Obama's Brutal Gaffe: Low Gas Prices Cratered Our Economy

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[Sub-Driver]

Obama's Brutal Gaffe: Low Gas Prices Cratered Our Economy

by Ben Shapiro 17 Oct 2012, 11:48 AM PDT

Last night, President Barack Obama dropped the biggest campaign gaffe of the season – only the media wasn’t watching. It happened during his testy exchange with Mitt Romney over gas prices. First, Obama denied that he’d done anything about denying licenses on oil and gas; he backed off of that shortly. Then he denied that production on federal land was down; he was lying. Finally, Romney hit him with this devastating line:

The proof of whether a strategy is working or not is what the price is that you're paying at the pump. If you're paying less than you paid a year or two ago, why, then, the strategy is working. But you're paying more. When the president took office, the price of gasoline here in Nassau County was about $1.86 a gallon. Now, it's $4.00 a gallon.

Obama’s response was horrendous:

Well, think about what the governor -- think about what the governor just said. He said when I took office, the price of gasoline was $1.80, $1.86. Why is that? Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney's now promoting. So, it's conceivable that Governor Romney could bring down gas prices because with his policies, we might be back in that same mess.

In other words, bringing down gas prices by drilling creates economic recession. That was Obama’s argument.

Does anyone think this president understands basic economics?

[Oldeconomybuyer]

bookmark

[Political Junkie Too]

So we're back to what I asked earlier, it's not the low gas prices that Obama said, it was the rise in gas prices. If prices remained low, it might not have happened? If we secured our own oil supply by drilling domestically, we could have hedged against global demand swings and lessened the shock of sudden increases?

-PJ

[xzins]

I thought Obama’s words were a little wacky, too. I didn’t view it like the author did as “drilling creates recession.”

I heard Obama say “recession causes fuel price increases.”

I’m trying to wrap my head around that. If I don’t have a job, and don’t have as much money, then I can’t buy as much fuel, so increasing the supply of fuel and decreasing the demand for fuel causes a price increase.

That’s news to me. I always thought greater supply and lesser demand caused a decrease in price.

[Principled]

What was the previous year’s gas prices before 0bama? There was no sudden fall IIRC.

And, 0bama said gas prices were so low b/c we were on the VERGE of a great recession... not that demand was low already.

No, he screwed the pooch on this one.

[DannyTN]

"So according to Obama, a recession will drive down gas prices and a strong economy = high gas prices? Ummmm. Don’t think so."

Actually that is the way it works. A weak economy means less demand and a lower price. A strong economy means more demand and a higher price. It's a little distorted because of the cartel OPEC. But it still works. The OPEC members also have enough non-oil investments that they strive to get the highest price they can without tanking the economy.

Supply and Demand Curves

[FreedomPoster]

Bingo. The price of gasoline in silver or gold is pretty flat.

[DannyTN]

Yes, if we could have kept oil prices steady during 6 or 7 years leading up to 2008, we might not have seen a crisis at all.

However, I do think the economy was being weakened by the constant outsourcing overseas due to free trade. Both oil and job exporting was driving up unemployment and reducing disposable income. We "might" have been able to handle one or the other, but both were deadly.

[FreedomPoster]

Here:

[nc28205]

>>>What was the previous year’s gas prices before 0bama? There was no sudden fall IIRC.

Gas prices peaked in Jul-08 at $4.09. As I noted earlier in the thread, they were still at $3.80 just before the Lehman Brothers collapse in mid Sep-08. Prices moved below $2.00 in mid Nov-08 and bottomed out at $1.63 at the end of Dec-08. Over $2.00 over a couple of months is pretty significant

>>>And, 0bama said gas prices were so low b/c we were on the VERGE of a great recession... not that demand was low already.

That he got wrong. We weren't on the verge of the great recession, we were in the midst of it. 4Q08 GDP declined at a rate of 8.9% and Jan-09 payrolls fell by 818,000.

[TexasTransplant]

***** “Not absurd at all. It is fact. Sorry some of you can’t get it, but this is a losing argument. Crude oil and gas prices crashed in mid 2008 when the world economy took a dive.

