Monday, March 24, 2008

John Yarmuth shines while Baron Hill panders on the price of gas

Hill won't be able to use his simplistic line this time-- that gas prices rose so much during Sodrel's term, since they've risen much more during his most recent term.

So, now, he's taking a poke at President Bush's decision to purchase oil for the Strategic Petroleum Reserve.

Hill, Yarmuth, and Co. may have the correct policy position. But it's difficult to imagine their empirical claim-- that this could lower the price of gas by a quarter per gallon. I don't know much about this particular market, but I'd be surprised if the impact was that large.

Here's James Carroll in the C-J, reporting on their efforts...

32 lawmakers, including Reps. John Yarmuth of Kentucky's 3rd District and Baron Hill of Indiana's 9th, have sent a letter to President Bush urging him to delay purchasing more oil for the Strategic Petroleum Reserve.

That could increase the amount of oil on the market and perhaps reduce prices.

Such a move, they said, "can have temporary benefits that would go a long way towards helping American families who are being squeezed, and also stimulate the economy."

There's disagreement among economists about how much impact -- if any -- such a move would have.

But the lawmakers cite an investment firm's analysis that gas prices -- now in the $3.25-a-gallon range around Louisville -- could be cut by 25 cents.

Again, it's difficult to imagine that such a small decision (relative to the entire market-- and the entire cost of a gallon of gas) would make that big of a difference!

If Bush doesn't take the step voluntarily -- and the White House says it won't, even though it did briefly halt purchases two years ago -- Yarmuth and fellow Democrats plan to push legislation.

It would require a suspension in oil purchases for the reserve this year, or until the average price of crude oil falls below $50 a barrel, whichever comes first. Oil prices recently have been around the $100-a-barrel level.

Again, maybe it's the right decision-- you know, buy low and sell high-- but that doesn't mean it will have a significant impact on the price of gas.

I wish Congress were this aggressive about ending the War in Iraq-- or dealing with issues that impact us much more (e.g., payroll taxes and Social Security).

OK, here's the numbers:

The Department of Energy is scheduled to take in 12.3 million barrels of oil for the reserve over the next six months -- an amount that's less than two-thirds the daily U.S. consumption.

Less than 2/3rds of one day's consumption: less than .2% of our annual consumption....

In an interview, Yarmuth said he doesn't think postponing oil purchases for the reserve is a long-term solution to rising gasoline prices.

OK, Yarmuth seems to get it.

Hill said the White House doesn't get it.

"It may not be an emergency for Bush, but people are hurting out here," he said. "I think we ought to be offering some relief to the common folks. That to me is an emergency."

Hill doesn't seem to get it-- at least the policy angle. He does seem to have a clearer understanding about the usefulness of this issue for his political ambitions.


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