Gas prices do not seem to be decreasing any time soon, and the increased prices may become a major issue in the presidential campaign depending on how high they go this summer.
Before voters decide their presidential pick in November, we want to caution them about one aspect of this issue: The president has little to no control over gas prices.
A major talking point for Republican presidential contender Newt Gingrich is his promise to lower gas prices to $2.50 per gallon.
While nationwide gas prices currently stand at $3.80 per gallon, that much of a reduction would probably be a big boost to the economy.
But no matter who is sitting in the Oval Office come January, there is little that person will be able to do about the price of gas.
The public, on the other hand, seems to think that the president can and should do more to help ease its burden at the pump. According to a recent Washington Post-ABC News poll, only 26 percent of respondents approve of the way Obama is “handling the situation with gas prices.”
This is not a partisan thing, either. When gas prices were up in 2005 and 2006, only 20 to 26 percent of the public approved of President Bush’s handling of gas prices.
Who really controls the price of gasoline? The answer is simple: no one. There is not a bureaucrat sitting in an office in Washington, DC, determining the price of gasoline, and there never should be.
The price of gas is determined by the supply and demand of oil, the cost of refining and gasoline taxes. Even if all gasoline taxes were eliminated (something that would likely never occur due to the fact that revenue funds highway projects and repairs), it would only affect a quarter of the price.
This is a very simplistic explanation considering that there is a global market for oil, but the main point is that most of the factors affecting the price are out of our hands.
The main thing the government can do to improve the price of oil is get out of the way. Not only should it lessen its intervention in the oil market, but it should also make it easier for alternative energy companies to compete.
The more the government taxes and regulates the energy market and intervenes in the Middle East, a major source of oil, the more it will negatively impact the price of gas.
Meanwhile, there’s not much that Gingrich or any of the presidential contenders can do. They shouldn’t try, either.
By artificially decreasing gas prices through controls, we will experience shortages and a complete shutdown of the movement of goods.
Voters should be wary of all grandiose promises made by politicians. They should especially be wary of presidential candidates who claim they have the ability to change the price at the pump.