Fact” *****

And it is twice the price now because the Economy is twice as good? Is that a FACT too?

Don’t know about anyone else but in my business the phones were ringing today... all because Zero looks like he is on his way out... of those I discussed Politics with the biggest concern was “What the FOOL will do on his way out and can or will Romney be able undo it”

TT

[DBeers]

Not absurd at all. It is fact. Sorry some of you can’t get it, but this is a losing argument. Crude oil and gas prices crashed in mid 2008 when the world economy took a dive.

Fact

PRICE is but an indicator premised upon many things including supply and demand. Obama was arguing demand in regard to the supply issue that Romney brought up -THEREFORE in my opinion Obama was either clueless or adding another layer of lying to cover his ass as far as his efforts to reduce American supply of energy...

[DBeers]

My take on oil prices is somewhat different. No one here is addressing the Fed’s impact on oil prices. Oil is traded in US dollars. The Fed has been printing money for the past 4 years, big-time. So the real value of a dollar has been diminished, by how much I couldn’t say. So the sheiks want more of these cheaper dollars for their barrel of oil.

Good point -YES, that impacts price.

[nc28205]

>>>What is causing the outrageous gasoline prices with crude hovering at 92 bucks?

We are driving fewer miles, purchasing more fuel efficent autos and producing more domestically, yet the price remains high. Given that we are a net exporter of refined gasoline even at the current price levels, I would say that it is global demand that is driving our gasoline prices.

[rottndog]

And, more importantly, the increase in prices during the Obama term is due primarily to reductions in supply and pressures on oil produced energy due to taking a lot of coal out of the equation.

A couple of other major causes of the increased price of gas:

Inflation is really the biggest driver--printing endless amounts of money to cover deficit spending is making money worth less, which is have the effect of making oil/gas cost more.

Also, we now export much more gasoline than we used to, meaning that gasoline is also now a fungible product and subject to pricing based on an international market in addition to just a domestic one.

[NoLibZone]

Obama might argue that recession leads to low gas prices, due to lack of demand.

And he’d be right – during the worst throes of recession, gas prices (along with all other prices) drop. But Obama didn’t argue that.

Instead, he argued that low gas prices destroy the economy. Which is simply asinine.

And if that asinine argument means that Obama is fine with high gas prices, we’re set for a second recession.

[NoLibZone]

But times are bad now so the price should be below 1,89.

[Political Junkie Too]

I still think that oil behaves differently because it is globally fungible.

As I said earlier, if demand falls in the United States (for whatever reason), the price won't fall because the supply will be adjusted as the oil companies sell their oil overseas instead.

A global commodity like oil won't behave like a domestic product that can only be sold locally or it's wasted, resulting in lower prices to at least get something for the product.

-PJ

[nc28205]

>>>And, more importantly, the increase in prices during the Obama term is due primarily to reductions in supply and pressures on oil produced energy due to taking a lot of coal out of the equation.

1. Domestic oil production is up. In fact, it is higher than at any time since 1998.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=M

2. Much of the the reason coal production is down is because it cannot compete with the sub $4 natural gas prices. NG production is about 25% above where it was in the mid 2000s due to fracking in the shale formations.

http://www.eia.gov/dnav/ng/hist/n9010us2m.htm

On a BTU equivalent basis, $4 ng equates to about a $50 coal price. Appalachian producers do not operate well at that level.

3. Current futures prices for ng are below the $4 level through most of the next year and are below $4.50 for pretty much for the next 4 years.

http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html

If those trends hold, those coal mining jobs aren't coming back no matter who is president.

[chessplayer]

Last night, President Barack Obama dropped the biggest campaign gaffe of the season – only the media wasn’t watching.

---

Oh, the media was watching. They just didn’t care.

[rcrngroup]

These are funny! Too bad the partisan hacks & comedians waited until now to start mocking 0dumb0. I especially like Conan O'Brien's line.... "Q: Have you heard about McDonald's' new Obama Value Meal? A: Order anything you like and the guy behind you has to pay for it. --Conan O'Brien"

Even Letterman had some good one-liners.