Saturday, October 11, 2008

What the Heck is Going Down With Gas Prices?!?!

Gas prices were $2.72 last night in Indianapolis. Aside from Linda Pence saying she would zealously investigate Indiana gas stations as Attorney General, what has changed? (No, I know that couldn’t do it. Yes, she’s a bad@ss, but she’s not even in office yet!)

Seriously, America hasn’t begun drilling anywhere new yet, and most authorities say even if we did so TODAY, we won’t see the results for shy of a decade. Can someone explain how gas prices can drop so precipitously so quickly without market manipulation in the first instance or “politically-oriented price manipulation" now?

Some conspiracy-minded friends (who apparently are prescient) told me to watch gas go as low as $2.00/gallon until right after the election low gas prices helps McCain. This is common sense. Every public opinion taken on the matter says when the economy is bad, McCain suffers. Low gas prices lower the cost of everything.

But such a theory would assume that some American and European oil companies believe they’d be better off with John McCain. What would make them think that? Oh, wait. Barack Obama is going to tax them, isn’t he?

But how can the private oil companies alter production when they're all operating at capacity? And we know they are at capacity because multi-national corporations never lie, even when restraining production generates record profits for all of them. So, this price change must have occurred somewhere else.

Oh, guess what? On September 10, the Saudis said they would ignore OPEC requests to reduce production to keep oil prices from dropping below $100 per barrel. Oh, and guess what? The Saudis privately prefer McCain because they believe they want him to keep troops in Iraq, and they like his Iran rhetoric.

In short, two plus two equals cheap gas until November. Then watch us get crushed because then the Saudis won't care anymore.


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7 comments:

Daniel said...

The economy is tanking at historic levels and people and businesses will use less energy. Oh and that helps Democrats if that makes you feel better.

braingirl said...

Check the US dollar against foreign currancies. One of the primary reasons by-the-barrel prices have shot up so much in the past two years has been due to the dollar tanking overseas. Prices adjusting as the world-wide economy tries to stabilize are normal. What makes me more nervous is how worried people are that prices are going down.

You can also check, but I know two huge refineries in S. Texas were due to come back online in the past couple of weeks. When refineries are offline for maintenance or storms, it also has a pretty significant impact on prices.

Chris Worden said...

Daniel and Braingirl:

Thanks for "rounding this out." I don't know anybody who is worried that prices are going down. I just think they're nervous they won't hold.

On the issue of reduced energy use, I know Daniel is right. This is why I'm somewhat angered by the denunciations Obama has received for using the bully pulpit to ask us to be more energy conscious. If we all use less by doing things that Republicans mock, such as checking your tire pressure, we WILL save money. That's not government coercion, that's market effects in operation.

www.ipopa.blogspot.com

Anonymous said...

I hate it when people have conspiracy theories. ....but I have been thinking for several days that gas prices might be a way to get voters' minds off the price of gas and help McCain.

Anonymous said...

I was paying around $4.20 for gas before the refineries in S. Texas were damaged.

Vox Populi said...

This is something I've heard from several people of different political persuasions. They think the oil companies want lower gas prices because they don't want Obama to win and tax them more.

Sean Shepard said...

Some quick thoughts:

Oil has plummeted as the market is adjusting to expected lower demand due to economic concerns and lots of investors are probably having to sell off their holdings for liquidity reasons and/or to take advantage of bargains in the stock market.

Oddly, the dollar is off of it's lows despite the FED pumping huge amounts of credit into the markets. Unless other economies are doing the same, the dollar has to start falling in value and oil prices will go back up (give or take impact of supply/demand).

We have to be worried about a competition amongst nations to devalue currencies for international trade reasons. Our politicians proved they were a bunch of jokers with the "bail out" garbage. [$800 billion bailout? Hell, for $1100 billion they could have suspended the personal income tax for EVERYBODY for one year].

The Saudis absolutely prefer us keeping troops in Iraq. Our troops are in Iraq so that they don't have to be on Saudi soil. Our forces over there serve to provide a backstop propping up what is a fairly unpopular royal family.

Keep in mind the Bin Laden is an exile from there as he was trying to rally forces to overthrow the government. Our military support to Saudi Arabia was a primary motive behind the 9/11 attacks.

Our excursion into Iraq is partially driven by a need to establish a new Middle Eastern base of operations.

Oh, and gas prices do tend to drop before presidential elections it seems. Going from past sense of history here, not facts but I think facts would at least partially support this.