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Hillary Clinton throws economists off the bus
Andrew Leonard, Salon
… Anyone who pays attention to the intersection of politics and economics knows that economists hardly have a stranglehold on any such a thing as absolute truth. They may be united as never before on the subject of the stupidity of the gas tax holiday, but they are certainly not infallible. But her associated slam, “We’ve got to get out of this mind-set where somehow elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans,” reveals another group that Clinton is deciding not to join hands with: peak oilers.
Hillary Clinton told Stephanopoulos that her support for a gas tax holiday is based on her conviction that the price of oil is a result of oil market manipulation.
Now, why am I proposing this? Well, No. 1, I am absolutely convinced that these record profits of the oil companies are a result of a number of factors beyond supply and demand. I think there has been market manipulation. In fact, Exxon Mobil official testifying under oath before the House of Representatives committee said that if it were just market factors, then the price of oil would be like $50 or $55 a barrel.
We know that there’s market manipulation going on. So I would launch an investigation if I were president right now by the Department of Justice and the Federal Trade Commission.
The question is: Who is doing the manipulation? What the man from Exxon-Mobil was likely referring to is the impact of speculation by hedge funds and other institutional traders upon the price of oil.
… Which is not to say a windfall profits tax is necessarily a bad idea: The oil companies are obviously benefiting phenomenally from current high prices; why shouldn’t they share some of the pain everybody else is going through? But in normal circumstances, when the price of oil rises, the likes of Exxon and Chevron and BP do their best to boost production. But the most telling aspect of the current oil market is that they have been unable to do so.
(6 May 2008)
Obama is wrong about the gas tax
George Frost, Salon
Think Clinton’s plan to suspend the gas tax temporarily is a bad idea? A similar measure in Illinois — which Obama backed — seems to have helped consumers.
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… American drivers are hurting, especially those who must drive a lot — commuters, truckers, carpool moms. Millions of lower-income rural and exurban Americans must drive long distances to their jobs, meaning high gas prices take a disproportionately large chunk out of their incomes. Some are having to choose between gasoline and food. A savings of $30 or $50 is a significant amount of cash for at least some Americans.
Despite the “gimmick” slam on Clinton, could it be that Clinton is sincerely trying to help, albeit in a very modest, and politically self-serving way? The evidence suggests that Clinton’s plan might work. It also raises the question of why Obama hasn’t made a similar proposal. He was certainly proud to back a gas-tax moratorium eight years ago.
… the only scientific study done on the pass-through of the tax holiday savings to Illinois consumers (and those in Indiana, as well, whose citizens enjoyed a similar holiday) found that it actually worked to a large extent.
The study is titled “$2.00 Gas! Studying the Effects of a Gas Tax Moratorium,” by Joseph J. Doyle Jr. and Krislert Samphantharak. Download the PDF here. The authors concluded that “the suspension of the 5% sales tax led to decreases in retail prices of 3% compared to neighboring states. And when the tax was reinstated, retail prices rose by roughly 4%.”
This suggests that the tax holiday delivered at least 60 percent of the tax savings to motorists.
… What about the charge that Clinton’s summer tax holiday will spur consumption, leading to sharply higher long-term demand, thus crippling our efforts to conserve? Well, the economic literature suggests otherwise.
Basically, it is absurd to say that a summer-long price drop of this tiny magnitude will have any long-term effect at all.
George Frost is an attorney who lives in Berkeley, Calif. At his former law firm he represented Alaska, Louisiana and other states in major tax and royalty litigation against oil companies, and represented the state of Hawaii in an antitrust case against Chevron and other firms accused of gasoline price fixing. He currently serves as general counsel at CivicActions LLC, and is counsel to several other tech and green energy companies in various stages of development.
(6 May 2008)
High oil prices for Obama and Clinton
Derrick Z. Jackson, Boston Globe
… Historically, political contributions from oil companies are owned by the Republicans. All top 20 recipients of cumulative contributions from Exxon Mobil since 1990 are Republicans with President Bush at the top, according to the nonpartisan Center for Responsive Politics. But with a Democrat having a real shot at the White House, Obama and Clinton reside in their own wonderland, railing against the oil companies while taking money from industry employees.
In the 2008 election cycle the second-biggest recipient of contributions from Exxon after the $39,730 for Senator John Cornyn, Republican of Texas, is Obama at $23,550. Clinton is in fourth place at $15,700. Both are ahead of the $8,450 for John McCain, the virtual nominee of the Republican Party.
… Now, what Obama’s and Clinton’s handlers will be quick to say is that these few thousands of dollars are a pittance in the millions being raised by their campaigns, well below the threshold of influencing their political stances. Obama may say that his cash from Big Oil must be put in perspective with the fact that he is also the top recipient in the 2008 cycle of contributions from the alternative energy industry, $45,650.
(6 May 2008)
Is this the strongest case that can be made for political influence on Clinton and Obama by oil companies? The numbers seem underwhelming for a national political race. -BA
