In the USA, McCain has proposed reacting to the higher oil prices by temporarily cutting taxes. This is in keeping with the Republican solution to everything -- cut taxes. Hillary Clinton has jumped on the McCain tax cutting train, hoping to draw more contrasts with Barack Obama. Meanwhile, Obama finds himself in the same camp as George W. Bush in opposing a symbolic tax holiday. A few paragraphs from the New York Times, via Drezner:
At a meeting with voters in North Carolina on Monday, Mr. Obama said lifting the gas tax for three months would save the average consumer no more than $30, a figure confirmed by Congressional analysts. Mr. Obama has previously dismissed Mr. McCain’s proposal as a “scheme.”
“Half a tank of gas,” Mr. Obama told his audience. “That’s his big solution.”
President Bush’s spokeswoman essentially sided with Mr. Obama in saying that tax holidays and new levies on oil companies would not address the long-term problems of dependence on foreign oil.
Dana Perino, the White House spokeswoman, said gasoline prices were “entirely too high, but I think it would be disingenuous and unfortunate for American consumers for them to be led to believe that there is a short-term fix.”
The Energy Information Administration, which is the Energy Department's independent analytical arm, estimated that if Congress had cleared Bush's ANWR drilling plan the oil would have been available to refiners in 2011, but only at a small volume of 40,000 barrels a day -- a drop in the bucket compared with the 20.6 million barrels the U.S. consumes daily.
At peak production, ANWR could have potentially added 780,000 barrels a day to U.S. crude oil output by 2020, according to the EIA.
The extra supplies would have cut dependence on foreign oil, but only slightly. With ANWR crude, imports would have met 60 percent of U.S. oil demand in 2020, down from 62 percent without the refuge's supplies.
Perhaps it is an even larger error to talk about this issue in isolation. Just last March, Bush noted that oil is a fungible commodity. That is to a large extent true, as long as there is a functioning global market for oil. If, say, Venezuela shifts its exports to China, that will displace some exports other countries make to China, which can then be shipped to the US.But fungibility cuts more ways than one, and, accordingly, ANWR will have an impact on oil prices proportionate to its negligible impact on the global market for oil.