Note to Michele Bachmann: Presidents Don't Control the Price of Gasoline
Regular readers of my blog or my Twitter followers know that I feel about politics the way that Luddites feel about technology. So, permit me this brief detour into the political realm to note that Michelle Bachmann cannot control the price of gasoline in the United States.
This shouldn't really be something that has to be said, given that oil market is global and immensely complex, but Bachmann told a group of prospective South Carolina voters she could determine the price of gas. "The day that the president became president gasoline was $1.79 a gallon. Look at what it is today," she said. "Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen."
This ignores the geological and geopolitical realities of the world oil market. It's just impossible to promise the price of gasoline at some future date several years from now. Well, actually, I shouldn't say that. Perhaps President Bachmann would institute price controls or spend massive sums to subsidize gasoline in an effort to drive gas prices down. The Chinese kept gasoline prices down for a while with heavy-handed efforts. But it's hard to see how that squares with her small government posture. (To say nothing about whether that would be a good way to spend public money.)
Politico notes that she mentioned shale development and is a long time proponent of more Arctic drilling, but let's look at the numbers. The United States Geological Survey estimates that there is a 50 percent chance of finding seven billion barrels of technically recoverable oil in the Arctic National Wildlife Refuge. Sounds like a lot, no? But Americans use about 20 million barrels a day, so if we sucked out all of those billions of barrels, we'd use it up in less than a year. The shale guys are talking big, too, for sure. But we've already had one shale bust in this country. And most of the big successes have been with gas. And environmental tradeoffs still cloud shale's future. And the USGS pegged the oft-cited Bakken formation as having a few billion barrels of technically recoverable oil. And shale oil production in 2010 was a mere 275,000 barrels a day.
All of that to say: it is not credible for a politician to state they can bring the price of gasoline down under $2 with increased domestic production in the very near term.