From my email inbasket today, from the nice people at the Annenberg Public Policy Center:
Is Obama to Blame for $4 Gasoline?Democrats, Republicans spin oil data in dispute over high gas prices.
March 24, 2011
Conflicting, false and misleading statements on oil production and gasoline prices have become the currency of politicians lately, as oil tops $100 per barrel and gasoline hovers near $4 per gallon. Among some of the claims that got our attention:
Top Republicans blame President Obama’s moratorium on deepwater drilling for rising gasoline prices. The moratorium delayed drilling of some new wells, but did not affect the output of wells already in production. A projected drop in total domestic oil production this year should amount to six-tenths of 1 percent of all U.S. consumption of liquid fuels. A Wall Street oil analyst told us the moratorium has had "zero" effect on prices.
Obama said domestic oil production last year was its highest since 2003. That’s true — but U.S. oil production is projected to drop this year.
Rep. Kevin McCarthy said "under this administration our output has gone down 13 percent." McCarthy is wrong — U.S. oil production was up in 2009 and 2010, and is projected to decline only 2 percent this year.
Sarah Palin said Obama is "allowing America to remain increasingly dependent on imports" from unstable countries. But there has been a decline — not an increase — in total oil imports from Middle Eastern and African countries, as well as countries identified by the State Department as "dangerous or unstable," since Obama took office. (There's more - follow the link!)
No surprise.
ReplyDeleteYou may want to check out LUV as well:
http://groups.yahoo.com/group/libertyundergroundtalk/
With the US frighteningly appearing to be going toward corporate, commercial Fox style News, which includes even sort of unbiased NPR, there are links to alternative new sources at my wordpress blog.
Thank you Laci - I find all kinds of things that are worthwhile and informative on your blog!
ReplyDeleteThank you.
ReplyDeleteI just received an e-mail from the Union of Concerned Scientists about their "receipt revolution" to demand stronger standards for automobiles. Of course, Detroit has been against CAFE for a while, even though the US has been on warning that peak oil was coming for nearly 40 years now.
Sad.
Great post. This is the type of information that needs to be promoted … sadly, the driver sees the price jump and will react to the Republican Message Machine.
ReplyDeletePeople need to understand that oil is a global commodity … and the price is not set by the US (well, except in Minnesota where the state controls the minimum price that it can be sold at … if the MN-GOP really wanted to lower prices they should be ending the price control … let the market determine the price … if a convenience store wants to sell it at a lost leader, let him.)
The price of oil is set by speculators who react to world events. There is no reason for them to seek lower prices.
Remember “Drill here, drill now” ? I wrote about who was winning then … and so no one should be surprised when British Petroleum had a rig explode … I hope you caught the name – British – when I looked, the active bidders were Norway and Brazilian companies. (BTW, why is the state-owned Brazilian oil company operating wells in Libya ??? certainly not to sell it in Libya)
BTW, the last count of domestic rigs showed 293 more rigs operated in the US that a year ago.
When the US economy tanked, drillers shut down … now that prices are back up, they are active again … they have no incentive to pull the oil out of the ground unless they can make maximum money … otherwise they will just hold thier leases … the oil is not going anywhere.
Plus as we use more fuel efficient vehicles, consumers may be paying more per gallon but that can be negated by greater miles per gallon. Here the Republicans are playing games … Bush created a program called “Freedom Car” to get industry to improve mileage … 3M in St. Paul got part of the contract … but now since Obama’s Government Motors, John Kline (R-MN-02) is leading the charge to cut the program. (read more about Kline and the Freedom Car here.
It’s a game they are playing … and people will react to it favorably for them.
