Posted on 01/23/2009 10:45:53 AM PST by arthurus
Among the most recent things to be completely forgotten are the high gas prices, peaking in July 2008 with nationwide averages over $4 per gallon ...What was the government program that fixed this economic problem? The answer is...
(Excerpt) Read more at seekingalpha.com ...
Read the article.
YEP!
A: We drove less.
Duh.
Reduce demand and prices fall.
Even 0bamessiah hasn’t repealed that law.
$4 a gallon, a couple months ago!
It’s Bush’s fault
I wouldn’t say that the free market SOLVED the high gas prices. Yes, the demand for gas went down with our economy and that brought prices down, but it was not our free market that just let it go and the prices magically cut in half....
Because our economy is bad now no one is driving or driving a lot less. So yeah you can say it went down because of less demand which IS because of our free market economy, but I would say it’s more because OPEC doesn’t wanna lose their a**es by charging high and not selling as much.....
Anyone notice the speculators price per barrel before the Coronation and after? Before was mid 30’s after 50....
>> A: We drove less. Reduce demand and prices fall.
I think that answer is partially correct. I also think commodity prices were artificially inflated beyond simply supply-demand levels ... partially because of false fear in the market about “peak oil”, peak demand, global warming, dwindling reserves, and other such nonsense.
SnakeDoc
This is a good illustration of what Adam Smith called the “invisible hand”. Sadly, I don’t think our new administration will even try to take any lessons away from it.
Answer: Commodities stopped being an “investment” with a “return” and returned to being commodities again. Maybe investors have now realized that speculation rushes are not the way to make money after losing their shirts in commodity and real-estate derivatives.
Just look at the US rig count numbers from 2002 and today, or back in August.
Commody prices are causing 20-25 drilling rigs per week to be 'stacked' without a contract.
Didnt realize that, it did go up a dime around here, I can handle that, but shortly our carbon tax will be added.
Also, after the olympics , China stopped keeping the price of gasoline artificially low. They also cut back on the amount of oil there were purchasing.
Secondly, speculators helped drive the price up. They also shorted the heck out of it to drive it down. I remember when Goldman Sachs came out with a statement saying oil was going to $200. It started to fall just after this. To me it sounded like someone talking their position.
Actually ALL of the credit goes to the removal of barriers to domestic drilling. The day that Bush eliminated the Executive prohibition on drilling, oil prices started to fall. When Congress allowed their prohibition to expire, prices continued to fall.
There are two Big Lies that Democrats tell about this. One was that if the prohibitions were removed, it would take years for prices to fall. That was absurd. The prohibitions led to a climate of fear, which was the factor that pushed prices up. As soon as the prohibitions expired, oil companies began to sign leases for exploration and the marketplace responded accordingly.
The second Lie is that Speculators pushed the price up. Nonsense. The majority of the big positions in the oil markets were Hedgers, not Speculators. Plus, the Speculative positions were almost equally longs and shorts. Hedgers are actual producers and end users who plan to actually deliver or take delivery at the expiration of the contract. They aren't speculating. They hedge to protect their business from price moves that could go against them. Speculators are trying to trade for profit, that is their incentive to take the risk, but their main function is to provide liquidity to the marketplace. Without the Speculators, the Hedgers would have to pay much higher spreads between the bid and ask prices, which would increase their costs, which would increase consumer prices.
Don't swallow the Democrat Kool-Aid. It was the “Freeing” of the market that allowed prices to come down, and that happened BEFORE the economy tanked.
While all of those things may have had some effect, as you say, they're nonsense and mainly fall into the realm of conjecture.
My suspicion is that fear of government actions to keep drillable (and potentially drillable) reserves locked away was a far greater factor. Government actions can be far less predictable and can have almost immediate consequences in the market.
It would be interesting to graph a timeline of oil futures prices versus GWB's announcements regarding renewed domestic drilling.
Yes, but Democrats don’t get it. And Democrats are in control of two out of three branches of the government. Maybe 2.5 out of three.
A “Great Post” BUMP!
A “Great Post” BUMP!
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