Palin Wrong Again On Cause Of High Gas Prices

››› ››› FAE JENCKS

Fox News contributor Sarah Palin claimed that gasoline prices have doubled since President Obama took office because the administration is "decreasing the amount of energy in our market domestically." In fact, this claim has already been debunked by energy experts, and even those who disagree with Obama's energy policies have said that it's simply not accurate to blame those policies for the current spike in gas prices.

Palin Again Blames Obama For Gas Price Spike

Palin: Gas Prices Have Doubled Because Obama Is "Diminishing And Decreasing" Our Energy Supply. From Palin's appearance on the May 6 edition of Fox Business Network's America's Nightly Scoreboard:

PALIN: But rising gas prices -- there is an inherent link, David, between energy and security, energy and prosperity, and energy and freedom, and this is something that obviously our president doesn't understand because he's doing all that he can to manipulate the U.S. supply of energy. He is diminishing and decreasing the amount of energy in our market domestically and that, of course, resulting in prices that are rising and gas having doubled since he has been in office.

He's absolutely on the wrong track. So, you have the rising cost of energy and you have the job situation, which is proving that his agenda towards some social engineering, some manipulation of the marketplace, is not working. [Fox Business Network, America's Nightly Scoreboard, 5/6/11]

Palin Previously Blamed Rising Gas Prices On Obama's "War On Domestic Oil And Gas Exploration And Production." In a March 15 Facebook post, Palin claimed Obama's "anti-drilling mentality" and "war on domestic oil and gas exploration and production" are to blame for the recent rise in gasoline prices. [Media Matters, 3/16/11]

Experts: It's Not Credible To Blame Obama Policies For High Gasoline Prices

Canes: "It's Not Credible To Blame The Obama Administration's Drilling Policies For Today's High Prices." Michael Canes, a distinguished fellow at the Logistics Management Institute and former chief economist of the American Petroleum Institute, who disagrees with Obama's drilling policies said "It's not credible to blame the Obama Administration's drilling policies for today's high prices because of the relative scales involved." He further stated:

World oil prices are determined in a market of around 85 million barrels per day of production and consumption, while the consequences of domestic drilling, particularly in the Gulf, likely would be more in the range of several hundred thousand to one million barrels per day, and most of that production would not occur for a number of years. [Email to Media Matters, 3/10/11]

Tyner: No Merit To Claim That Obama's Drilling Policies Caused The Spike In Gas Prices. When asked if there is "any merit to the claim that Obama's drilling policies caused the high gas prices we're seeing," Wally Tyner, energy economist at Purdue University, said: "No. It would take years for increased drilling to have an impact. And most of the oil that remains off the US shores is in deep water and high cost." Tyner added:

The biggest factor is the rapid growth in world demand, especially India and China. Over the past decade, about a third of the global growth in world demand has come from China alone. Currently with most of the exports from Libya down, that is causing prices to be higher. However, Saudi Arabia has indicated they will pick up the slack, but that will take a while to work through the system. Saudi oil is sour crude, and Libya produces sweet crude mostly destined for European refineries that cannot generally take sour crude. [Email to Media Matters, 3/14/11]

Crandall: "Gasoline Prices At The Pump Would Be Higher" Even If U.S. Had Increased Drilling. Lou Crandall, chief economist of Wrightson ICAP LLC, an independent research firm that analyzes high-frequency economic data, told Media Matters via email:

Higher oil prices today are a global phenomenon, and the additional supply from increased drilling by the U.S. would not alter the global balance of supply and demand greatly. Gasoline prices at the pump would be higher either way. The only difference is that a somewhat larger share of the revenue would accrue to domestic interests (governmental and private) rather than to foreign suppliers. [Email to Media Matters, 3/14/11]

Gheit: Deepwater Drilling Moratorium "Doesn't Even Move The Needle." Fadel Gheit, energy analyst at Oppenheimer & Co. told that "[o]nly the naïve will think that" the deep-water moratorium "will have a direct impact." He added: "It doesn't even move the needle. Is 100,000 barrels (a day) going to make a difference? It's not. A cent or two per gallon? It might. But there are much bigger factors." [, 3/24/11]

