The former president and his right hand man were both oil executives. I am sure it had nothing to do with any decisions they made while in office, but still... The oil industry seems to have a huge ability to influence Washington insiders, to include members of the legislative branch as well as, potentially, the executive branch.
In those years, the government clamped down on anyone's ability to regulate "speculation" in oil prices - meaning with rumors of a possible war in the middle east, crude oil prices can jump through the roof - and even though no supply is cut, the price you and I pay at the pump can rise as much as thirty or forty cents in a week's time... On rumor! And when the war drums start beating more slowly, the crude oil prices bounce back down, yet it takes weeks for the 'trickle down theory' to go to work at the gas pumps.
For a while now, I've had those thoughts - why can mere rumor cause my fuel bill to go up by a hundred dollars or more in a month's time?
Then I started reading some things by the oil industry, who who are still, after all these years of recession, making record profits (we can't control the price at the pump, they say, and we hardly make any money as it is off fuel sales, etc) (Ref the propoganda machine here: http://www.exxonmobilperspectives.com/2011/04/27/gas-prices-and-industry-earnings-a-few-things-to-think-about/ (If you believe them, they're actually LOSING money: "Over the past five years, we incurred a total U.S. tax expense of almost $59 billion, which is $18 billion more than we earned in the United States during the same period." )
Now, the GOP folks in Congress and on the Presidency trail, (whether you're Republican, Democrat, or Independent, it doesn't matter in the end, we're all paying the same price for our gas), are bashing Obama's presidency for "doubling the price of gasoline". My memory may be weak, but it seems to me like it was pretty darn high in the good old days of George W. Bush's presidency, and I was thinking, "How can the price have doubled?"
Someone sent a link to someone's "useless trivia" that showed how much he paid for gas every time he's filled up since 1979. Ref: http://www.randomuseless.info/gasprice/gasprice.html The charts seem to show a huge spike downward just at the end of the Bush years and going into the Obama term...
Then I found a more official site for gas prices that confirm these charts. Suffice it to say, in June and July of 2008, regular unleaded gasoline was averaging around $4.00 per gallon:
2008-Jun
06/02 3.932
06/09 3.979
06/16 4.007
06/23 4.002
06/30 4.027
2008-Jul
07/07 4.051
07/14 4.054
07/21 4.005
07/28 3.896
With a presidential election just around the corner in 2008, I will note that from this high point, gasoline prices just kept dropping. This may not have been affected by politics, but if the oil industry folks wanted 'their man' to win, then they COULD have done something to appease the very restless voting public. Unfortunately, so many people were getting laid off left and right and the economy was a shambles, for a variety of reasons, and 'their man' lost anyways... But that's okay, because all the way through December, gas prices just kept dropping:
2008-Dec
12/01 1.790
12/08 1.681
12/15 1.648
12/22 1.635
12/29 1.590
2009-Jan
01/05 1.672
01/12 1.772
01/19 1.832
01/26 1.813
On January 20, 2009, President Obama was sworn into office. December ended with gasoline prices at $1.59, and in January, remained in the middle-upper $1-$2 range, but was already drifting upward again. Now Representatives McConnell and some Presidential candidates are bashing Obama for the doubling of prices - when in fact, those prices haven't yet hit the Bush-era prices as seen in mid-2008.
Now that another big election is just around the corner, you've got folks pushing rumors of war, and speculators again driving up the gasoline prices... It seems that even as our economy improves, the gas prices are moving upwards again (trying to break the momentum for political reasons? Maybe not, but... maybe).
It's about time that reason prevails. I am NOT a big fan of government interference and regulation - but there are times in every industry where people will manipulate numbers to get what they want. I for one would recommend that we educate ourselves on what causes these problems.
I found a pretty good writeup on it here. I do not endorse any views they represent, but if you look you can find even more information elsewhere:
http://money.howstuffworks.com/oil-speculation-raise-gas-price.htm
If you follow this article through to its conclusion, it gives a good insight into the problem and what has/has not been done to curb it.
An exerpt:
By betting on the price outcome with only a single futures contract, a speculator has no effect on a market. It's simply a bet. But a speculator with the capital to purchase a sizeable number of futures derivatives at one price can actually sway the market. As energy researcher F. William Engdahl put it, "speculators trade on rumor, not fact" [source: Engdahl]. A speculator purchasing vast futures at higher than the current market price can cause oil producers to horde their commodity in the hopes they'll be able to sell it later on at the future price. This drives prices up in reality -- both future and present prices -- due to the decreased amount of oil currently available on the market.
Investment firms that can influence the oil futures market stand to make a lot; oil companies that both produce the commodity and drive prices up of their product up through oil futures derivatives stand to make even more. Investigations into the unregulated oil futures exchanges turned up major financial institutions like Goldman Sachs and Citigroup. But it also revealed energy producers like Vitol, a Swiss company that owned 11 percent of the oil futures contracts on the New York Mercantile Exchange alone [source: Washington Post].
As a result of speculation among these and other major players, an estimated 60 percent of the price of oil per barrel was added; a $100 barrel of oil, in reality, should cost $40 [source: Engdahl]. And despite having an agency created to prevent just such speculative price inflation, by the time oil prices skyrocketed, the government had made a paper tiger out of it.
President Obama and some lawmakers are reviving the notion of oil price oversight/curbing speculation - but of course they are being blocked on almost all fronts. There's some folks making huge money off these oil speculation games... (at our expense).
What if the speculation has to do less with the rumors of war and more to do with the attempt at getting rid of the ones who would curb it? (ie., ruin any recovery to the economy and you can oust the incumbent). Maybe... maybe not. But it's an interesting notion.
Regardless of that, I suggest you take the time to write your public officials and recommend that they look into the issue of oil/gas price manipulation through speculation.
One final thought: What would YOU do if the price of gas dropped by $1 or more? If you spend $200 a month in gasoline now, what would you do with the $50.00 that you saved?
1 comment:
I think I'd take my baby to the beach for a little R&R with the money we'd save on gas...
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