Congresswoman Bachmann attacked President Obama for expensive gasoline yesterday, noting that when the President took office in January 2009 gasoline cost $1.79 per gallon. Playing to the understandable wishes of nearly everyone, she promised that she would return gasoline to less than $2 per gallon.
Though Bachmann provided no details about how she would bring back the happy days of cheap gasoline, I believe her. Here is how she would keep her promise and the rest of the story.
The price of oil is priced in world oil markets and in July 2008 it had reached $147 per barrel with gasoline over $4 in the USA. I am sure at the time Congresswoman Bachmann was railing against President Bush for causing the high gas prices, but President Bush and his Administration quickly solved the problem. You got to give him his due.
By December 2008 oil prices had collapsed to about $30 per barrel and gas prices plummeted to less than $2. I think President Bush can take credit for a low price of about $1.60 just before he left office. How did the former President deliver cheap gasoline?
His Administration produced a near Great Depression following the bankruptcy of Lehmann Brothers on September 15, 2008 that caused a global collapse in consumer demand.
You might remember those scary days when GDP collapsed by 8% in the 4th quarter of 2008, when the nation lost over 500,000 jobs per month from October to December 2008, then 750,000 jobs in January 2009, and when the Stock Market fell by over 50%. And when the US car market fell from 16 million to 9 million cars per year, when USX went from producing at 100% of capacity to 40% of capacity by December 2008, and when oil collapsed from $147 per barrel in July to $30 by December 2008.
In the modern world, with rising Chinese and Indian oil demand, the only way to create below $2 gasoline is to create a global depression.
Looking at the Austerity Economic policies championed by Congresswoman Bachmann, including a promise to never again raise the debt ceiling, I am totally confident that Congresswoman Bachmann would create a global depression and keep her promise to give us all once more cheap gasoline.
But will she get the chance to keep her promise?
This week PPP issued a poll of Wisconsin that had Bachmann taking the lead there, Perry second, and Romney collapsing to third. Bachmann could be the Republican nominee, and she could beat President Obama.
Be careful for what you wish and of what you think cannot happen.