How to think about politics – Principle 1: Contemporary example. Michelle Bachmann’s $2 gas.

*I recently realized I have been misspelling Michele Bachmann’s name.  This is because I hate her.  I will not be changing it in any previous work because I absolutely refuse to engage in any behavior that further validates her as a human being beyond what is necessary to point out the depth of her ignorance.  Furthermore, I apologize to the English language and females of every species on the planet for the unavoidable degradation of the pronoun “her” as it references Michele Bachmann in this body of work  Thank you.*

The Contemporary Example part of these is what I intend to use to display how one can use the principles to sort through bulls-t that’s going on right now.  I’m going to pick examples that stand out for me, but realize that there are lots of these on both sides of the aisle.  My blog, my choice.

So I had a friend tell me that Michelle Bachmann is claiming that “Under President Bachmann, gas would be less than $2 a gallon.” 

OK, bulls-t radar goes up.  Now I hadn’t heard anything about this, so I decided to have a little fun.  I asked my wife to verify the quote, but before we read it I wanted to brainstorm a list of every possibly way I could imagine this could be done.  Principle 1:  Preserve objectivity and give the benefit of the doubt.  After all, if she can actually do it without destroying the American economy, I might want to vote for her.  Who knows.

So here’s the list I came up with.  I was super generous and assumed gas averaged $3 for convenience of thinking:

1.  Eliminate all fuel taxes, and regulate the industry to cap prices.  – good bloody luck.  1.4 trillion gallons a year minus only the ~$0.19 cent govt. tax would take $266 billion out of the US budget.  That should be easy.  We can simply eliminate the Army and the Marine Corps.  Total savings: ~$270 billion.  Debt what?

2.    Nationalize fuel sales.  -Not likely from a Tea Party candidate.  Plus, the last time a country did that it was Iran, and it’s why we armed Iraq in the first place.  Oops.

3.  Federally subsidize gas. – That’s not really saving anyone money, and besides; how can you be against doing that with health care but it’s OK for gas?

4.  Tap every single petroleum reserve in the nation while heavily regulating the fuel industry. – probably would have a marginal effect, but I don’t think it would work.  Without regulation gas companies would simply jack the price up anyway.  Plus, it’d run out in 50 years and we’d be right back to where we were except without any strategic reserves.

5.  Invade and conquer the entire Middle East. – Sure, that would do it.

6.  Kill every black, Hispanic, and gay person in the country to reduce consumption. Should be about 30%. Probably a few retarded people as well to account for gay blacks and Hispanics. - Given what’s happening in Arizona, there’s a pretty good chance she’s going with this one. 

7.  Nuke China.  -  They do kick our ass in diving and gymnastics at the olympics, and a few more gold medals in the 2012 Olympics would make us a few thousand dollars if we sold them.  Every little bit, right?

8.  Force everyone to walk twice a week.  – Would probably solve the health care stuff too. 

9.  Decide the number ’2′ now means ’3′ on November 6th, 2012. - Of course, we’d be voting in the 3013 election, so it would be technically impossible to make it happen right away.

10.  Make 1 gallon a third smaller. – Yes.  That could be done. It’s by far the easiest solution.  My money’s on this one. 

11.  Invent a time machine to go back to 2000.  -The Pepsi’s not free, Marty.  You gotta pay for it…

12.  Do what Bush did and deregulate the mortgage industry until the economy collapses again, and national panic reduces consumption destroys the oil market. – This is the only one I KNOW would work, because that’s exactly what happened.   

That’s about the best I could do.  The rest are variations on “kill ‘X’ collection of people.’  Personally, I believe Michelle Bachmann might have a bit of traction here, because she’s just crazy enough to nuke Russia or kill all the Mexicans in the US. 

So what does it turn out is the plan?  Here it is in her words:

“Under President Bachmann you will see gasoline come down below $2 a gallon again.  That will happen.  The day that the president became president gasoline was $1.79 a gallon.  Look what it is today.”

Wait, WHAT?!?  That’s…f-king…IT?!?  So let me make sure I have this straight:  You make an absolutely insane pie-in-the-sky claim regarding gas prices, and your strategy for making this happen is…saying it will happen. 

