COLUMN: President can do little about gas prices
Recently there has been much talk about gas prices, and many Republicans are blaming President Obama for not taking action to lower gas prices.
Newt Gingrich even went as far as promising $2.50 per gallon gas if he were to be elected. Ultimately, that pledge is about as politically smart as saying, “Read my lips; no new taxes.”
When the partisan rhetoric is chipped away, it becomes clear the president can really do little to affect gas prices, and more importantly, Americans should be questioning if lowering gas prices is even in the country’s best interest.
Republicans like Gingrich often tout the line of “Domestic drilling will lower gas prices.” That is not true for two reasons; oil companies export much of their domestic oil in order to maximize profits. Unless the GOP is willing to put a ban on exporting oil, which certainly would not adhere to our small government principles, exporting will continue and Americans will not see most of that newly refined oil.
More importantly, the Organization of Petroleum Exporting Countries has a history of adjusting oil exports to maintain prices at a level they want. Since the U.S. is reliant on the world oil market, an increase in U.S. production would result in a decrease of OPEC production so that oil prices would stay at the level OPEC wants.
Ultimately, the president cannot influence oil prices through allowing more domestic production. Where he can influence prices is in reducing gasoline taxes, but is this really in our best interest?
In the 2008 election, both Barack Obama and John McCain had a plan for a gas tax holiday during the summer months, when gas prices are the highest. For years, the U.S. government has provided the oil industry with more and more tax credits in order to try to lower the price of gasoline. Instead of trying to artificially lower prices to appease voters, we should keep oil at a consistent tax rate without tax credits or holidays.
This would allow the market to adjust to the actual price of gas, instead of bringing consumers back to the government for increased support to artificially lower gas prices. If gas prices were as high as they should be without these tax credits, alternative fuels would have begun developing at a faster rate years ago, and we would be less reliant on gasoline now, meaning we would not need the government to artificially lower prices.
This country is in a vicious cycle of relying on the government to lower gas prices, and until the market is allowed to function properly, the cycle will only worsen.
It may not be politically friendly, but putting an end to these tax credits for oil companies is the only way the market will function as it should, and with time, this will allow us to move to sources of fuel that will eventually be cheaper and better for the environment.
Nathan Inks is the president of College Republicans. The column does not reflect views of the organization.
