Bachmann: I'll bring back $2 gas

[dudley]

I hope she is not elected.

NEW YORK (CNNMoney) -- President Michele Bachmann has a promise: $2 gas.

"Under President Bachmann you will see gasoline come down below $2 a gallon again," Bachmann told a crowd Tuesday in South Carolina. "That will happen."

Sure, politicians promise all kinds of things on the campaign trail. But Bachmann, a leading contender for the 2012 Republican nomination, is wading into truly tricky territory.

The price Americans pay at the pump is tied to the crude oil market -- a global system largely beyond the reach of Washington.

It's certainly true that prices -- now about $3.50 a gallon on average -- have risen since President Obama took office.

"The day that the president became president gasoline was $1.79 a gallon," Bachmann said. "Look what it is today."

Of course, that's not the full story.

When Obama took office, the country was mired in a terrible economic contraction.

"That was in the 4th inning of the greatest recession of our lifetime," said Tom Kloza, chief oil analyst at the Oil Price Information Service.

During recessions, demand for gasoline plummets as trucks pull off the road, companies cut back on travel and laid off workers drive fewer miles.

Obama's desperate SPR oil play

"You have to be careful what you wish for because the recipe for cheap prices these days is economic disaster," Kloza said.

Since early 2009, the economy has recovered somewhat and demand for crude has risen. It has even spiked in the developing world -- especially in China, India and South America.

Kloza said that increased crude demand is the principal driver behind higher gas prices.

"We're going to have to recognize the rest of the world has this increasing appetite for oil," he said. "If we go below $2 a gallon, it probably means there has been a lot of wealth loss and we are in a deflationary period."

There are some measures that could be taken to lower gas prices, according to Phil Flynn, a senior market analyst at PFG Best.

Saudi prince: Oil should be between $70-$80

A stronger dollar would take pressure off prices, and reducing the number of miles Americans drive in gasoline-powered cars would also weaken demand.

"I never say never," Flynn said. "But whether or not Bachmann can do that in four years is a tall order."

Bachmann did not lay out a specific plan to drop prices on Tuesday. But her campaign website says that as president, she would ease restrictions on drilling and roll back federal regulations on the shale gas industry.

While increased oil and gas drilling in the United States may create good-paying jobs, reduce reliance on foreign oil and lower the trade deficit, it would have little impact on gas and oil prices.
Drill baby drill won't lower gas prices

That's because the amount of extra oil that could be produced from more drilling in this country is tiny compared to what the country -- and the world -- consumes.

Plus, any extra oil the United States did produce would likely be quickly offset by a cut in OPEC production.

According to a 2009 study from the government's Energy Information Administration, opening up to drilling areas off the East Coast, West Coast and the west coast of Florida would yield an extra 500,000 barrels a day by 2030.

The world currently consumes 89 million barrels a day, and by then would likely be using over 100 million barrels.

After OPEC got done adjusting its production to reflect the increased American output, gas prices might drop a whopping three cents a gallon, the study said.

http://money.cnn.com/2011/08/18/news/ec ... tm?iid=EAL

[featherstick]

The American empire has gone from optimistic adolescence to full-blown, incoherent-screaming, running-around-naked, smeared-in-its-own-shit senility in 75 years. Of course she'll get elected.

[DominicJ]

Deep breath.

The US government can do little about the oil price.
But it has vast swathes of control over the dollar price.
Not unlimited mind, but significant.
Commodities arent up.
The dollar, and every other currency, has, since the early 00's, been ruinously debased.

Increases in interst rates and cuts to government spending would rebound the dollar.
Probably wouldnt be pleasent, but its possible, if not realistic.

While increased oil and gas drilling in the United States may create good-paying jobs, reduce reliance on foreign oil and lower the trade deficit, it would have little impact on gas and oil prices.
Drill baby drill won't lower gas prices
That's because the amount of extra oil that could be produced from more drilling in this country is tiny compared to what the country -- and the world -- consumes.
Plus, any extra oil the United States did produce would likely be quickly offset by a cut in OPEC production.