Reporter:  Hey Michelle, listen, I was having a stroke just then. Can you tell go over that one more time?

Michelle:  Yes, I can.  Under my Presidency, I will reduce gas prices to under $2 a gallon…by saying it

Reporter:  Oh, that’s interesting.  Listen, so given the price of oil, do you think it’s safer for the average American to invest in oil or CD’s?

Michelle:  Well, I’d have to say CD’s.

Snoop Dog:  Den SEE DEEZ NUTS IN YO MUTHAF-KIN’ MOUTH, B-TCH!!!   

Michelle:…

Snoop:  Hehehehe…

Michelle:  I don’t under…

Snoop: … hehehehe

Michelle:  So what was that for?

Snoop Dog:  That’s me bein’ real baby girl, I’m up out a here.  Dis is Snoopy Deal Double Jizzle fo Shizzle Dizzle.  It’s been real baby girl, holla.

Click.

So as you’ve probably gathered, and in the words of James Randi, “I felt that claim needed to be challenged.”

Let’s start with the $1.79 claim.  This is true.  Except her website says $1.83 but whatever.  (Oh, and if we’re going to play this game, it was $2.27 when he was elected.  That means he was able to reduce gas prices by $.48 just by being elected, right Michelle?  Right?  I mean, if we’re going to simplify things down to a ludicrously reductionist extreme for political capital…)This occurred in 2009, after a total tanking in mid-2008.  Now this does feel very low.  Gee, what else was going on in mid-2008 that might have resulted in gas prices falling something like $2.80 a gallon in a month?  Hmm.  I wonder.  I think I can sum it up like this:

By 2006, the Asian and oil-producing economies of the world were in full-swing, and the US had really low interest rates.  Because Asia had a ton of cash to loan and interest rates were good, Bush deregulated the mortgage industry and everyone bought a house under ridiculously risky conditions.  In mid October 2008, the housing bubble exploded and took the rest of the world with it.  Asia and oil-producing countries took a huge hit, as well as every major economy in the world.  Gas prices tanked. 

So.  YEAH.  Gas prices were really, really low.  It has nothing to do with Obama’s policies, and the fact that gas is $3.50 now has little to do with his policies.  It’s still cheaper than the $4.40 average at which it peaked in 2008. 

So I went to her website, and there’s slightly more to it than that,AS ONE WOULD HOPE.  Apparently, her total plan is, in a nutshell:

“Deregulate the oil and natural gas industries, eliminate cap and trade, and every thing the EPA does, cut taxes for oil and natural gas industries, and open up the petroleum reserves.”

Wait, deregulate?  How the f-k do you expect THAT to work?  For comparison, Texas deregulated its electricity companies in 2002.  Texas now has the highest electricity costs in the nation.  This is a familiar symptom of deregulation.  Take a look at insurance companies.  We deregulated the hell out of them, and prices went down for a brief period of competition and then collectively went sky-high as they realized that fewer restrictions on their policies allowed them to maximize their profit margin.  Deregulation can do many, many different things, but cutting prices by even a sixth?  No chance.  When you deregulate prices don’t go down.  Profits go up because prices hold.  Americans were already paying $X for a product, why would that change?  With no regulations, there’s nothing to stop an industry from collectively gouging us, and history has borne this out time and time again.  Secondly, cutting taxes for oil and gas and eliminating cap and trade may help, but do you really want to?  We already can’t afford to cut taxes because of the debt issues we have.  All of these things combined they aren’t going to come anywhere NEAR to dropping gas prices by a third.  So that leaves opening up the petroleum reserves.   

Oh, and really quick.  Her website says she wants to completely eliminate EPA regulations on oil and natural gas companies.  She claims that Obama was unduly harsh on BP for the gulf oil spill because he made them pay to clean it up.  Additionally, she believes that instituting regulations on energy companies that forces them to treat our planet with respect is insane because it hurts consumer prices.  Michelle Bachmann has five children.  If she runs her house like that… 

The US produces about 11% of the oil in the world.  In order to offset costs, we’d have to increase production by about…a s-t ton.  Even to reduce it fractionally we’d have to start churning out a ridiculous amount of new oil, and it would take years to get that all cranking anyway. Historically, in order to get even $3 a gallon for gas, you’d have to get crude oil prices down to about $59 a barrel.  Right now…it’s $85. Obviously she wouldn’t even have to get it down to  I’m going to go ahead and say that’s not possible to offset right now.

