When John McCain (among others) began pushing for a “gas-tax holiday” a couple of months ago, economists widely panned the idea as a rather obvious way of boosting oil company profits, without offering consumers much of anything. And I don’t just mean “economists” in the general sense — the Huffington Post tried to find an economist anywhere who would endorse McCain’s idea. None turned up.
Now McCain has joined the president in pushing a coastal-drilling policy as a way to addressing high gas prices. Once again, the Huffington Post tried to find an economist who honestly believes McCain’s idea would lower the price of gas. And as Sam Stein reported, once again, it was a futile search.
The Huffington Post took on the task of finding an expert who thought that Americans would, within the next decade, receive relief at the pump from McCain’s plan. Querying the entire scope of the ideological spectrum — and putting aside the debate over whether or not offshore drilling was sensible policy — the consensus seemed to be that if the presumptive GOP nominee was persuading voters that he could help decrease their gas bill, he was either living in a political fantasy or being disingenuous.
The best conservative experts could do was point to the possibility of placating speculators, who might be impressed with the added “exploitation” of the coasts (to borrow McCain’s word). But even that’s wishful thinking.
“There are a number of problems with that argument,” said Rob Shapiro, formerly undersecretary of commerce under President Clinton, and co-founder and chairman of Sonecon, LLC. “First of all I don’t think anyone thinks that within the time period of futures trading, that there would be enough additional supply to effect global future prices. Second of all, the market will look at this not only in terms of, ‘there is more supply,’ but also, ‘there is more supply at substantial greater costs to recover than current supply, and with substantial new liabilities’ — the communities that are going to sue them when they destroy their beaches.”
Could we rush new-found oil to the market? Maybe, but it would only lessen the supply. “The faster we try to drain the less efficient the drainage,” said Dr. Ralph Byrns, Professor of Economics at UNC-Chapel Hill. “If we drain it dry and still get 14 billion barrels of oil [the President has suggested 18 billion], that itself would still take 20 years.”
So, we agree, right? Coastal drilling does not lead to lower prices, at least not anytime soon, and probably not ever. Yesterday, even the White House stepped on its own message in conceding this point.
Here’s Dana Perino on this:
“[T]here’s not a real good short-term answer. And we’ve been very explicit about that from the beginning,” Perino told the press corps, adding, “There’s not going to be a short-term response, and it would be irresponsible for anybody to suggest there would be.”
That sounds about right, though as Ali at TP noted, it also runs counter to Republican talking points, which absolutely point to coastal drilling as a short-term response.
* In his radio address this weekend, Bush explained that “the fundamental problem” with high oil and gas prices is supply and demand, adding, “One obvious solution is for America to increase our domestic oil production.”
* Sen. John McCain (R-AZ) — whose call for offshore drilling was embraced by Bush one day after he announced it — explained last week that, in favoring offshore drilling, he was seeking to “address the concerns of Americans, who are struggling right now to pay for gasoline.”
* House Minority Leader John Boehner (R-OH) and Minority Whip Roy Blunt (R-MO) stated unequivocally that expanding domestic drilling “will reduce gasoline prices in the short term.”
Let’s hope they were listening to Perino’s response.