Well thats just balls.
Lowering the trade deficit would increase the value of the dollar, or at least slow its fall.
US gas and oil reserves are epic in scale, even compared to world production, so they could easily make a difference, theres little to no long term storage of either.
OPEC is bankrupt, all of its members are haemoraghing cash like theres no tomorrow and they simply cant afford to cut.

Most have planned their budgets on $90 a barrel oil, but they have planned their budgets on $90 a barrel, at quota (or whatever they can actualy produce, for those who cant meet quota).
If you budgeted at 1mn bpd at $85, 500k bpd at $100 really doesnt cut it.

Exactly the same thing happend inthe 80s and 90s, everyone wanted a higher oil price, but they wanted everyone else to cut production whilst they themselves ramped it up.
As prices fell, each country increased production to try and balance the books.

Does anyone seriously believe Venezuala is going to half oil production?
A third of the population lives below the poverty line already and the country imports 60% of its food!

The only nation with any room to move is Saudi Arabia, but they are likely to see increased production as a fun way to push ImADinnerJacket back into his little box.


Trust me, The Fed hiking interest rates to 20% and US government spending falling to 10% of GDP are far more likely.

[kenneal - lagger]

She's just saying that if she gets in there will be another major recession.

[vtsnowedin]

Get a grip people. This is a congress woman that thinks the battle of Lexington and Concord was fought in Concord New Hampshire!
The New Hampshire debates and primary will eat her up and spit her out like chopped liver. She has won a straw poll in the state of her birth. that will be the zenith of her campaign.
Why the media is wasting any more time on her is a mystery to me but I suspect that they can not see a clear winner and pumping her up is good for ratings.

[biffvernon]

Useful observation, vt, it's a big pond we're the other side of.

Perhaps you might take the trouble to read Barbara Ehrenreich's article, http://www.guardian.co.uk/commentisfree ... iminalised , that someone here mentioned a few days ago. What's wrong with her analysis, or is the USA really bonkers?

[vtsnowedin]

Useful observation, vt, it's a big pond we're the other side of.

Perhaps you might take the trouble to read Barbara Ehrenreich's article, http://www.guardian.co.uk/commentisfree ... iminalised , that someone here mentioned a few days ago. What's wrong with her analysis, or is the USA really bonkers?

An interesting read. Very liberal point of view which she admits to. She dismisses colored people wearing the wrong color shirt as if there were not any gangs that wear gang colors every day. The same attitude to drug abuse etc.
Her example of the veteran in a wheel chair is puzzling. If he was actually wounded in Vietnam he would be getting medical care from the veterans administration and probably a disability pension and as he would most probably have been twenty years old in '68 he is 63 years old now and eligible for social security and is just two years from medicare.
I agree with her point that it should not be a crime to be poor but it is not a crime to let your inspection sticker or insurance on your car run out. It is a crime to drive it on the road before you get those things back.
Lets face it . A lot of people are poor because they are not the smartest person on the block and they make poor choices that cost them jobs and money on a regular basis. Adding more money to their situation will not improve their well being just increase the size and costs of their mistakes.

[biffvernon]

A lot of people are poor because they are not the smartest person on the block

Yes, I suppose about have the people are stupider than the average person (and look how stupid he is!). A test of the fitness of a society must be how it cares for the the dumbest on the block.

[kenneal - lagger]

The main problem with today's world is that we have made subsistence farming more or less impossible. I suppose the last of that in this country was crofting in Scotland although that is now making a come back in places. If a person can grow their own food they can live and, in times past, if they could produce even a small surplus they had a bit of money to spare. Because food is now underpriced because of the subsidy it gets from too cheap oil it is difficult to make a living from any sort of food production.

It is interesting to note that in Cuba, with expensive oil, the people earning the most money are often the people who are growing the food. Expensive oil brings life more into the correct perspective.

[biffvernon]

http://www.guardian.co.uk/environment/a ... -slideshow

He kinda manages. If every agricultural acre looked like that there would be far too much food in the world.

