Filed under: Etc.
Gas prices fall as fall elections draw near. Coincidence?
Nearly every industry analyst will tell you that there's no way the federal government could directly control the market price of gasoline, however, a new Gallup poll reveals that 42 percent of Americans think otherwise. More specifically, those respondents agreed with the statement that the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections." 53 percent did not agree and 5 percent had no opinion.
The White House obviously denies the claim and is taking the let's-laugh-it-off tactic. WH Press Secretary Tony Snow told reporters that "the one thing I have been amused by is the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being."
Industry officials and analysts say there are a plethora of reasons for the rapid decline in prices which include the end of driving season, the re-emergence of cheaper winter fuel blends, growing domestic inventories of fuel, the calming of tensions with Iran as well as the competition among gas station owners to post the most attractive prices on the block.
Now, if you're a conspiracy theorist yet you don't believe the government has the capacity to manipulate fuel prices, then this is the next obvious question: is it possible that oil companies are reducing their prices in order to help Republicans? Department of Energy analyst Joanne Shore's response is simply "What company in their right mind would step forward to kill their profit?" Personally, I'd be more inclined to believe that the major oil companies could form a cohesive oligopoly or secret agreement than I would believe that Bush has the ability to control the oil market, however, I'm still not convinced on this specific matter given the nature of complex forces at play. I also happen to work closely with a couple groups of energy futures traders on the New York Mercantile Exchange and to have seen the volatility swings and chaos upclose over the last few months was simply astounding.
I'm usually game to entertain most conspiracy theories (and even have a bunch of my own), however, it's going to take pretty hard evidence for me to believe that there are a small group of minds who actually manipulated a steep drop in the country's gas prices for the fall elections (though, I would agree that the President certainly has an indirect effect by the choices he makes in geopolitical matters). What do you think? If you need some guidance into how gas pricing works, check out Autoblog's link to howstuffworks.com on the subject.
[Source: Associated Press via MSNBC]
Reader Comments (Page 1 of 1)
Sam Abuelsamid 2:31PM (9/26/2006)
I don't think the White House actually needed to do anything. I do think it is highly likely that the oil companies have deliberately pushed down prices, to help keep republicans in control of congress. As for the statement "What company in their right mind would step forward to kill their profit?", that is just idiotic. Companies regularly cut prices in the short term in the interest of their long-term benefit. Just look at printer manufacturers who sell printers at a loss and make it up on ink sales. I predict that the prices will stay low for the next 6 weeks and then be back at $3/gal by thanksgiving.
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Howard Lee Harkness 6:40PM (9/26/2006)
It would be interesting if the oil companies could manipulate the markets in that way, but I doubt it. They would have to enlist the aid of foriegn suppliers who openly collaborate to manipulate the price of oil. Possible, but unlikely.
I think perhaps the oil producers in countries that hate us saw a decline in gasoline consumption which let them know that oil is a more elastic commodity than they thought, and they backed off in order to forstall development of really effective alternatives like biodiesel. Biodiesel is really competitive with dinodiesel at $3/gal, but not so much at $2/gal.
Regardless of the root cause(s) of these fluctuations, we still have a pressing need to quit sending money to countries that hate us, and also to find ways to leave a habitable planet to our grandchildren. In this regard, $2 gas is very bad news, given the short attention span of the US consumer.
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Shawn 10:42PM (9/26/2006)
Almost a coincidence, for me. It's just sad that it usually happens during elections.
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shakybarnes 12:41AM (9/27/2006)
Yes, George Bush controls the price of oil. And he made the price go real high over the past year and a half because he just wanted everyone to hate him.
No, the conspiracy nonsense ignores the REAL fun in the oil markets, which is the dynamics and cheating among the OPEC cartel (which is indeed a socialist conspiracy, being a price-fixing cartel of the state-owned oil companies of 11 countries). They agree to limit production to just the right point of maximizing their profits (think of supply/demand curves in econ 101).
This behavior would be highly illegal if conducted between private businesses in any country in the world. But these aren't private business under some government's jurisdiction. These are governments themselves. Hence no actual law breaking. They are allowed to screw the consumer.
Anyway, when the price is high, every individual member has a strong incentive to cheat his sack off and let the oil flow in order to make as much money as possible. If only one cheats, it won't affect the price of oil.
But if discipline fails and too many of them cheat, then supply gushes, and prices and profits plummet to the detriment of them all. No doubt some of that insanity is playing a role even right now.
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Jake 3:02AM (9/27/2006)
BP shuts down half of Prudoe Bay, our biggest well.
BP gets hammered and Gas Prices drop.
It works for me.
I say keep it shut down and save it.
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MikeInNC 9:56AM (9/27/2006)
I'm selling tin foil hats for $24.99 a piece (free shipping). They will prevent the evil President from mind 'controllering' your 'psyconciousness'. It's so funny that the left talks about how stupid he is and then gives him super-powers when it can give the impression of making him 'eviler'. He may not have a very good handle on the language but at least, for the most part, he attempts to deal in reality.
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