Back during the 2000 presidential campaign, George W. Bush criticized President Bill Clinton for not doing enough to hold down gasoline prices, and boasted he would do a lot better. The president, he said, needed to "get on the phone with the OPEC cartel and say, 'we expect you to open your spigots,'" and promised to "use the capital my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot."
You'd think, given Bush's family ties with the Saudis, and his experience (and that of his vice-president) as an oil executive, this would have been one campaign promise he'd be able to keep. But no. As former Clinton administration energy policy staffer Ron Minsk explains in a new Progressive Policy Institute Front and Center article, gas prices have spiked during the Bush administration, in part because the president has refused to effectively jawbone OPEC countries on oil production levels. Meanwhile, Bush is pursuing a long-range energy policy guaranteed to intensify our dangerous dependence on oil.
As every American motorist knows, gas prices have not come down under Bush. In fact, says Minsk, "skyrocketing pump prices have caused the typical American household to spend $360.25 more per year for gasoline during President Bush's first term that it did during the average year in President Clinton's second term -- a de facto gas tax that was never proposed, debated, or enacted, but is as real as if it had been." If this doesn't sound like a lot of money, consider that it wiped out over 60 percent of the Bush income tax cuts for most moderate income families.
Bush officials often blame high gas prices on Democratic opposition to the administration's energy plan, or on environmental regulations that make it hard to open new refineries. But that's nonsense. The Bush energy plan, focused on oil production increases in the distant future, would have no impact on current oil supplies or gas prices. And, as Minsk notes, the excuse about refineries is a red herring, since U.S. refineries are operating at well under their current capacity.
"The predominant cause of higher gasoline prices," says Minsk, "is higher oil prices," which climbed 41 percent in the last year to a near-record high. And "the primary causes of higher oil prices are Saudi decisions to constrain output in the face of growing demand for oil -- particularly in the United States and China -- and President Bush's failure to successfully engage with OPEC in order to ensure that it provided enough oil to the market to support moderate prices."
Until this week, notes Minsk, Bush's Saudi friends have been pursuing a deliberate policy of forcing higher oil prices by limiting production. "As recently as March 31, Saudi oil minister al-Naimi was calling for OPEC to implement production cuts." On May 22, the Saudis announced a change of course and promised to boost production in a belated recognition that high oil prices were threatening global economic growth. But why did it take so long for that to happen? As Sen. John Kerry remarked yesterday: "They could've produced more before now. And America's paying an enormous penalty as a result of that and all of our economy gets hurt as a result of that."
Meanwhile, the administration continues to exacerbate oil supply shortages by insisting on continued efforts to "top off" the Strategic Petroleum Reserves, a strange policy that Kerry has criticized for months. Aside from the immediate impact on prices, says Minsk: "Taking oil off the market to fill the reserve undermines our credibility when asking OPEC producers to put more oil on the market to lower prices."
But the short-comings of the administration's short-term oil policies pale in comparison to the perils associated with its long-term energy strategy of even heavier dependence on oil markets effectively controlled by other countries, especially Saudi Arabia. As Minsk notes, the Saudis currently posses "at least 78 percent of the spare oil production capacity in the world," along with "the world's largest oil reserves.... This means that the Saudis will continue to exercise significant influence over long-term oil prices for the foreseeable future." In other words, "our ongoing reliance on oil to fuel our economy places our national and economic security in the hands of a government whose interests frequently diverge from our own."
Citing a recent PPI policy report on energy policy, Minsk concludes: "Meeting our oil challenge will require a meaningful commitment to transform our transportation system from one powered by oil to one powered by new fuels.... While this transformation will take decades, the Bush administration has done little to accelerate the process, apparently content to leave the crisis to future presidents." That's quite a legacy for a former oil executive and close friend of the Saudis who promised not only to keep down gas prices, but to usher in "a responsibility era."