Does the high price of gasoline hurt Bush or Kerry? It hurts both of them.<?xml:namespace prefix = u1 /> <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Overall Bush is hit harder, because the price rise is occurring under his administration. Whether the public thinks it is Bush's fault—despite sinister hints from Kerry and others about Bush and Cheney's ties to big oil, no one has made a plausible argument that it is—the price rise is happening on his watch. All other things being equal, it is much better to be a challenger than an incumbent when a trip to the pumps is this painful.
But the gas price spike is far from a grand slam for John Kerry. It has given the Bush campaign the chance to highlight Senator Kerry's past support for federal gasoline tax increases. Unlike oil price fluctuations, a tax deliberately and permanently raises gasoline costs. In the early 1990s, Kerry expressed support for a 50 cent per gallon tax increase, though the last actual tax increase was 4.3 cents per gallon in 1993.
The federal excise tax has nothing to do with the current increase. Nonetheless, the consumer furor over high prices has handed Republicans the opportunity to inject the "tax and spend liberal" attacks on Kerry into the gasoline debate.
Stung by these criticisms, Kerry has fought back with a plan of his own, announced on March 30th at a <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />San Diego gas station amidst the backdrop of a sign showing $2.35 per gallon for regular.
His main idea is to "pressure OPEC to start providing more oil." However, Kerry gives no reason to believe that his administration would be any better than the current one at working behind the scenes with OPEC member nations. After all, OPEC has been around for several decades, and has had at least some success manipulating output levels and prices during just about every recent administration. Kerry's aggressive talk is also a bit strange, as it would entail the kind of American bullying and arm twisting of other nations that he so deplores in just about every other context. Kerry didn't even say whether he would try to build an anti-OPEC coalition before going it alone.
Kerry also takes potshots at the administration for replenishing the Strategic Petroleum Reserve (SPR), the nation's emergency stockpile of oil. The federal government is currently adding about 150,000 barrels per day to the SPR to bring it up to its full capacity of nearly 700 million barrels. Granted, the administration can be faulted for the horrendous timing of being a buyer in the oil market when prices are so high, but most analysts believe that the impact of these purchases—which amount to a fraction of one percent of the overall market—has a negligible effect on prices.
Kerry does make some solid points about the need to streamline the regulatory burden that adds to the cost of producing gasoline. He correctly observes that "these regulations result in a patchwork of gasoline zones across the country where only certain fuels can be sold, creating price disparities across the country," and that "action must be taken to reduce the proliferation of boutique fuels." However, Kerry the regulatory reformer may be on a collision course with Kerry the environmentalist. Most of these measures were designed to make gasoline cleaner burning, and past efforts to modify them have sparked opposition from the same green activists Kerry is now courting.
Further, at the same time Kerry is saying all the right things about reducing gasoline regulations, he also wants to add to them. For example, he has frequently faulted the Bush administration for not taking steps to reduce CO2 emissions in order to combat global warming. Yet motor vehicle emissions are a substantial anthropogenic source of this greenhouse gas and could not be left out of any serious attempt to deal with them. According to a 2003 analysis from the Department of Energy's Energy Information Administration, a bill offered by Joe Lieberman (D-CT) and John McCain (R-AZ) to cap CO2 emissions would add as much as 40 cents per gallon once fully implemented. Indeed, any substantive effort by a Kerry administration to reduce CO2 emissions would likely increase the overall regulatory burden on gasoline, regardless of what else is done to trim it.
Kerry also recycles some old Carter-era ideas about federal subsidies and mandates for renewable energy sources and conservation, but they are unlikely to work any better this time around.
Bush's efforts on motor fuels are largely embodied in the energy bill, which has been pending in Congress for most of his first term. Though touted by Republicans as the solution to high gasoline prices, the reality is more mixed. It repeals a few of the regulatory provisions that increase costs, but at the same time adds a requirement that costly corn-based ethanol be added to gasoline. The ethanol mandate may be good news for the Midwestern farm economy (and those who want their votes), but it is no favor to the driving public.
Chances are slim that the federal government can or will do much in the near term to prevent prices from staying this high or even rising as we head into the summer months. Longer-term solutions are possible, but will require more than anything currently on the table.