[vtsnowedin]

http://www.guardian.co.uk/environment/a ... -slideshow

He kinda manages. If every agricultural acre looked like that there would be far too much food in the world.

I'd be interested in a hard look at all the inputs to his acre and a half. Free labor from students, Fertile topsoil added to beds etc. You can't expect scalability until all of that has been accounted for.

[UndercoverElephant]

http://www.guardian.co.uk/environment/a ... -slideshow

He kinda manages. If every agricultural acre looked like that there would be far too much food in the world.

Inspirational.

Every agricultural acre can't look like that because they aren't all in Wales. But there's plenty of acres of the UK that could look like that, in principle. The question is how we get from the situation where it is almost impossible for anybody to actually do this to the situation where it is actually happening all over the place?

There's nothing mystical about what he's doing. Anyone can learn how to do it. The problem is partly about education, but that's not what stops me doing it, for example. You have to be in a position to own the right sort of land/property and have enough money to get you to the point where you can make a profit, and most people who would want to do this don't have those things.

Also, is everybody was doing it then would it actually be so easy to make a load of money in the local market selling your organic produce? At the moment he doesn't have any serious competition.

[Bill Hicks]

The American empire has gone from optimistic adolescence to full-blown, incoherent-screaming, running-around-naked, smeared-in-its-own-shit senility in 75 years. Of course she'll get elected.

As an American, I'm not yet convinced on the last point...but the rest is pretty accurate.

[Blue Peter]

A lot of people are poor because they are not the smartest person on the block and they make poor choices that cost them jobs and money on a regular basis. Adding more money to their situation will not improve their well being just increase the size and costs of their mistakes.

Is America the "land of opportunity"? Not so much.

A new report from the Organization for Economic Co-Operation and Development (OECD) finds that social mobility between generations is dramatically lower in the U.S. than in many other developed countries.

So if you want your children to climb the socioeconomic ladder higher than you did, move to Canada.

The report finds the U.S. ranking well below Denmark, Australia, Norway, Finland, Canada, Sweden, Germany and Spain in terms of how freely citizens move up or down the social ladder. Only in Italy and Great Britain is the intensity of the relationship between individual and parental earnings even greater.

For instance, according to the OECD, 47 percent of the economic advantage that high-earning fathers in the United States have over low-earning fathers is transmitted to their sons, compare to, say, 17 percent in Australia and 19 percent in Canada.

HuffPo

Though the US are (very slightly) better than the UK (who look to be the worst - Yah, go UK),


Peter.

[vtsnowedin]

A lot of people are poor because they are not the smartest person on the block and they make poor choices that cost them jobs and money on a regular basis. Adding more money to their situation will not improve their well being just increase the size and costs of their mistakes.

Is America the "land of opportunity"? Not so much.

A new report from the Organization for Economic Co-Operation and Development (OECD) finds that social mobility between generations is dramatically lower in the U.S. than in many other developed countries.

So if you want your children to climb the socioeconomic ladder higher than you did, move to Canada.

The report finds the U.S. ranking well below Denmark, Australia, Norway, Finland, Canada, Sweden, Germany and Spain in terms of how freely citizens move up or down the social ladder. Only in Italy and Great Britain is the intensity of the relationship between individual and parental earnings even greater.

For instance, according to the OECD, 47 percent of the economic advantage that high-earning fathers in the United States have over low-earning fathers is transmitted to their sons, compare to, say, 17 percent in Australia and 19 percent in Canada.

HuffPo

Though the US are (very slightly) better than the UK (who look to be the worst - Yah, go UK),


Peter.

And yet thousands cross the border illegally to take their chances here rather then where they are? And then you have the Asians with the tiger moms that keep graduating magna cum laude from our top universities based on both talent and extreme effort.
Cut out the effects and costs of drugs ,alcohol and tobacco and much of the American poverty problem is reduced to a fraction of those on the dole today. You can't do that of course as drug testing mom and dad and throwing them off the dole will penalize their innocent children.