Borenstein: Moratorium Has "A Miniscule Impact On The Price Of Oil." Severin Borenstein, director of the University of California Energy Institute and business professor at the Haas School of Business, said that "the economic value lost from reduced production is real, especially when the price is so high," adding:

BUT these numbers are very small relative to the world oil market and have a miniscule impact on the price of oil. The best estimates are generally that even a very short run output decline of 1% raises world oil prices by about 5%. Even that is probably overstated given the slack capacity that other producers have. So, the changes we're talking about here, probably are raising oil prices no more than 1%-2%, which is 2-5 cents at the pump. [Email to Media Matters, 4/22/11]

Lafakis: "The Loss Of A Small Amount Of Domestic Production Has Had A Minimal Effect On Gasoline Prices." Chris Lafakis, economist at Moody's Analytics, said: "If we take the EIA and Makenzie at their word, the effect of this lost production has been an increase in gasoline prices of anywhere from 3 to 5 cents per gallon." He added:

Given that gasoline prices have jumped by 68 cents per gallon just since late February (which is largely the result of turmoil in Libya), it is safe to say that the loss of a small amount of domestic production has had a minimal effect on gasoline prices compared to other factors such as the loss of oil and natural gas liquid production in the Middle East and North Africa, the depreciation of the U.S. dollar and the expansion of the oil supply uncertainty premium. You can call this last factor the rise in oil prices related to non-fundamental factors (fear of further unrest, speculation, financial demand). [Email to Media Matters, 4/21/11]

Kingston: It's A "Total Stretch" To Blame The Moratorium For Spike In Gasoline Prices. John Kingston, director of news at energy information firm Platts, stressed that all oil produced in the U.S. "goes into the great big world supply" where "nobody could hide" from events around the world that affect the price of gasoline. He said that while the U.S. can and should work to increase the global supply of oil and that the moratorium "will pinch supplies down the road," it's a "total stretch" to say that the deep-water moratorium has had a significant impact on today's gasoline prices. [Phone conversation with Media Matters, 4/22/11]

Duckert: "Americans Tend To Exaggerate The Price Effects Of Fluctuations In Domestic Production." According to Joseph Dukert, independent energy analyst and former president of the U.S. Association for Energy Economics:

The dip in offshore production brought about by the partial moratorium will more likely be felt 8 to 10 years down the road because of the interruption to exploratory efforts as a result of uncertainty. Overall, though, Americans tend to exaggerate the price effects of fluctuations in domestic production in relation to the total amount of oil in global trade. On the larger stage, the perception of geopolitical risks is more important. [Email to Media Matters, 4/21/11]

Even Fox's Self-Described "Clearly Partisan" Analyst Has Rejected Palin's Claim

Varney: "We Would Still Have $4 Gas No Matter What We Do In the Gulf." Responding to Palin's March 15 Facebook post blaming Obama for the spike in gas prices, Fox News' financial analyst Stuart Varney said:

VARNEY: Governor Palin is saying two things. Number one, she blames the president for the gas price spike and secondly, she says the president wants this gas price spike. OK, let's deal with number one first of all. Would we still have $4 gas if we were drilling in the Gulf? The answer is yes we would still have $4 gas no matter what we do in the Gulf because higher gas prices are the result of an expanding global economy and turmoil in the Middle East. Where Governor Palin is right on that count is President Obama has done nothing about the rise in gas prices and the absence of drilling in the Gulf has actually made things worse. [Fox News, Fox & Friends, 3/16/11]

Varney Has Described Himself As "Very Clearly Partisan" And Frequently Derides Obama While Promoting Republican Candidates. As Media Matters has documented, Varney has frequently advocated for Republican electoral victories, has repeatedly described Obama's policies as "socialist," and has described himself as "very clearly partisan." [Media Matters, 9/7/10]

Posted In
Environment & Science, Drilling
Fox Business
David Asman, Sarah Palin
America's Nightly Scoreboard
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