“Let us rid ourselves of the fiction that low oil prices are somehow good for the United States.” Dick Cheney, 43rd President of the United States.
”Now we’re facing gas prices over $4 a gallon, gas prices that are decimating the savings of families who are already struggling in this economy” – Presidential candidate Obama, campaigning in 2008.
“We were at the height of political season. You had all kinds of slogans and gimmicks and outraged politicians — they were waving their three-point plans for $2 a gallon gas, And none of it was really going to do anything to solve the problem, The truth is, none of these gimmicks, none of these slogans made a bit of difference.” – President Obama talking about the 2008 campaign
Nevermind…
Gas prices will always be used as a political tool, but how much power does the president really have to lower gas prices?
” If I had a magic wand, but the president doesn’t have a magic wand.”
– Vice President George Bush http://www.youtube.com/watch?v=H_asyHfq_fA
“Let’s open up the Keystone pipeline to bring Canadian oil into our country to dramatically reduce our dependency on foreign oil. It creates jobs here in America. It lowers gas prices, increases supply, ” – Paul Ryan
“Here is the bottom line, last night it took 70 dollars to fill the tank of my 2008 H3 Hummer, what is it costing you?” – Allen West
“I’ve developed a program for American energy so no future president will ever bow to a Saudi king again and so every American can look forward to $2.50 a gallon gasoline.” Presidential candidate Newt Gingrich
“I think people recognize that the president can’t precisely set the price at the pump.” – Mitt Romney, presidential candidate
“The best thing we can do to get the price of gas to be more moderate and not have to be dependent upon the cartel is: drill in the gulf, drill in the outer continent shelf, drill in ANWR, drill in North Dakota, South Dakota, drill in Oklahoma and Texas.” – Mitt Romney
Pieces of the $7 billion Keystone XL pipeline waiting to be assembled.
Read more:http://indiancountrytodaymedianetwork.com/2012/01/20/the-truth-about-keystone-xl-few-jobs-no-energy-security-60041 http://indiancountrytodaymedianetwork.com/2012/01/20/the-truth-about-keystone-xl-few-jobs-no-energy-security-60041#ixzz23MU8bbZf
photo courtesy of TransCanada
My understanding of gas prices: Gasoline prices are tied to the price of oil, set by global markets. Gas prices increase and decrease in the same manner across the globe. Gas prices are largely determined by global supply and demand. The United States would have to take itself out of the equation of world trade in oil and gasoline to set its own prices. Americans pay much less at the pump, compared to Europe for example, because we pay lower gasoline taxes; when the price of a gallon hits $3.71 in the United States, it is closer to $8 in central Europe. Oil is a global commodity, increasing U.S. production will do very little to bring down retail gas prices in the United States. Statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production found no statistical correlation between gas prices and how much oil comes out of U.S. wells. That being said, domestic production is up and oil imports are down: 2005 oil imports accounted for nearly 60 percent of America’s daily consumption. In 2010 imports were less than half of consumption, and last year, 2011, imports were only 45 percent — 8.6 million barrels a day of the 19 million consumed. There are two reasons for this welcome shift: production is up and oil consumption is down. Ten years ago, cars and light trucks (including S.U.V.’s) averaged 24.7 miles a gallon. In 2011, the figure rose to 29.6 miles a gallon.
There is also the issue of increased demand. China and India are using more and more oil. China’s consumption is forecast to increase 2.8 percent next year to 9.75 million barrels a day. Japan, only recntly, is starting back up its nuclear powerplants that were all shut down and temporaily replaced by oil-fueled power (a huge, sudden demand on the oil market). The International Energy Agency cut global oil demand forecasts for this year and next, estimating that growth will slow in 2013 amid weaker expectations for the economy and the restart of nuclear plants in Japan. Hopefully this will keep prices in check. Iran is another story.
One thing a president can do is to release oil from the Strategic Petroleum Reserve that is kept in giant salt caverns near the Gulf of Mexico. That has happened three times — at the outset of Operation Desert Storm in 1991, after Hurricane Katrina swept through oil production and refining facilities in the Gulf states in 2005, and during the Libyan civil war in 2011. In 2000, President Bill Clinton ordered a swap of oil from the reserve, letting refiners give the oil back in 2001.
But oil experts are divided about the impact of such a release. In the past, SPR releases have lowered prices, but only temporarily. Moreover, the 696-million-barrel reserve — which could, for example, offset a 280-day suspension of Iranian oil exports — is an emergency stockpile for supply disruptions, not a device for blunting price increases.
”In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum. Speculation typically involves the lending of money or the purchase of assets, equity or debt but in a manner that has not been given thorough analysis or is deemed to have low margin of safety or a significant risk of the loss of the principal investment.”
One thing the president can and should do is go after the speculators that drive prices up, creating artificial markets and can account for as much as 40% to 60%of the cost of a barrel of oil. “Obama could unleash a serious-minded, subpoena-wielding probe aimed at frightening the Wall Street speculators who are responsible for most of the climb in gas prices.” Obama is at fault here. the Oil and Gas Price Fraud Working Group, the body that the attorney general first convened at Obama’s direction nearly a year ago has been utterly useless. Had the task force really barged into Wall Street offices in search of people needing to be held to account, it might well have taken some of the momentum out of gas price increases. The manipulation inquiry, even if it just has the appearance of being taken seriously, would drop the gas price immediately,” Michael Greenberger, a finance expert at the University of Maryland School of Law.
“A serious investigation in and of itself has historically shown that the speculators pull back and the price drops,” Greenberger added. “If there is evidence of manipulation and subpoenas are issued, and the FBI is investigating, it will drop even further. If indictments are brought, the bubble will collapse. We don’t see the investigation that the president wants done.”
Other issues have been raised that have little or nothing to do with current gas prices. Approving the Keystone XL pipeline, rejected by Obama with its current route and highlighted by Gingrich as a useful move, would not add to current domestic oil supplies; it would go to the highest foreign bidder, not the U.S.. Renewable energy such as wind and solar makes the electricity grid cleaner but has nothing to do with oil prices. Electric cars could help, but it is likely that their sales figures will fall short of administration goals. And higher U.S. production will cut U.S. oil imports and ease the pressure on global demand, but the United States will remain a major oil importer for many years.
Skyrocketing oil prices. Tensions between the United States and Iran. Do these headlines seem unsettlingly familiar?
Flashback to the 1970s and the Arab Oil Embargo of 1973. The embargo caused a spike in oil prices in world markets. In response, the Nixon administration announced “Project Independence,” a plan which consisted of a combination of measures aimed at reducing US dependence on oil and reigning in prices.
Despite this progress, ending dependence on foreign oil seems as remote as when President Richard Nixon proposed it. With developing countries like China and India demanding more petroleum, prices are likely to stay high. The American President can affect gas prices very short term, but only at a price that we will have to pay. Only a combined policy of much better fuel efficiency, solid and steady oil production and the continuing development of alternative fuels can protect US against what could be even greater gas price surprises in the future. What do you think?
Doesn’t have a clue…
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