But wait a minute, that’s not entirely true.   That was a price from 2007.  Gasoline prices compared to oil prices have changed a lot.   Here’s a historical view of times gas was $3 a gallon vs oil prices.

5/07 – $59 per barrel

6/07 – $65 p/b

7/07 – $71 p/b

11/07 – $83 p/b

2/08 – $85 p/b

(Gas prices peaked at $4.40, then tanked)

12/10 thru 2/11 -  $88 p/b average oil price

So why is it that an $88 barrel of oil today costs us the same in gas prices at the pump as a barrel of oil that cost $59 four years ago?  And why is gas that costs $3.39 today coming out of barrels being bought for $86?  This does not seem to indicate a corrolation that fits the utopian conservative view of traditional economic influences.  I’m confused. 

Well, it’s very simple. Let’s change that table slightly so you can see gas prices fluctuating over time when cost per gallon is shown as a  percentage of oil prices.  Yes, it does trend directly top some degree, but when oil prices were well over $120 a barrel they were only selling gas for $4 bucks a gallon.  That’s .03 $gallon/$barrel.  In 12/08 when crude prices tanked at $33 p/b, gas was $1.59 a gallon.  That’s .054 $g/$b.  Our price today?  .046 $g/$b.  Let’s re-look at that chart now as $g/$b

5/07 – .051 $g/$b

 6/07 – .046 $g/$b

7/07 - .042 $g/$b 

11/07 - .036 $g/$b

2/08 - .035  $g/$b

(Gas prices peaked at $4.40, then tanked)

12/10 thru 2/11 -  .033 $g/$b 

Now it just looks weird.  It APPEARS that today oil companies are taking a loss on their oil compared to prices in the past, and as a matter of fact, when the economy tanked in 12/08 and gas was $1.59 a gallon, that’s when profits were at their HIGHEST.  What the f-k does all this mean?

Like I said, it’s actually very simple.  What it means, is that gas companies don’t care about regulations and taxes and price per barrel of oil.  Really.  Oil companies sell gasoline at whatever price they think Americans can pay REGARDLESS of what a barrel of oil costs.  If you deregulate their industry, they’re still going to sell gas to the American public for as much profit as they possibly can.  They’ll say,  “thank you Uncle Sam, I can get that yacht now.”   If they thought charging $10 a gallon wouldn’t hurt their bottom line, they’d do it even if oil was FREE.  They’re in this business to make money.  Period.  And if you cut their overhead costs by even 50%, and reduce the price of oil to that of toilet paper, they’re still going to evaluate what Americans can pay for a gallon of gas and charge that.  That’s why gas was so cheap in the 90′s, and it’s why it costs so much now.  They know we’ll pay. 

 Besides, even if you could churn out a ton of US oil, which we can’t, as gas gets cheaper consumption will increase.  There’s quickly going to be a natural balancing act between the two.  Look, when the American economy was at its strongest right before the bubble burst, gas was as expensive as it’s ever been. Low gas prices are not indicative of a healthy economy, and I’m already saying this is impossible without taking into account the fact that inflation has ALREADY made $2 a gallon harder to attain.  I’m just not seeing it. 

Now I’m all ears for a an update regarding this, and I’d love to see some hard math as well.  If she can demonstrate how this will work in practical, mathematically verifiable terms, I’ll be the first to say so.  She can’t even get gas prices down to $2 a gallon GIVEN that she can do all those things she said, not to speak about IF we can or SHOULD we do it.

Extraordinary claims require extraordinary evidence Ms. Bachmann.  You get an F-.

One Response to “How to think about politics – Principle 1: Contemporary example. Michelle Bachmann’s $2 gas.” Subscribe

  1. John August 29, 2011 at 5:04 am #

    By writing this article, you are giving far more credit to the potential of the average American than I ever would or could. As a nation, we seem far more comfortable to trust the wild claim and get pissed when they can’t deliver, and start the whole process over again. The last thirty years or so prove it.

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