There was an exec from either Chevron or Shell on the news a few weeks ago saying that the price of gas should be under $2 a gallon. Speculators are driving the price of oil up and he said that accounts for about $1.75 of their cost of making gas. Ed Wallace here in Ft Worth has been saying that for a couple yrs and now I am seeing oil co execs and finance people saying on the national news. The oil markets in the US have a rule that you have to take delivery of the oil you buy and when you put in your bid you have to identify yourself so they will know you are someone like an airline, trucking co, oil co. or someone who will use the oil, diesel or gas you are buying. There are a few European markets where you can bid anonymously. So you buy barrels of oil at $95 a barrel and you have 30 days to take delivery. Another investor buddy of yours comes in and bids $102 a barrel forcing Shell and whoever to bid 103, you dump yours on them for $8 a barrel profit. When you can do this every other week for a couple months (if you look at the prices recently that is very feasible) with millions of barrels that $8 a barrel can net you a couple hundred million. The downside is the people actually using the oil pay more, so gas and diesel cost more, airfares go up, and anything transported by truck goes up, but hey you made your millions you can afford an extra 4 dollars a tank.
ReplyDeleteThanks Tuck for pointing that out.
ReplyDeleteThere used to be very different regulation of the commodities markets, including oil. The speculation in all of them has been a destabilizing influence, and is directly linked in some respects to the food shortages which are the catalyst behind many of the middle east uprisings taking place now. THAT is the single greatest trigger, and the only one that explains so many countries acting at the same time.
There is an excellent video about it here:
http://www.msnbc.msn.com/id/21134540/vp/41414080#41414080
Minn Central - your posts are excellent as they apply to this, thanks. You continue to be my favorite blogger to read on these issues.
First, Thanks for your kind words. I used the FactCheck information you cited in a new post about HR 910 … it’s an interesting bill … do we want inaction and to continue using old technology … or do we want $120 billion in annual health benefits and to “spur both private sector and investment in developing new, cost effective technologies and private sector deployment of these technologies at a large scale” as supported by the Bush Administration ? Phone calls are being made encourage voters to lobby their Congressman … I hope people do that … I will be writing my Congressman, Tim Walz and encouraging him to vote NO … I am hopeful that Representative Walz will listen … however based on the spending by outside interests it may be the decisions may be already made by some members of Congress { $513,148 – Michelle Bachmann (R-MN-06), $145,210 – Erik Paulsen (R-MN-03), $110,050 – John Kline (R-MN-02)} … The 112th Congress may be the Best Money Can Buy !
ReplyDeleteSecond, regarding speculators, I am not an expert on the commodities market … but business can be impacted depending upon how well they buy on the futures market. My exposure is limited to Copper Futures which I would buy a year in advance for my employer … it was necessary to have an idea what the cost of our product would be in the future … and more times than not, we made money …
You may recall in 2005, when Southwest Airlines was in the news for their favorable buys while Delta CFO had sold all Deltas hedges as they needed that money desperately to make a payroll … at that time, the thought was that at $50 a barrel, no airline could survive … yet, we know that last year, the airline industry was quite profitable. BTW, did you know that airplanes use about 1.2 million barrels of oil per day.
“Users” need futures … but the speculators drive prices just to make money .. it would drive us mad that somebody that had no interest in ever using the commodity would impact the price of the product that was essential to our profitablity.
This is, at the bottom line, an issue of regulation. More precisely, from the lack of regulation. We used to have much better legislation regulating this kind of trading. The present situation of the U.S., and the larger world, offer an excellent occasion to return to them; they worked.
ReplyDeleteToo few people either have forgotten that legislation existed, or they never knew.
The doom of repeating history all over again........
One thing I would point out DG is that we do have regulation preventing that type of speculation in the US. However as you say in your article oil is a global commodity. Everyone who has mentioned speculation as a cause of gas prices and $100+ barrels of oil has mentioned the Asian and European markets. They still have a few where it is possible to do this. Most people think that Warren Buffet and T Boone Pickens are heavily involved in this speculation but the markets where it is happening also allow anonymous bidding so there is no way to prove it, however, Pickens knows how to squeeze every dime out of a drop of oil and Buffet is heavily invested in alternate energy sources which would benefit from high oil prices. Either way last summer when this happened I saw videos from Houston with oil tankers parked offshore and full. They were parked because the onshore storage was full. If you have so much oil you don't have storage for all of it prices should be falling not rising.
ReplyDelete