APS News

Inside the Beltway: Washington Analysis and Opinion

Pain and politics at the pump.

By Michael S. Lubell, APS Director of Public Affairs

According to gasbuddy.com, the cheapest price for a gallon of regular in the DC area is $2.82 at a Sunoco Station in Woodbridge, Virginia. Inside the District, gasbuddy says it will cost you $3.29 at the Exxon Station on 22nd and P. I find the 47-cent spread pretty remarkable.

But I find it even more amazing that there is a website dedicated to providing such information. Hold on, you say, there’s a website for everything these days. True, but if you google “gas price,” you find ten sites on the first page alone. Although they don’t tell you how many hits they get each day, they must be getting enough to make money from their advertising.

Consumers are clearly feeling the pain as they drive around in their gas-guzzling SUV’s and Hummers, wondering what hit them. And when consumers cry, “Ouch!” politicians don’t think clearly. Invariably they try for a quick fix.

So what have our elected representatives proposed? Republicans floated the idea of putting a $100 check on every driver’s seat. That elicited such hoots of political pandering from consumers that the leadership quickly buried the idea.

Democrats called for investigations of price gouging, a windfall profits tax and suspending the 18.5 cent per gallon highway tax. The public hasn’t bought that line either. Besides, despite holding 202 seats in the 435-member House, Democrats in that chamber have little clout, check that, no clout.

Congress and the White House have dithered over meaningful energy policy for years, and the public, feeling the pinch at the pump and fed up with the Iraq war, is now expressing outrage in opinion polls. On May 9, President Bush, whose approval rating has been in free fall all year, hit a new low of 31% in a USA Today/Gallup poll (18% on his handling of gas prices). But he was well above the 23% that Congress garnered.

If this were the first time soaring oil prices threatened our way of life, I could understand the hand-wringing, the angst and the political paralysis. But it isn’t.

In the days before Lee Raymond was at ExxonMobil’s helm and the company was called Esso, McCann Erickson, a premier Madison Avenue firm, helped the Standard Oil Company of New Jersey launch one of the most productive advertising campaigns in the history of corporate America. The slogan was, “Put a tiger in your tank.”

That was in 1964. It was an era when all you needed was a 389 cubic inch engine and sex appeal to sell a car, when Detroit sat on top of the world, and what was good for General Motors really was good for America. Back then gas was cheap, or at least it seemed so, and every eighteen-year-old filled up on premium, just to impress his girl, even if his car didn’t need it. Gas was also mostly an American product: we imported less than 25% of the oil we used.

Less than a decade later, on October 6, 1973, half a world away from Main Street, Egypt and Syria launched another campaign, a surprise military offensive against Israel on the Jewish high holy day of Yom Kippur. With American assistance, Israel, after initially suffering significant losses, pushed the invading Arab armies back across the borders. The Organization of Petroleum Exporting Countries (OPEC), dominated by Arab nations, struck back by imposing an oil embargo on the United States.

By then, we were importing 35% of our oil, and within hours, the price of a barrel of black gold shot up 70%. Two months later it had doubled again, sending gasoline prices soaring to more than $3 a gallon in 2006 inflation-adjusted dollars.

Responding to consumer pain, Congress enacted the Corporate Average Fuel Economy (CAFE) Standards in 1975, and for the next two decades auto efficiency improved dramatically, and the size of cars shrank. But as gas prices gradually fell to less than a dollar a gallon, the public and politicians lost interest in serious energy reform, even as we became 65% dependent on oil imports. The automakers discovered that they could boost their bottom lines by selling gas guzzling SUV’s and Hummers that carried high profit margins. And consumers were happy to oblige–until now.

Gasbuddy might be able to save you half a buck a gallon, but you’re still going to pay about $75 to fill up your Lincoln Navigator. So what to do? In the short term, consumers are going to have to pay the price for poor public policies, lousy leadership and their own extravagance. And members of Congress may well find themselves paying the price at the real polls in November.

Long term, we must focus on policies that promote efficiency and conservation, spend money on research to make alternate sources of energy economically and environmentally acceptable and come to the realization that the true cost of gas is far higher than the price you pay at the pump. If you include the hundred plus billions of military dollars we have had to spend each year to keep the foreign wells pumping and the sea lanes open, gas hasn’t been cheap for years.

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Editor: Alan Chodos
Associate Editor: Jennifer Ouellette
Staff Writer: Ernie Tretkoff