FUELLED UP FOR POPULISM / THE FINANCIAL TIMES COMMENTRAY & ANALYSIS ( HIGHLY RECOMMENDED READING )

Fuelled up for populism

By Christopher Caldwell

Published: April 29 2011 22:24

The American Automobile Association recently noted a bizarre trend. The number of motorists calling the organisation after running out of petrol has risen almost 40 per cent in a year. One AAA official speculates that the increase comes from the steep rise in petrol prices, as drivers who cannot afford to fill up their tanks try to eke out one last trip.


Gas, as Americans call it, is now about $3.87 a gallon – low by the standards of the developed word but about a dollar more than a year ago and close to the all-time US high of 2008.


That is terrible news for Barack Obama. The Hotline newsletter recently polled Washington political insiders about gas prices. While the poll was not terribly scientific, it was striking in its unanimity. Democratic and Republican consultants alike believe overwhelmingly that when gas prices go up, it is Democrats who get blamed.


Obviously this is unfair. Petrol is dear because of demand in developing countries, revolution in north Africa and other factors beyond the control of any American president. No matter. Democrats are hurt by gas prices the way Republicans are hurt by government shutdowns. Republicans are the party that distrusts government, so the public blames them when a shutdown produces less of it. Democrats – or at least the greens among them – want people to drive less, so the public blames them when driving becomes more expensive.


Fuel supplies border on an obsession for US voters. Barely a year after BP’s Deepwater Horizon spill in the Gulf of Mexico, 69 per cent say they want more offshore drilling. As Ken Salazar, secretary of the interior, said recently, it is almost as if the spill never happened. And this impatience feeds a more general discontent. About 60 per cent disapprove of the way Mr Obama is handling the economy.


The president has lately tried to fortify himself against what may be the most serious threat to a second term in office. His main line of defence is to cast blame on oil companies. After John Boehner, the House Speaker, said on television that everyone, including oil companies, should pay their “fair share” of taxes, the president gave a talk about the cost of filling up one’s car and fired off a letter to congressional leaders. Pronouncing himself “heartened” by Mr Boehner’s remark, he urged legislation to cut $4bn in “unwarranted tax breaks”.


Conveniently for the president, energy companies announced record profits this week: ExxonMobil made more than $10bn in the first quarter, up 69 per cent from last year.


Yet Mr Obama’s populist tack will probably not work in its present form. Linking subsidies and gas prices is a non-sequitur. Subsidies for oil companies may cost voters as taxpayers; they benefit voters as buyers of petrol. And the public has only the vaguest idea of what Mr Obama is calling for. Most assume he wants Congress to take aim at the poorly understood “oil depletion allowance” that big energy companies enjoy. But according to his “Blueprint for a Secure Energy Future”, the president’s focus on subsidies is the result of international discussions he has had in the context of Group of 20 and Apec meetings. In that document he identified $46bn in subsidies, a rather more ambitious goal than the $4bn he named this week.

The president, however, is not simply flailing. He is launching his 2012 re-election campaign. This month, he held big meetings in the swing states of Pennsylvania and Indiana to discuss the energy issue. These were a sort of self-audition. They will give Mr Obama and his staff a fund of understanding about public sentiment so that when he debates his Republican opponent 16 months from now, he will know the obvious grievances over gas. He will know which policies make voters nod agreement and which make them shake with rage.


We can expect a bit of the homespun tone that Mr Obama often adopts when talking about the environment. “There’s not much we can do next week or two weeks from now,” he told a crowd at the Gamesa wind power company in Pennsylvania. Conversion to clean energy will be a long process, he warned. (Or promised.) But his letter to Mr Boehner (“We simply can’t afford these wasteful subsidies”) hints at a different tone.


In the same Washington Post poll that showed the punishing effect of gas prices on Mr Obama’s popularity, one new development went under-remarked. Asked what they would like done to close the budget deficit, Americans rejected almost every alternative. Big majorities opposed cutting military spending. Even bigger ones wanted health entitlements left uncut. The only solution that was popular – and it was wildly popular – was that of raising taxes on those with incomes over $250,000.


In that, and in the populist tone of the Obama attacks on big oil, we can see the contours of the 2012 campaign emerging. They do not look dainty.


The writer is a senior editor at The Weekly Standard


Copyright The Financial Times Limited 2011.