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Policy / ENERGY

Oil Prices Set Stage for Energy Conference

Customers wait in line to purchase gasoline at a station Tuesday, Feb. 21, 2012, in Oakland, Calif. U.S. retail gasoline prices rose less than a penny Monday to a national average of $3.57 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 19 cents higher than it was a month ago and 40 cents more than a year ago. (AP Photo/Ben Margot)  (AP Photo/Ben Margot)

photo of Amy Harder
March 5, 2012

HOUSTON—It has become a daily routine for lawmakers in Washington to bicker over what they can do to lower skyrocketing gasoline prices. In Texas, where the oil industry is synonymous with the economy, people know better.

“The frustration for Washington is that there is not much that can be done in the short term in response to rising gasoline prices,” said Daniel Yergin, chairman of the IHS Cambridge Energy Research Associates, a global consulting firm whose influential annual conference known as CERA Week kicks off on Monday in Houston.

To most experts, it’s an open secret that Washington can’t do much to lower gasoline prices in the short term. That economic reality gets lost in the echo chamber inside the Beltway. Some senior Capitol Hill aides who are speaking at Yergin’s conference on Monday are relieved to be discussing the volatile issue away from the political warfare — even if only for a day.

 

“I would think you would get a different flavor of what’s going on than some of the speeches you hear in Washington,” said Bob Simon, staff director for Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-N.M. Simon is part of a panel on Monday afternoon with two other Washington-based energy experts: Maryam Brown, chief counsel of the House Energy and Power Subcommittee, and Frank Verrastro, senior vice president at the Center for Strategic and International Studies.

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The panel is entitled “U.S. Energy Policy in an Election Year.”  Judging by the barrage of Capitol Hill press conferences and floor speeches on gasoline prices in recent weeks, the title could be deemed an oxymoron.

“People think that with one little stroke of a pen here and there, suddenly gasoline prices will be at $2.50,” Simon said. “I doubt you would find anybody at CERA Week who would think that is actually a sensible thing to say.”

If that sounds familiar, it’s because President Obama has made a similar argument stumping on the campaign trail.

“We’re going to be hearing a lot about how people have these magic three-point plans to make sure you’re only paying $2-a-gallon gas,” Obama said at a New Hampshire rally last week.

The fact is, as most energy experts will attest, that global events mostly overwhelm any domestic action that could be taken to bring down gasoline prices. But economic reality takes a back seat when opponents know that incumbent presidents suffer the most politically when prices at the pump go up.

In an interview with National Journal last week before the conference, Yergin stressed that U.S. gasoline prices are going up primarily because of Iran’s threats to block the Strait of Hormuz, a key conduit for 20 percent of all the oil traded worldwide, and because of the slow but steady economic recovery.

Yergin’s conference, which includes more than 300 executives from top energy companies all over the world, will focus less on how gas prices are affecting this year’s elections and more on a plethora of energy issues that transcend the Washington political season. This includes the global oil market and Iran’s actions, America’s development of unconventional shale natural gas and oil, and the world’s embrace — or rejection — of nuclear power one year after Japan’s Fukushima disaster.

But talking politics is inevitable.

“We managed to schedule the conference on Super Tuesday,” Yergin quipped. “Presidential politics and energy policy will be a definite theme that runs throughout the conference.”

Two former governors who were both involved in presidential politics are closing the conference on Friday, and their keynote discussion with Yergin is bound to turn to the election. Former Mississippi Gov. Haley Barbour, who considered running for the GOP presidential nomination last year, was highly critical of Obama on fuel prices in 2011 and will offer his assessment today along with former New Mexico Gov. Bill Richardson, a Democratic presidential candidate in 2008 and a former Energy secretary.

“A lot of that discussion will be about handicapping the whole campaign,” Yergin said. “And tying the energy issues into what’s happening in the campaign.”

With gas prices inching closer to $4 a gallon, that won’t be hard.

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