Conservative Magazine calls out Gingrich’s “Despicable Gasoline Promise”

March 15, 2012

Reason magazine, (“Free Minds and Free Markets”) has published a piece severely critical of Newt Gingrich, and by extension, the FoxNews axis-of-error, on the gas price charade.

Newt Gingrich’s Dispicable Gasoline Price Promise 

Former House Speaker and current Republican presidential hopeful Newt Gingrich has promised voters that gasoline will be $2.50 per gallon after he becomes president. In fact, Gingrich thinks he may even be able to get the price down to $1.20 per gallon. “His promise to go the moon is easier to achieve,” says Michael Lynch, president of the oil consultancy Strategic Energy and Economic Research. “We may see $2.50 per gallon gas again, but not because of anything that any president does.” Gingrich’s pitch is attractive to consumers who are confronting pump prices that average $3.83 per gallon and which are expected to go even higher later this year. Why doesn’t Gingrich promise free daily ice cream and cake for everybody while he’s at it?

While it is true that the Obama administration has ruled out drilling on vast areas of the federal estate, the number of oil and gas rigs operating in the U.S. has nonetheless increased markedly in recent years. Indeed, it is not surprising that as the price of petroleum soared so too did the number of drilling rigs. The oil and gas rig count has increased to more than 1,900, up from around 700 [PDF] in 2000. As an historical note, the total number of U.S. oil and gas rigs peaked at more the 4,500 [PDF] in 1981.

While Gingrich is right that domestic demand for oil is down, global demand is up. In addition, global crude prices start rising when global spare production capacity begins to drop below the threshold of 3 million barrels per day. Spare capacity prevents and cushions price shocks. During the 2008 price run-up to $147 per barrel, global spare oil production capacity fell to as low as 1 million barrels per day.

If Gingrich wants to lower oil prices, perhaps he should stop his saber-rattling against Iran. “If there’s an effective diplomatic outreach here that pushes back the prospect of a military confrontation with Tehran, we probably have something on order of $20-$30 a barrel geopolitical risk premium that could drop out of the oil price very dramatically,” wrote Tim Evans, energy analyst at Citi Futures Perspective in New York in the Financial Times. Oil consultant Lynch agreed. “The recent run up the price of oil is almost completely the result of concerns about losing Iranian oil or Iran attacking shipments in the Strait of Hormuz,” he says.

The coordinated boycott of Iranian oil being spearheaded by the United States is increasing uncertainty in the global oil market. An attack on Iran to stop its nuclear program would clearly disrupt oil supplies. There is not enough current spare global production capacity to make up for the loss of Iran’s 3.5 million daily barrels of oil. Lynch believes that as the Iranian situation drags on, crisis fatigue will set in among oil traders. He also points out that global production capacity is increasing. Thus Lynch predicts that the price of crude will likely drop back to $90 per barrel and the price of gasoline to around $3.25 per gallon by the end of the summer.

Lying to voters about his power to command the law of supply and demand is as close to despicable as anything I can imagine. Well, actually not. But it’s still pretty despicable.

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9 Responses to “Conservative Magazine calls out Gingrich’s “Despicable Gasoline Promise””

  1. daveburton Says:

    I have my quarrels with Newt (whom the WSJ called “Professor Cornpone“), but I also remember when Reagan (an economist by education) was running for President, and he told us that if the government would just get out of the way, we could have cheap, abundant gasoline once again. Just about everybody scoffed, including me. But history vindicated him. We were wrong, and Reagan was right.

    Newt is an historian, and he presumably knows that bit of history well. It is not at all unreasonable to think that we could have $2.50/gal gasoline again, if the federal government would reverse the policies that restrict supply.

    • dana1981 Says:

      That Reagan ‘got government out of the way’ and oil prices fell does not prove a causal relationship. The price of oil is dictated by international markets, not by anything the USA does.

  2. greenman3610 Says:

    that newt is calling for more war in the middle east kind of makes lower oil prices a fantasy – but as long as fighting biblical demons in the middle east remains a key motivation for the republican base, and a driver for GOP foreign policy — that’s how its going to be..

    http://www.secularhumanism.org/index.php?section=library&page=haught_29_5

    in any case, what’s driving out transition away from oil is not the absolute price at any given moment, but the volatility year to year, which any sane business would like to get away from.

    • dana1981 Says:

      Republicans are great at complaining about problems, but their proposed solutions to those problems always seem to make things worse.

      They say unemployment is a big concern…so they propose cutting government spending and thus job creation?

      They say the federal debt is our biggest problem…so they propose extending tax cuts on the wealthy such that their economic plans will increase the debt more than President Obama’s?

      They say gas prices are too high…so they threaten to go to war with Iran, which will cause gas prices to go up?

      Then they claim President Obama’s energy policy is what’s driving gas prices up, when in reality he’s dramatically increased domestic oil drilling.

      Basically they’re a bunch of fear mongerers and liars who will make things much worse if they fool the American public into electing them.

      • daveburton Says:

        Obama hasn’t increased domestic oil drilling. You need to learn to distinguish Democrat propaganda from fact. Domestic oil drilling has increased in spite of Obama. His idea of energy policy is to twist the 1950 Defense Production Act into a pretzel, with his National Defense Resources Preparedness executive order, to illegally promote “biofuels.”

        If you like turning vast swaths of the planet into monoculture fuel plantations, and burning half of our corn as fuel ethanol, and thereby driving up world food prices so that the poorest of the poor are pushed over the edge from extreme poverty to starvation, then Obama’s your guy. As the Climategate whistleblower reminded us, “poverty is a death sentence.”


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  4. The man asked his wife for a divorce when she was in the hospital being treated for cancer. No one should be surprised that Newt says things that are despicable.

    • daveburton Says:

      Jeff, as usual the leftists are lying. That particular ugly smear against Newt Gingrich has been circulated by liberals for over a quarter century, and debunked many times:

      http://okhenderson.com/2011/12/10/gingrichs-daughter-here-to-debunk-urban-myth-of-her-parents-divorce/

      You should be furious that he leftists deceived you. Somehow I doubt you will, though.

      • greenman3610 Says:

        so, Gingerich is just this really great Christian moral reformer who’s been married three times, including
        the long time affair he had with his current wife, who was servicing him while he was still married to his second wife, who wouldn’t allow him to have an “open marriage”.
        Conservative values – check.
        I will give him points for not being an oxycontin addict, so far as we know.


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