Bush Recession, Not Jawbone, Drives Down Oil Prices
In the pantheon of his presidential failures, the utter inability of former Texas oilman George W. Bush to influence OPEC and the price of oil stands out among the most predictable - and ironic. While gas has dipped below $2 a gallon and a barrel of oil has plummeted almost $100 since its record high in July, those developments owe nothing to George W. Bush's famous 1999 boast that he would "jawbone" his friends in Kuwait and Saudi Arabia into opening the spigots. As it turns out, Americans have the deepening Bush recession, and not his powers of persuasion, to thank for the temporary relief at the gas pump.
George W. Bush's promise to get biblical in persuading, cajoling and otherwise arm-twisting OPEC dates back to his first run for the White House in 1999. As oil prices rose to the then-alarming level of $30 that December, then Governor Bush said President Clinton "must jawbone OPEC members to lower prices." At a New Hampshire Republican debate the next month, Bush claimed the mantle of the Great Persuader. Contending that his days in the West Texas oil fields made him uniquely qualified for the task, Bush proclaimed:
"What I think the president ought to do is he ought to get on the phone with the OPEC cartel and say we expect you to open your spigots...And the president of the United States must jawbone OPEC members to lower the price...
...I used to be in the oil business. I was little oil -- really little oil. And so I understand the -- I understand what can happen in the marketplace."
"I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply," Mr. Bush, the presumptive Republican candidate for president, told reporters here today. "Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot."
That November, of course, the American people were persuaded. Despite Bush's own personal record of busts and bailouts in the business, his family's close ties to Prince Bandar and the Saudi royal family, Americans must have reasoned, should count for something.
As it turned out, not so much.
Confusing master and slave in the American-OPEC relationship, Bush failed at every turn to get his Persian Gulf friends to bump up production or slash prices. Other times, of course, he didn't even try.
In the spring of 2004, the White House trumpeted Saudi Prince Bandar's commitment to maintaining the price of oil in the range of $22 to $28 a barrel. With the price then at $33 a barrel, by April speculation ran rampant that President Bush had secured a deal with the Saudis just in time for the November election. But as a barrel reached then-record levels topping $50, it became clear that both Bush and Bandar were backing off their past pledges. As CBS News reported that September:
As gas topped a record level of $50 a barrel this week, Mr. Bush has shown no propensity to personally pressure, or "jawbone," Mideast oil producers to increase output.
A spokesman for the president reportedly said in March that Mr. Bush will not personally lobby oil cartel leaders to change their minds.
In the spring of 2005, President Bush returned to his failed formula on oil prices. Promising to use his self-proclaimed charm to woo the Saudis, Bush would ultimately leave the American people to the mercy of the marketplace. As the AP detailed:
In a CNBC interview, Bush said he would press the Saudi crown prince to boost production. "I'll be talking to our friends about making sure they understand that if they pinch the world economy too much, it'll affect their ability to sell crude oil in the long run," Bush said.
Jerry Taylor, an energy analyst at the Cato Institute, a Washington-based think tank that advocates less government regulation, said the idea that "jawboning OPEC or arranging for nice relations with OPEC will somehow get us more oil is utter illusion."
An illusion, indeed. As the price of a barrel oil surged into record territory in March, OPEC dismissed out of hand President Bush's latest use of his jawbone. Pointing to the collapse of the dollar during the Bush presidency and the slumping American economy, OPEC leaders are not budging on production levels or prices:
"OPEC is angry that President Bush wants them to increase production while the dollar is sinking and the administration is doing nothing about that," said Fadel Gheit, an oil analyst at Oppenheimer & Company in New York. "It"s really not surprising that they have ignored him."
Back in Washington, President Bush in April was left to grouse about Congress for a situation he insisted was not his fault. In prepared remarks peppered with accusations of Congressional inaction, Bush opened with a salvo aimed at Capitol Hill. "I've repeatedly submitted proposals to help address these problems," Bush said, "Yet time after time, Congress chose to block them." Ultimately, a frustrated George W. Bush suggested the energy crisis called for a higher power:
"And so I firmly believe that -- you know, if there was a magic wand to wave, I'd be waving it, of course."
When a gallon of gas as forecast hit $4 a gallon in June (a prediction about which Bush in February amazingly acknowledged, "I hadn't heard that"), the President turned to the equivalent of his magic wand: offshore drilling. Joining his fellow armchair psychologist John McCain, Bush in July insisted that just the specter of drilling off the nation's coastlines, despite having no near-term benefit on gas prices, would nonetheless work wonders for American consumers:
"I readily concede that, you know, it's not going to produce a barrel of oil tomorrow, but it is going to change the psychology."
As it turned out, of course, chants of "drill baby drill" had no impact on energy prices. It took the credit crisis, the Wall Street meltdown and the crushing Bush recession to do that. Energy prices began their steep decline in the third quarter just as global demand slumped and the American economy was cratering, a contraction of gross domestic product (GDP) the Commerce Department today revised downward by 0.5%.
But while oil prices still haven't reached their pre-Bush levels, the President will no doubt take credit. After all, for George W. Bush, nothing succeeds like failure.