No Surprises Here...And They Call Kerry A Waffler.....

SELF-SERVING GASOLINE COMPLAINTS:

John Kerry's energy plan calls for reducing U.S. oil imports by two million barrels per day, roughly the amount the country brings in from the Persian Gulf. So how come Kerry is simultaneously blasting George W. Bush for not pressuring OPEC to sell us more oil? Welcome to one of the stupidest aspects of contemporary presidential campaigning: petroleum nonsense.

First a quick reminder that, as yours truly pointed out a month ago, gas prices are not at any "record" level in the meaningful--inflation-adjusted--sense. In real dollars, gasoline currently costs no more than it did in the 1950s; in real dollars, gasoline currently costs about a third less than it did at the real-dollar peak, early in the Reagan administration. Factor in that buying power per capita has more than doubled since the 1950s, and most Americans now spend a significantly smaller share of their incomes at the pump than their parents spent during the 1950s. But this has not stopped either party, nor any major news organization, from declaring that gas prices just hit "record" levels.

Now to Kerry. The Democratic contender has the high ground on gasoline. Unlike George W. Bush, who has run trembling from higher MPG standards, Kerry in 2002 cosponsored with John McCain a bill that would have required new U.S. cars, SUVs, and pickup trucks to average 36 miles per gallon by the year 2015; a goal declared reasonable by the National Research Council in a study requested by the Bush White House. Kerry's mileage proposal was practical and good national policy--both good energy policy, and good security policy. Equally important, Kerry's proposal was courageous. Higher MPG standards are not only opposed by automakers but by many Democratic donors and many within the United Auto Workers, a key Democratic constituency. Kerry showed fortitude by proposing stricter MPG rules regardless of the political risk. (This is separate from the complication that the Kerry bill would have increased MPG using the existing "corporate average fuel economy" regulatory mechanism that is disliked by economists; ideally, new MPG strictures would take a different form.) In fact, Kerry's 2002 mileage-improvement proposal was his most significant legislative undertaking in the years immediately prior to his presidential bid.

But having staked out positions saying MPG needs to rise and Middle East oil imports need to decline--let's call this the "carpool lane position"--last week Kerry jumped backward to the gas-aholic viewpoint, complaining that the White House should shake down OPEC and acting like everyone should be deeply upset by a relatively small increase in the price of the petrol Americans are pumping by the gigagallon into their SUVs. Part of the Kerry's backward jump to the gas-aholic viewpoint is to divert attention from Bush accusing him of once having favored an increase in the federal gasoline tax. Part is simply that the candidate of the party out of power always says whatever is critical of the party in power: George W. Bush did the same when campaigning against Al Gore. Mainly Kerry's gas-aholic reversal reflects that fact that theatrical hysteria about pump prices has become a staple of presidential campaigning. Remember that in 1996 Bill Clinton, a secure incumbent, fretted and backtracked when challenger Bob Dole started acting like everyone should be deeply upset over a 4.3-cent increase in the federal gasoline tax. (State taxes on gasoline are much higher than federal taxes.)

Kerry showed courage by supporting higher MPG standards; pure political valor would be to tell Americans they're spoiled regarding gasoline prices. Gas prices do impact the poor regressively, but most gasoline buyers aren't poor. There is something deeply spoiled and selfish about an affluent American pausing at the door of his luxury SUV to announce outrage over paying $2 a gallon for fuel he will proceed to waste by nailing the accelerator to cut others off in traffic. This is particularly true if he just ran into the gas-station minimart to buy a Dasani for the SUV cupholder, since status-brand bottled water retails for about $8 a gallon, and no one has to drill it, refine it, or fight over it. Americans pay less than half what Europeans do today for gasoline, in addition to paying less in inflation- and buying-power adjusted terms than Americans of the 1950s paid. All the political complaints--and the news shows and talk shows hyping "record" prices without perspective--are the product of a spoiled culture.

As to the Bush White House position, the president should bear in mind that there are two ways to cause the price of anything to fall: increase supply or reduce demand. Even if Bush won congressional authorization for exploratory drilling in the Arctic National Wildlife Refuge, it would be at least a decade before ANWR increased domestic supply, if it ever did. Probably ANWR production would only replace supply that will be lost from domestic fields that are depleting. On the other hand, if Bush backed higher mileage standards now, they could take effect in the 2008 model year, the vehicles that go to showrooms in 2007. Higher mileage would moderate gasoline demand, exerting downward pressure on prices.

So Bush can't do much to increase gasoline supply--other than badger OPEC and hope--but he can take action on gasoline demand. Moderating demand for gasoline will help moderate its price. It would be nice if anyone, Democrat or Republican, would point this out to voters.