Those of us who were old enough to drive in the 1970s recall the rising gas prices and the seemingly endless lines at the gas stations (a result of various rationing schemes, including limits on purchases and/or the days one could purchase gas). There is little question that the gas prices had important implications for President Carter’s re-election bid (although the results were, in many ways, overdetermined). Now that prices are on their way back up (and are at the inflation adjusted equivalent of the late Carter presidency, the question is whether $4-$5-$6 a gallon gas will sour the electorate on President Obama. See, for example, Bob King and Darren Goode’s “President Obama’s Carter Trap” (Politico) and the coverage in today’s NYT.
Meanwhile, the administration will use rising gas prices to justify another effort to revoke oil industry tax breaks. Ben Geman (the Hill) reports that the President will devote his speech at Nashau Community College to the topic. According to White House official:
“In Nashua, the President will . . . reiterate his call to repeal the unwarranted $4 billion in annual subsides handed out to oil and gas companies, and will urge Congress to take a vote on the repeal in the coming weeks”
“We plan to show that when [gasoline] is approaching $4 per gallon, oil companies don’t need the extra help from taxpayer subsidies…As a matter of fairness, Republicans should not be continuing to defend this loophole.”
Obviously, there is nothing in these comments (or in so many others) to suggest that the White House or the GOP have a deep understanding of energy markets or are above spinning gas prices to extract political gains. But even if the odds of success in repealing the tax subsidies are close to zero, one might nonetheless wish the President well. In a perfect world, we would scrap these subsidies and all other subsidies delivered through the tax system as part of our ham-handed, transfer-seeker-driven, national industrial policy.