Posted on 09/26/2006 6:56:37 AM PDT by ShadowDancer
Low Gas Prices: An Election-Year Ploy?
Many Think Politicians Manipulating Gas Prices
POSTED: 8:22 am EDT September 26, 2006
WASHINGTON -- There is no mystery or manipulation behind the recent fall in gasoline prices, analysts say. Try telling that to many U.S. motorists.
Almost half of all Americans believe the November elections have more influence than market forces. For them, the plunge at the pump is about politics, not economics.
Retired farmer Jim Mohr of Lexington, Ill., rattled off a tankful of reasons why pump prices may be falling, including the end of the summer travel season and the fact that no major hurricanes have disrupted Gulf of Mexico output.
"But I think the big important reason is Republicans want to get elected," Mohr, 66, said while filling up for $2.17 a gallon. "They think getting the prices down is going to help get some more incumbents re-elected."
According to a new Gallup poll, 42 percent of 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." Fifty-three percent of those surveyed did not believe in this conspiracy theory, while 5 percent said they had no opinion.
Almost two-thirds of those who suspect President Bush intervened to bring down energy prices before Election Day are registered Democrats, according to Gallup.
White House spokesman Tony Snow addressed the issue Monday, telling 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."
"It also raises the question, if we're dropping gas prices now, why on earth did we raise them to $3.50 before?" Snow said.
The excitement -- and suspicion -- among U.S. motorists follows a post-summer decline in gasoline prices that even veteran analysts and gas station owners concede has been steeper than usual.
The retail price of gasoline has plunged by 50 cents, or 17 percent, over the past month to average $2.38 a gallon nationwide, according to Energy Department statistics. That is 42.5 cents lower than a year ago, when the energy industry was still reeling from the aftermath of hurricanes Katrina and Rita, which damaged petroleum platforms, pipelines and refineries across the Gulf Coast.
Industry officials said the competition among gas station owners to sell the cheapest fuel on the block is fierce.
"They want to gain market share," said John Eichberger, director of motor fuels at the National Association of Convenience Stores.
Jay Ricker, president of Ricker Oil Co. in Anderson, Ind., which owns about 30 gas stations and supplies fuel to 30 more, said he's thrilled to see pump prices sinking as fast as they are.
With prices falling, more customers are buying mid-grade and premium gasoline, Ricker said, and they're spending more cash inside his convenience stores, where profit margins are higher.
"I'd much rather sell them a donut or a fountain drink," said Ricker, whose stations are selling regular unleaded for a few pennies above $2.
Fimat USA oil analyst Antoine Halff said there is no doubt that "the downturn in prices is welcome news from an electoral standpoint for the ruling party." But he scoffed at the notion that the U.S. president had the power to muscle around a global market.
The plunge in prices, Halff said, is the result of growing domestic inventories of fuel, slowing economic growth and toned-down rhetoric between Iran and the United States, which has been critical of Tehran's uranium enrichment program.
The selloff has been magnified, Halff said, by the recent retreat from the market by many speculative investors who got burned by the late-summer volatility. Just last week, a prominent hedge fund told investors that it lost some $6 billion due to bad bets on natural gas prices.
That said, "the sky is not falling," said Halff, who believes oil prices will likely head higher again this winter and average more than $65 a barrel throughout 2007.
At the start of summer, oil analysts were worried about rising demand, the threat of hurricanes and the nuclear standoff between the West and Iran, OPEC's second-largest producer. As a result, crude-oil futures soared to more than $78 a barrel in mid-July.
But by summer's end, these fears had largely dissipated. On Monday, November crude futures settled at $61.45 a barrel.
"We have lots of gasoline supply," said Joanne Shore, an Energy Department analyst. Data maintaned by her agency show U.S. inventories of gasoline at 207.6 million barrels, 6 percent more than last year and slightly above the five-year average for this time of year.
Asked if it was possible that oil companies would reduce their prices in order to help Republicans, Shore responded: "What company in their right mind would step forward to kill their profit?"
At a suburban Miami Mobil station, where regular was selling for $2.66 a gallon, no one was buying in to the conspiracy theory.
"The decrease of gas prices is simply due to a seasonal adjustment of price," said Javier Gudayal, a 48-year-old civil attorney. "And that the Bush administration does not have the power to manipulate."
But in Los Angeles, which has some of the highest gasoline prices in the country, motorists wouldn't rule out the possibility of a government eager to sway the electorate.
Twenty-eight-year-old attorney Amnon Siegel sensed more than serendipity at work.
"I'm sure there's some sort of string-pulling going on," Siegel said, referring to the government.
Doesn't it ever bother you that you believe something is occuring for which no known mechanism (manipulation of the price of crude on the global scale) has ever been plausibly identified and which really on the face of it is ridiculously implausible?
Do you have any plausible explanation on exactly HOW the GOP is manipulating this market? And if they are controlling the prices, what reason did they have for raising it so high the last few months?
