Sunday, August 28, 2011

Passing Gas with Michele Bachmann

Right Detour breaks from the history of the idea of republicanism to resume a tour of recent political news . . .

Michele Bachmann made an eyebrow raising campaign promise. She declared to her audience that under a Bachmann administration they would witness fuel prices below two dollars a gallon.

As they say, anything is possible. A few obstacles must be hurdled:

First, the Constitution does not empower the President (or Congress) to set fuel prices. If she could lower prices by executive order, oil companies simply would stop refining fuel.

Second, increasing supply might not significantly impact the prices. Like every other commodity, the price reflects supply and demand. Bachmann claims that she could reduce prices by removing restrictions on drilling. The best part of such a policy would be to get people back to work. It would not lead, however, to a significant drop in prices any time soon. A large lag exists between additions to the supply of oil and downward pressure on prices.

In fact, a price drop may never occur. I have not research the actual data, but I do remember the promise of North Sea oil and Alaskan oil not quite living up to the hype.

Third, OPEC may have something to say about oil prices. If US production does have an impact, you can bet OPEC will reduce production at their end. They do not really care what we think about it. Even after all the hand-holding and lip-smacking that went on between George Bush and the Saudi Royal family, the Saudis followed their own national interest—not ours.

Finally, overall economic conditions may not warrant confidence in declining prices. If economic activity slows into a recession, that will reduce demand for oil and tend to push prices lower. An economic downturn, however, is the last thing that a Bachmann administration wants.

Conservative candidates really need to tell it like it is, so that we do not end up with supporters like this woman:

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