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Gas at $4 brings promises, pandering

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[June 24, 2008]  WASHINGTON (AP) -- Like two rival filling-station owners across the highway in long-bygone price wars, Democratic Sen. Barack Obama and Republican Sen. John McCain keep putting up flashy signs and offering new incentives in hopes of attracting customers battered by $4 gas prices.

GlassMcCain is offering a summer break from the 18.4-cent federal gasoline tax, and holding out the promise of more offshore drilling to help you drive more cheaply to the beach. He wants to build 45 new nuclear reactors to generate electricity. On Monday, he proposed a $300 million government prize to anyone who can develop a superior battery to power cars of the future.

He may even wash your windows.

If you pull into the Obama station, he'll promise you cash back from the windfall-profits tax he plans to slap on Big Oil. Check the tires? How about promises to go after oil-market speculators who help drive up prices as well as big subsidies for solar, wind, ethanol and other alternative-energy projects? The Illinois senator likens his energy package to the Kennedy-era space program.

Oil and gas prices that have doubled in the past year have squeezed aside the war in Iraq as the No. 1 issue this election year and both parties are blaming each other for the price spike -- and for apparent congressional paralysis.

Obama and McCain have made high gas prices a top issue in their campaigns and have offered dueling remedies aimed at easing them. Their positions are being echoed daily by their surrogates on Capitol Hill. And both make it sound as if only their proposals would chart the path to lower fuel prices and a final cure for what President Bush once labeled the nation's addiction to foreign oil.

This debate is certain to get louder as the November election approaches.

In a USA Today-Gallup Poll released Monday, nine in 10 people said energy, including gas prices, would be very or extremely important in deciding their presidential vote in November, tying it with the economy as the top issue. People said Obama would do a better job than McCain on energy issues by 19 percentage points.

Pharmacy

Yet energy experts and economists -- and even some of the candidates' own advisers -- say none of their signature proposals will have any impact on $4 gasoline or $130 a barrel oil in the near term, or even the intermediate term.

Is it open season for pandering?

"I think it is. This is a real pressure point for people every day, everytime they fill their tanks. Therefore, politicians can't leave it alone," said Fred Greenstein, professor emeritus of politics at Princeton University.

School

Also, Greenstein said, McCain and Obama "needed to sharpen their knives on each other" as they found themselves going one-on-one after Hillary Rodham Clinton quit the Democratic race on June 7.

The rivals have helped to amplify the longtime ideological divide on energy between Democrats and Republicans -- with Democrat Obama putting his emphasis on reducing demand and Republican McCain touting increasing domestic production.

Yet, on some long-range issues they're closer together than their current rhetoric would suggest.

Both want to boost alternative energy technology, press for more fuel efficiency and promote more conservation. Both McCain and Obama favor expanding the electricity grid, implementing caps on carbon emissions to curb global warming, spend billions on clean-coal research and give nuclear energy a larger role. They differ on offshore drilling, but agree on keeping the ban on oil exploration in the Arctic National Wildlife Refuge.

Despite the flurry of activity and rhetoric, major factors in the rise of gas prices -- the weak dollar, soaring demand in China and India, market speculation, supply problems -- are beyond U.S. policy-makers' direct control.

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Civic

"There's no really good near-term policy response to what's happening," said Mark Zandi, chief economist at Moody's Economy.com and an adviser to McCain. "That doesn't mean we shouldn't be talking and acting on these things now. I think the policy steps may reap benefits five, 10, 15 years down the road."

Even if Congress does lift the ban on drilling on the continental shelf, and states go along, energy experts say it's at least a five to seven year process before new drillling could beging -- and that could be optimistic The industry already is in a frenetic push to find more sources of hydrocarbons and faces severe shortages of rigs and other equipment and workers.

Construction of nuclear reactors can take many years, sometimes decades, of regulatory hurdles before ground is broken once a new nuclear power plant is proposed. The Nuclear Regulatory Commission has nine applications for as many as 15 new reactors; the industry anticipates the first of these around 2016-2017 at the earliest.

Schools

McCain and Obama differ on a proposed federal gasoline tax holiday. McCain supports a temporary repeal saying a respite from the 18.4 cents per gallon tax will help consumers and small businesses. Obama ridicules the plan -- which Clinton had also supported -- as a gimmick that would steal money for U.S. highway repair and maintenance without much benefit to consumers. Most economists agree with the Obama camp.

McCain opposes ethanol subsidies -- not a popular stand in the nation's heartland -- although mixed his criticism of such subsidies with a little pandering during a trip to Iowa last month, when he praised farmers in his audience as "the most productive, most efficient and the best. And I will open every market in the world to your products."

Obama, coming from the country's second largest corn-producing state, has supported such subsidies, although he has said the federal government might have to rethink its support for corn ethanol because of surging corn prices which hit the world's poorest people the hardest.

And while Obama is calling for reducing the influence of special interests, some of his top supporters and advisers are tied to the ethanol industry. Former Senate Majority Leader Tom Daschle of South Dakota is on the board of several ethanol companies and works at a Washington law firm where he lists advice to clients in renewable energy among his specialties. Obama energy adviser Jason Grumet previously worked at the National Commission on Energy Policy, a bipartisan initiative associated with both Daschle and former Kansas Republican Sen. Bob Dole, a big ethanol backer, according to a story in Monday's editions of The New York Times.

[Associated Press; By TOM RAUM]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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