progressive blog Republicans have repeatedly voted to block efforts to repeal the tax breaks for Big Oil.

* Both last year’s House Republican budget plan (and supported by nearly every Republican member of the House and Senate) and the tax plans of every GOP presidential contender call for cutting the corporate tax rate by at least one-third, which would result in billions of more dollars for Big Oil.

 Big Oil prefers Republicans, as shown in its campaign contributions (88 percent, almost $14 million, to GOP candidates so far this election cycle, according to the nonpartisan Center for Responsive Politics, which shows Exxon alone giving candidates $8 million annually since 1996), and all its lobbying. But there’s no easy way out, and Obama’s pledge to seek new energy sources, continue to boost fuel efficiency, increase oil production and encourage conservation might be too little for folks when we’re maxing out credit cards to buy fuel.

 Plus, prices are set on a world market influenced by the OPEC cartel anyway. Anne Korin of Set America Free, a national energy-security coalition, told the Christian Science Monitor, “Until we break oil’s monopoly over transportation fuel, we are on a playing field where we can never prevail.”

Democrats are playing politics, too, responding with a tongue-in-cheek web site,, where they claim the GOP favors Big Oil generally and specifically in four key votes last year. Jesse Ferguson of the Democratic Congressional Campaign Committee said, “House Republicans are the Grand Oil Party because their first priority has been to protect taxpayer giveaways to Big Oil companies. The American people will hold the Grand Oil Party accountable for continuing to reward Big Oil companies as gas prices rise.”

Bill Knight is a freelance writer who teaches at Western Illinois University. The opinions expressed are not necessarily those of WIU or Tri States Public Radio.


Rich is TSPR's News Director.