Oil Price Politics

We are seeing a replay in Washington, D.C. of what has happened over the past ten years or so when gas prices go up, as both parties scramble to point the finger of blame at the other, with little to offer in terms of short term relief.

While polls indicate that the recent jump in prices to upwards of $4/gallon has hit many Americans hard in the wallet, it certainly wasn’t evident during my recent travels for Spring Break, as the roads were jammed with travelers.

But if there is one easy to understand metric other than the unemployment rate that voters understand, it’s the price of gasoline at the pump, and it can put fear into the heart of the party in power.

And that’s why both parties are trying to take political advantage of this price spike any way they can.

For Republicans, they’re readying a blitz in May from the Congress to push for new oil and gas exploration, claiming that the Obama White House is biased against the oil and gas industry.

On the other side of the coin, Democrats are focusing on tax breaks for Big Oil that they charge Republicans refuse to get rid of, arguing that at a time of big profits, the oil and gas industry doesn’t need any handouts from the taxpayer.

The hard truth is that there’s very little politicians can do in the short term to “fix” high gas prices – so it’s a political jab fest from Left and Right.

“It makes little sense for American consumers — who are now paying over $4 a gallon for gasoline in most parts of the United States — to have billions of their taxpayer dollars subsidizing oil companies that are making record profits,” said House Democratic Leader Nancy Pelosi, as she demanded votes to end those tax breaks next week.

“Running on Empty: Obama Administration Does Nothing to Address Skyrocketing Gas Prices,” thundered the headline on a release from House Speaker John Boehner.

Gas prices have spiked a number of times in recent years, sparking a jump in political rhetoric – and this spike is no different.

Yesterday, the White House aggressively pushed to end one small tax break for Big Oil, totaling $4 billion a year.

“I am writing to urge you to take immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil,” wrote President Obama in a letter to Congressional leaders.

That drew the expected response from the GOP.

“The President’s latest call to raise taxes on U.S. energy is as predictable as it is counterproductive,” said Senate Republican Leader Mitch McConnell.

The Obama Administration has tried to get rid of a series of tax breaks for the oil and gas industry in recent years, but that went nowhere – even in a Congress controlled by Democrats.

In the first six years of the Bush Administration, when the GOP controlled the Congress, Republicans struggled to pass a wide ranging energy bill, finally getting one in the Summer of 2005, when prices were about $3/gallon on average.

Gas prices went up over $4/gallon last in 2008, fueling voter dissatisfaction that led to big gains for Democrats in that election – but their centerpiece plan on energy – Cap & Trade – went nowhere.

Democrats have tried to move a Windfall Profits Tax and more, but like on many budget issues, the Congress is stalemated on energy policy. Both sides have strong beliefs, and don’t want to yield to what the other side offers as a prescription.

So, the next best option is to blame the other side for being intransigent and play some Oil Price Politics.

Welcome to Oil Price Politics, Version 2011.