In July, Republican presidential candidate Michele Bachmann failed economics 101 by claiming at a campaign rally in South Carolina: “A dollar in 2011 should be the same as a dollar in 1911. A dollar should be worth a dollar.”
Bachmann is still skipping classes. At another rally in South Carolina, the Minnesota Congresswoman appeared oblivious to the laws of global supply and demand by claiming she will get gasoline below $2 a gallon, presumably by opening up the U.S. to more oil drilling.
“The day that the president became president gasoline was $1.79 a gallon. Look at what it is today. Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen.”Watch it:
I’ve heard this one before — during my fifth grade student council election: “If I’m elected, I promise to get the lunch lady to serve more french fries with every meal in the cafeteria.”
Her “Drill, Baby, Drill,” strategy can’t lower prices more than a few pennies in 2030, as discussed below. But, there is another way, as Tom Kloza, chief oil analyst at the Oil Price Information Service, explained to the Chicago Tribune:
“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.“A lot of wealth loss and deflation – that pretty much sums up what a Bachmann presidency would mean. Here’s why.
The average price of gasoline is $3.60 cents today. Of course, getting gasoline below $2 is theoretically not impossible. But as Bachmann pointed out, the last time we saw those prices was in 2008, during one of the most severe global economic crises in history. Actually, at that time, Bachmann actually tried to take credit for lowering gas prices, explaining that the “drill baby drill” approach was the reason. She failed to note that the deep recession had caused an historic drop in gasoline demand:
Bachmann loves to quote that $1.83 figure. She used it in March when she falsely claimed that the Obama Administration had only issued one permit for new oil drilling. In fact, the Obama Administration has issued dozens of new permits for shallow and deep-water drilling. PolitiFact rightly gave her a “Pants on Fire” lie rating for that claim.
As the below figures from the Energy Information Administration show, domestic oil production has increased substantially since Obama took office. But since the global economy picked back up and developing countries like China and Brazil are demanding more and more oil, global prices have been on the rise. Again, those pesky laws of supply and demand.
Unless Bachmann would like to bring us back into a recession, the idea that we can drop gasoline prices below $2 a gallon simply through more drilling just doesn’t hold weight. The EIA issued an analysis in 2009 that compared opening the entire Outer Continental Shelf to drilling with a more restricted approach. It found that by 2030, gasoline would only be 3 cents cheaper under an open-drilling scenario.
Peter Fox-Penner, an energy economist with the Brattle Group, explains to Climate Progress that the exact opposite policies would have more of an impact on prices:
Bachmann’s claim is highly unrealistic. To reduce demand, the most important policy is stronger car and truck fuel efficiency standards — precisely what the Obama Administration has been doing. Her options for increasing gasoline or gas substitute supplies either require her to convince OPEC and other others to do what they’ve never been willing to do, or to adopt government policies that expand gasoline substitutes — again Obama policies. The one thing all oil experts would agree on is that no President could reduce prices to these levels simply by attempting to increase U.S. oil production.Never mind what the experts agree on. This is the Bachmann School of Economics — where a dollar in 2011 should be worth the same as in 1911, and the laws of global supply and demand don’t apply.