Bush's Gas Pain

By Dan Froomkin
Special to washingtonpost.com
Wednesday, April 30, 2008

It wasn't just his wistful words about magic wands that made President Bush's talk about lowering gas prices at his press conference yesterday feel particularly unrealistic. His most practical suggestion was to go back in time to 2002 and get Congress to allow oil drilling in the Alaskan wilderness -- although even had that happened, those oil fields likely wouldn't yet be producing a drop.

Bush's repeated mention of magic wands -- i.e., "if there was a magic wand to wave, I'd be waving it, of course" -- was a reprise of his comments two years ago, the last time gas prices were a major domestic issue.

And then, as now, Bush was neither talking -- nor being asked about -- two hugely significant factors that he could actually do something about: the war in Irq and the value of the dollar.

Indeed, here's what I wrote almost exactly two years ago, in a column entitled "The Magic Wands Bush Won't Wave":

Is there really nothing Bush could do about gas prices in the short term?

The dynamics of gas prices are enormously complex, and the conventional wisdom has indeed been that the recent run-up in prices is just the market at work, responding to long-term supply and demand factors. If you buy into that explanation, then it's hard to see how the government could do much about it in the short term.

But some alternate views are now emerging. They suggest that maybe there are some things Bush could do -- that, in short, Bush has some magic wands around, he's just choosing not to wave them.

Here, according to what I've been reading lately, are some of the things Bush could conceivably do to conjure up lower prices:

• Develop an exit strategy for Iraq. Fear of continued instability in the Middle East is widely seen as contributing to a 'risk premium' that's driving up crude oil prices.
• Tamp down speculation on the oil-trading exchanges, either by re-regulating the markets, raising interest rates, or both. There is some evidence that avaricious speculators have driven the price way above the levels justified simply by supply and demand conditions.
• Do something about the weak dollar. The dollar's dramatic drop against major currencies directly translates to higher gas prices for Americans. (But strengthening the dollar might require serious deficit reduction.)
• Tap the Strategic Petroleum Reserve.
• 'Jawbone' producers into increasing production.
• Aggressively investigate the possibility of price gouging by the oil industry."

(Continued here.)