Gas Pump Politics

The Nation: Oil Prices, Like All Prices, Fluctuate

(The Nation)  This column was written by Nicholas Von Hoffman.

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Do the democrats lose 50,000 votes every time the price of gasoline drops a penny? We'll have the answer to that question in a few weeks, but in the meantime cheaper gasoline raises some interesting questions.

The first of which is whether or not the Republicans have arranged to lower them to prevent what had seemed to be defeat in November. Certainly, the timing of the price drop might cause even the credulous to entertain a suspicion or two.

You may be sure that the Republicans are delighted to see gasoline fade from the list of voter irritations. You may also be sure that the Republicans would have arranged for prices at the pump to swoon if they could, but can they?

Not likely. To make the price of gasoline come down in Ohio, where the GOP is in big trouble, the prices have to drop everywhere. No special walled-off Ohio oil market, or even an American oil market, exists. If the price of oil is going to go down in Cincinnati, it is going to have to go down in Shanghai. Oil, as the economists say, is fungible.

There are times when energy prices are manipulated, California's electricity cost being an example. A few years ago, by closing certain generating plants and refusing to sell electricity from certain other plants, an artificial shortage was created, which drove up the price of electricity and drove ordinary Californians to the poorhouse.

But California is not part of a world electricity market. As opposed to oil prices, those electricity prices could be forced upward without worrying about how would-be suppliers in Canada or elsewhere would react. If California had been part of a world market, when the prices went up outside suppliers of electricity would have rushed in to sell and the prices would have been forced down again.

Because oil must be refined, it is possible to play some games with gasoline prices. Refineries can be pulled off line for no good reason except to drive the price of the products up. The operative word here is "up."

Driving prices down is another matter. Manipulators make money when the price goes up. Manipulators do not make money when the price goes down.

Down is going to cost somebody a lot of money. For practical purposes, the only way to make prices go down is to sell gasoline at a loss because you must sell it under the going price. Not quite the same as giving it away, but it's close.

And you have to sell a lot of it under the going rate. Last winter, for example, we saw President Bush's good friend the devil-defying Hugo Chávez, sell heating oil to poor Americans at lower-than-market prices, and guess what effect that had on the price of heating oil generally? None.

Last winter Chávez, through Citgo, owned by Venezuela, dumped 16 million gallons of heating oil at below-market prices in eight states, and if it pushed down the price of heating, nobody could see it. Imagine how many million barrels of oil it would take to depress the entire gasoline market — and how much it would cost. Rich Republicans, who are desperately clinging to every nickel out of fear the death tax will pauperize their heirs, are not about to make a campaign contribution of this magnitude. If that's the cost — and it would be — of keeping Denny Hastert in the House Speaker's chair, they'll
take their chances with Nancy Pelosi.

The Democrats, posing as the champions of the great unwashed as they do, dare not show their apprehension at the slump in gas prices even as they watch votes melt away. Nevertheless, every time gas prices drop, people kid themselves into believing the oil is going to flow forever and that we can go on living as we have forever.

If the past is any kind of a guide, the numbskulls in Detroit will postpone the design and production of truly energy-efficient automobiles, a decision that will ultimately put them out of business. Lower prices will bring research and development on more expensive alternatives to a halt. The thousands of undertakings, great and small, that can increase efficiency will be put off yet longer.

There will be no politicians of note who command national attention (Al Gore aside) to tell us that we are once more frittering away precious lead time between now and when (a) the oil runs out and (b) the environment crashes.

The American religion of every man for himself and the devil take the hindmost has made it a point of pride never to plan ahead, never to be ready and never to prepare. So in war after war we are caught with our pants down and in peace each Katrina is worse than the last one.

Whatever danger, no matter how real, how close or how certain, the response is, "Oh, the free market will take care of it" or "Aw, don't worry, technology has our back covered." So instead of throwing ourselves into energy conservation to postpone the day of disaster, we hear speeches about energy independence and ethanol.

As of now all ethanol can do is win the Midwestern farm vote. Yet the Democrats ought not to give up hope. The Republicans seem to have an inexhaustible supply of crooked pederast Congressmen, and there is one deep truth, which is that oil prices, like all prices, fluctuate. Next time the Ds may catch 'em on the down cycle.

[adventurepa]

You mean the tooth fairy and Santa arn't real?

Nicholas Von Hoffman:
"You may also be sure that the Republicans would have arranged for prices at the pump to swoon if they could, but can they? Not likely. "

Reality Check:
Here is one way it can work.

Look at the stores of Gas.
At an all time high. (Filled 6 months ago) (Stock)
Look at the purchases of oil by the refinery's.
Unknown. (6 months ago they filled up. Stopped buying in late august) (Flooded market with no big buyers)(We are the biggest buyers)
Price drop.

But what if they already made their profit?
"Manipulators make money when the price goes up."
For some time the price has been artificially high.(Companies made record profits for 2 years or better)(They can expect to take a loss for 3 months)Thank's buddy. (Somebody made a mint)

Here's the kicker:
Gasoline market- Oil is cheap when the market has been flat for 3 months.(Us Suppliers had cut their orders)
So when you go to replace the supply,
the companies make even more money because the price is less...

By the way cheaper alternate fuels and electric cars have been around for awhile (Hybrids etc.)
They have been paid off to stop the advancement.

Reason?
Ask yourself "How much money does the us gov make off of oil sales?"
Taxes on oil sales are, "Well lets just say alot."
Hear in lyes the problem.
And it is about money.

[mjv2944]

Big oil and our politicians, both Dems and Repubs work hand in hand and the American people pay the price and oil companies reap the profits. What happen this last year with gas prices makes it all the more obvious. You watch after the elections, and I am sure that the Saudi's will take care of the current administration by pumping more oil. Start this Nov. by voting out all imcumbents, they are all crooks and hacks and don't deserve to serve in the congress. Take back our country, VOTE! I have had my fill of these slick media created, and politically correct ZEROS!

[cruzn66]

And I believe in Santa Clause and the Tooth Fairy....Come on.... how many times must we be subjected to the ramblings of the "Right" that it's just market forces at work. There is no such thing as a free market as long as the U.S. economy is being held hostage to foreign oil and those who support the efforts of those who deal in petroleum products. I'm sure Bob Woodward was just feeding the "conspiracy theorists" on the left when he stated in his new book that the Saudis pumped more oil in 2004 to help out the Republicans. I guess when you hold hands with the devil you can expect a few perks in return!

[archangelric]

clearly you don't understand the oil market. For some time the price has been artificially high due to "speculators" biding up the price due to "fears of what is happening in the middle east", of high consumption (that never materialized), etc.

The drop is because these individuals have gotten out of the oil speculation market and back into stocks (which are rising); quite possibly related to the election, remember these are big, big money interests.

So the election happens, there is more bad news out of the white house about Iran, N. Korea, or some pretext; and prices go back up again. Our economy has been manipulated before, look at what happened to Jimmy Carter (in a free market you can never have "stagflation", but we had it).

Do you really think the American People are that stupid that we can't figure this one out?