We find it hard to believe that Barbara Boxer was an economics major in college when we get emails from her like this:

… I am also a cosponsor of legislation, introduced by Senator Debbie Stabenow (D-MI), that aims to lower the price of gasoline.

Senator Stabenow’s legislation, S.847, would encourage the President to directly challenge the Organization of Petroleum Exporting Countries (OPEC) to increase oil production and direct the Federal Trade Commission and Attorney General to exercise vigorous oversight when price gouging or other unfair practices are suspected.

S.847 would also allow the Strategic Petroleum Reserve to be used to help ease gasoline price spikes by suspending deliveries and providing for the release of 1 million barrels of oil per day for 30 days. By increasing availability when prices are high, this legislation seeks to lower the price of gasoline.

You can count on me to continue my efforts to bring down the price of gasoline and prevent further price spikes.

Actually, all we can count on Senator Boxer to do is make useless grandstanding gestures … of which this is another.

The IMF says these are the reasons for increasing oil prices:

Synchronized global growth, high oil demand (especially from China), and a series of supply disruptions eroded spare capacity of producers and pushed the annual real average price of oil close to $40 a barrel in 2004. Average oil prices increased further to about $50 a barrel in March 2005. …

… consumption in the emerging market and developing countries has been increasing at a faster pace, as these economies grow rapidly and their use of energy including oil in the transport, industry, and residential sector expands. China and India contributed 35 percent to incremental oil consumption between 1990 and 2003, even though the two countries produced only 15 percent of world output over the period.

(the IMF then projects prices will settle at about $34 / barrel by 2010 — somewhat higher than the mid-twenties range from the last 20 years)

Does the Stabenow / Boxer ‘plan’ alter demand? Not unless it has a section where the U.S. “directly challenges” India and China to put their populations back on bicycles, and to stop making so much darn stuff in their factories.

Does Boxer’s “plan” meaningfully increase supply? No; a million barrels a day from the Strategic Petroleum Reserve is under 5% of the U.S. daily consumption of 20+ million barrels per day. A month of this would have a minor impact on prices at the pump … for about a month. But it sure sounds like a lot, which no doubt is why Stabenow and Boxer have latched onto it.

Will “directly challenging” OPEC increase supply? OPEC says its production is already at a 25-year high — it knows high oil prices threaten its customer’s economies, and an economic downturn would hurt oil producers.

So econ major Boxer does nothing to reduce demand or increase supply. I’ve got a guess as to how effective that will be. Did she get the same grades as John Kerry?

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The bill is barely longer than the email excerpt above; you can find it here.

Technorati Tags: Barbara Boxer, economics, economy, energy, oil prices

This entry was posted on Tuesday, August 16th, 2005 at 2:17 pm by A Senior Administration Official and is filed under Barbara Boxer. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.