Republicans are noting with some satisfaction that gas prices are falling. The specter of gas costing significantly more than $3 a gallon this fall had worried Republicans who feared that voters would take it out on their party in November. But prices are well south of $3 and dropping. In Janesville the prices are now averaging about $2.58 a gallon, down from $3.09 a gallon a little over a month ago.
The declining gas prices have left many confused who accepted the idea high prices earlier were because of middle-east volatility, China and India increased demand or simple economic laws of supply and demand. The artificially inflated prices of the spring and summer dampened demand for gasoline in the U.S. which helped increase domestic supplies without finding new oil and put downward pressure on prices, but how does that influence the price of global oil?
However, fears of a total geopolitical meltdown in the Middle East still exist with Iran in pursuit of nuclear technology, Iraq in worse shape than it was three years ago, and a still shaky Israel/Palestinian cease fire. Under past circumstances, the recent attack on the American Embassy in Syria would have caused oil to pop another dollar a barrel overnight. Al-Quada is back in the news threatening more mayhem. The hurricane season is in full swing and will threaten Gulf of Mexico oil facilities into November. But the price of oil is going down.
Other reasons given by experts for the high oil prices earlier was the suddenly new heavy demand from China and India, while others have said we have reached “peak” oil and global supplies will begin to decline and raise prices further. None of this has changed. Throw in the recent Alaskan pipeline failure and the overbearing fear propaganda of the Bush/GOP election and all the ingredients are in place for even higher prices. Because of Big Oil’s ties to the Bush administration and the GOP-led Congress, there are some sound theories that dropping gas prices have more to do with politics than markets.
For instance, at an energy forum held at the Congressional Black Caucus conference last week, Rep. Carolyn Kilpatrick (D-Mich.) suggested the price drop right before the November elections has raised her suspicions. Similar comments were offered on the nationally syndicated Tom Joyner radio show yesterday.
People must remember that gasoline was oddly low during the summer and fall of 2004 and rose steadily to all time highs after the election with all the same excuses in place for the high prices today. The only difference here are the upcoming mid-term elections. President Bush has probably used up what may be the last of his political capital by requesting for lower prices to soften voter rebellion in November. With huge and obscene profits, Big Oil can easily afford to give away a little and undoubtedly owes some favors to the GOP Congress for their loyalty as well.
11 comments:
That didn't take long for the left to blame LOWER gas prices on BUSH. Can't we come up with something else besides Bush bashing? It really is quite amusing.
I'm not quite blaming Bush for lower gas prices or bashing him on it either. I'm just connecting Bush and his administration's ability to influence what they call free markets. The reasons given for the huge run-up in oil and gasoline prices are still in place today. I'm glad they are going down, even for the wrong reasons.
Bush used the last of his political capital on Big Oil favors to make conditions more favorable at election time. Its just too obvious. The only thing missing are $600 tax rebate checks to hand out for the vote.
Gasoline prices always go down after labor day. Just like they always go up before memorial day. The refineries aren't having to mix the summer blends of gasoline that is required in some areas. That means the process to get it onto the market goes quicker. Put that with the demand of gasoline going down after the summer travel months and you have less expensive gasoline. Now if we could just get rid of the minimum mark-up law we would even see lower gasoline prices.
Gasoline could be selling for $1.15 a gallon and you would still want to get rid of the minimum mark-up.
When the price was $3.25, everybody(experts) said it was because of China and India increased demand, the hurricanes, volatile middle-east, wasteful Americans, supply and demand, fear, pipeline explosions, Iran, peak oil, etc.,etc.,. All of those conditions are still there today, perhaps even worse. Nobody would admit the price was artificially inflated(gouging). Now they're saying it may go waaaay down with all of those conditions still at play? It's an election year.
Oil is a future commodity and is widely traded on speculation. They ( the speculators) were concerned for the worse they were wrong. The Iran situation is pretty well contained the hurricane season hasn't been much of anything.
Iran is contained? That is one way to look at it I guess. Iraq is going well too, so well they have to dig a moat around Baghdad. Pipelines in Yemen were attacked by two suicide bombers...today.
If you can call a group of dictators, royals and heads of state run oil coming together to adjust global oil production part of open futures or free enterprise speculation, I guess that's another way to look at it. I'll never go to that school, I'll never drink the kool-aid.
Well that'sa the way capitalism works. That's the way our oil is traded. That's they way grain is traded to.
J.J. once again we find common ground, but supporters of the bastardization of capitalism will swear it's a just a coincidence.
Bush and the Republican Party are pulling out all the stops to ensure they don't lose the House or the Senate.
Out of all the trouble spots effecting our country, the ability to manipulate controlled markets like energy is the only sure thing. In 2004, the Saudi's guaranteed Bush there will be no supply shortage, the price throughout the year was relatively flat. Bin Laden was releasing video and audio tapes all the way up to the election. Bush won.
In 2005 after the election, no one guaranteed supply, the price went through the roof supposedly because of China, hurricanes, etc. Bin Laden was absent from the world scene, we actually thought he might be dead. No election to win in 2005.
In 2006, prices are high again, but are dropping so fast you would think China and India fell off the Earth. Bin Laden is back releasing new audios and videos. There's an election to win. Coincidence?
Basic economics. Supply and demand.
It's not that hard to figure out if you actually look at what is going on. The supply of oil has decreased since 2002 when the strike by Venezuelan oil workers has kept 1 million barrels per day off that country's output of 3.25 million barrels per day. The subsequent application of socialist economies to the Venezuelan fields has done little to bring that volume back. This trouble combined with the U.S invasion of Iraq, resulting in another 1 million barrels a day reduction to an average of 2 million. In 2004 China's consumption of oil went up by nearly 1 million barrels a day to 7.4 million barrels a day. Suddenly the world had 4% less oil than it expected. Since 2003 industry spending on exploration and production grew from $169 billion to $277 billion last year. Rental for some oil rigs has quadrupled to more than $300,000 a day. They actually are using their profits wisely to find more oil in remote area's. The recent news of an oil field in the gulf of Mexico was also great news. This wouldn't have been acomplished if it wasn't for the oil companies reinvesting their profits back into research.
The supply of oil has decreased since 2002....Venezuelan fields has done little to bring that volume back...U.S invasion of Iraq, resulting in another 1 million barrels a day reduction...China's consumption of oil went up....
Thank you for the supporting evidence proving the oil markets are controlled by "manipulators."
All this plus the recent OPEC decision to NOT increase volume, yet the price of oil plummets without new supplies online. How can this be with all the fearmongering and chaos?
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