These are the same people who voted for Bill Clinton, Al Gore and John Kerry.
Storage was a record highs while the price was running up.
Holy cow, I heard the same thing! LOL ...
Here's your answer.
Everybody believes things happen or have happend that they don't have all of the answers to.
If Republicans have the power to manipulate gas prices, I definitely want them to win.
"If Dick Cheney runs for President in 2008, they'll be giving away a free handgun with every tankful just to get you to come in and fill up"
I was hoping for a Berreta 28 gauge O/U or semi-auto.
The sure was a good economic reason: the hurricane forecast. The people who were trading the futures saw that forecast and ran up the price in anticipation of a supply shortage. In their defense, if the forecast had been accurate they would have made gobs of money selling those $75 contacts at $100 a pop.
The problem with your stated belief is that there has never been any possible mechanism for anybody to do what you are alleging they are doing.
Not you. Not a single expert in the field. Not a single human being beyond moonbat psychos can even envision a hypothetical method by which it would even be possible, let alone demonstrated a real world application of this alleged power.
It can't be done. It is impossible not because Republican are in power and I like them. It is impossible because it can't be done.
Bush isn't controlling the global price of crude. Clinton didn't control the global price of crude. Reagan, Carter, Nixon or Ford didn't control the global price of crude.
The market controls the global price of crude. But you can believe Bush is doing it, if you want.
That's just not true. Speculators impact the price. Opec cotrols the price. Our administration impacts the price. The fed reserve impacts the price. Storage numbers impact the price. Spin and prognostiators impact the price. Supply and demand has litte to do with it. The proof is in the fact that oil rose to an all time high while having alltime high storage numbers.
Hey dead..... wanna make a bet? I'll bet you a $10 contribution to freerepublic that OPEC does not cut production before the election. And that they do cut production before the end of the year. Want to bet? :)
What controls the price of crude, and has done for years, is the worldwide excess daily production capacity, as measured in bbl-equivalents. This past January, this figure fell to 0.65 MM bbl/day, down over 6 MM bbl/day from 4 years earlier. That's not enough of a cushion for ANY decent-sized supply interruption, and demand was therefore pushed sharply forward, as numerous large users felt they had to insure supply for the medium term. Result? Prices went bazoo.
The daily excess cap figure has rebounded somewhat, to about 1.72-1.76 MM bbl/day. Prices have accordingly relaxed considerably, and will do so further if the excap figure continues to rise (which yr hmbl srvnt believes it will do, slowly).
Interesting sidebar to this. With on-hand supplies of crude being well more than ample, any production cut will have -- after the inevitable Nervous Nellie spike by the Chicken Littles of the world -- the net effect of lowering crude prices worldwide. Why? Because the crude is still there, still available, and will be counted as part of the excap figure.
Let OPEC cut (notionally, of course; their use of 'cut' is rather like Xlinton's use of 'is') 1 MM bbl/day. 90 days hence, with excap at 2.7 MM bbl/day or thereabouts, crude will be $5-$8 lower.
That's just not true. Speculators impact the price. Opec cotrols the price. Our administration impacts the price. The fed reserve impacts the price. Storage numbers impact the price. Spin and prognostiators impact the price. Supply and demand has litte to do with it. The proof is in the fact that oil rose to an all time high while having alltime high storage numbers.
Speculators are part of the market. Spin and prognostication are part of the market. But speculators speculate and hope to profit from their guesses. Their guesses can have some effect on the market, but they don’t control that effect. They just hope the speculate correctly.
OPEC has their hands on the levers that can control a portion of supply which will affect cost via the market. But the levers on any domestic production of oil is not in the hands of the GOP or the Administration. There has been no evidence that American producers are under GOP control and they have exhibited no actions that appear to be geared towards price manipulation regarding this or any other election cycle and if they did it would be illegal, easily detected, and ineffective.
There has been no evidence that OPEC is manipulating the market to help Republicans. Given the fact that OPEC is largely run by muslims and Venezuela, the concept is absurd.
There is no plausible way to secretly control the markets. If OPEC wanted to shut down or severly trim production, they could drive prices up, but even they couldn’t control the effect on their own profit margins. In addition, such actions would be transparent and most likely bring economic hardship down on them. It is not currently happening, obviously.
Generally, newspapers make up their own headlines.
The problem with the FR search feature is that it isn't deep enough (which would make it slow, of course.
My guess would be because editors usually create the headlines for the stories.
You're giving yourself a pretty tight window there.
Gee, I think you are BOTH right! Yes, the market controls the price, but speculators, Kim Jong Il, Red China, Hugo Chavez and even George W. are part of that market. Oil was sky high with large stores because Iran was taking a threatening posture. One major flare up, and the speculators take a windfall. As it is, they should be taking a bit of a beating right now. When George W. talks about alternative energy incentives and new regulations, that has an effect on things, too.
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