There has been much discussion of gasoline prices lately and the American right wing is crowing loudly about how this justifies the maintenance of Bush Administration economic policies.
There is only one big problem with these assertions. There isn’t much support coming from the media outside the Beltway. In fact, there is much coming out that refutes these assertions of ‘conservative economic success’.
One of the biggest problems facing those who are claiming such validation is the widespread belief that currently lower gas prices are being manipulated. 42% of respondents to a new Gallup poll agree that the Bush administration “deliberately manipulated the price of gasoline so that it would decrease before this fall’s elections.”
It isn’t just the common man in the street who is suspicious. CNN’s veteran political commentator Jack Cafferty suggested as much on August 30.
There is reason to believe that the strategy is working – at least enough for Diebold to work its magical transmogrifying vote tricks.
Americans appear willing to trade away their votes, unable to make any changes for two more years – for $10 lousy dollars per tank. This doesn’t speak well of the American people in that they can be bought off so easily by the reduction of just a few dollars in gas expenses.
Oil industry experts, however, maintain that gas prices should be dropping faster, yet in places like Wyoming, Utah, and Idaho there are experiencing higher than average gas prices despite this drop elsewhere in the nation [except for Naples, Florida!].
One Utah newspaper, the Daily Herald, insists that Gasoline price reforms needed: “How about a tax on retailers that would kick in when the retail price varies too much from wholesale?”
Such strong taxation language coming from an anti-tax, Redder-than-Red State!
Elected officials of these afflicted states are seeking to take some kind of legal action, but are finding themselves with few regulations to work with against an uncooperative and uncaring industry. Wyoming’s Gov. Freudenthal said, “The state does not have the inherent jurisdiction to investigate multi-national oil companies.”
Neither is there much to expect out of the national government, as The Kansas City Star rued in a recent editorial.
This leaves only the gasoline retailer for customers to complain to, but they protest they aren’t the ones to blame for these prices:
“If you want to find out where the problem lies just follow the money,” said Mark Walker of the Lindon [UT]-based Walker Oil. “You’ve got the retailers out here scratching and scrambling to make a nickel, while the big oil companies are making billions and posting 30 percent to 40 percent gains in their profits.”
Considering the huge record profits recently reported by oil companies, they can certainly afford a few weeks of lower prices (and profits) in the quest to ensure that the GOP retains control of the government.
The smoking gun that indicates there is some domestic political shenanigan afoot comes from these two opposing pieces of evidence. In Japan during the period that gasoline prices dropped in the US, crude oil prices were increasing.
This should normally mean that investors would be buying oil stocks expecting higher profits. Yet, instead, they were pulling their money out of energy markets.
I somehow doubt that wholesale oil prices vary that much around the world with demand being what it has been of late. In fact, the industry insiders are already talking about higher wholesale prices on the way.
Just a few days after these experts made their announcement, the news came out that an OPEC oil production cut is being discussed due to reduced demand (caused by higher prices?) in consuming countries. This is when investors normally dive in, and yet they did not despite this news which emerged just days after they had ‘bailed’.
There must be another reason, and I doubt that wholesale prices are the culprit. There is another reason that explains their anomalous response to favorable market conditions. The decreasing number of fuel suppliers in Montana is the clue:
“From 18 distributors 30 years ago, it’s now boiled down to one fairly large marketing firm – CityServiceValcon – and one small wholesaler in Whitefish,” said Dallas Herron, owner of CityServiceValcon.
By definition, a lack of meaningful competition indicates a monopoly exists. The lack of anti-monopoly enforcement against the oil industry by the Bush Administration aids the development of a situation that hasn’t been seen since the days of John D. Rockefeller’s overwhelming dominance. It is certainly in the interest of the oil industry to maintain this economic environment for as long as they can, even to the point of ‘losing’ a few billion in profits to ensure continued largess by offering voting consumers a few weeks of lower gas prices.
But like everything else the Bush Administration has diddled, nothing is simple or works as they expect without something else going wrong somewhere else. For instance, Economists say falling energy prices reflect weakening economic outlook in U.S..
For example, the economists at Wachovia Securities think the economy is slowing down. |Another analyst gets specific about the looming decline.
Pension funds in particular could be hit if the coming winter is a cold one and retired investors need their money to pay higher heating costs. But the retirees aren’t the only ones who are affected by higher energy costs: Charleston, SC-based America’s Research found that the percentage of shoppers who said they feel pressure from credit card bills doubled to 43 percent in July, from March.
That impression may hurt retailers during the coming holiday season – a point that may already have been reached.
But the effects of that condition won’t really be felt until the Bush Administration is safely past the November election. In the mean time, voters are being distracted by playing the gas price game.
In addition to higher profits allowing for a period of politically-oriented generosity toward the ruling party, there is an added benefit for Big Oil: they are running the independent gas retailer out of business. This will make it much easier for the oil companies to make even more dishonest dollars per quarter than they already have to date.
What is it that causes the wild price ride that forces the independent out of business? The availability of product from the refineries which are mostly owned by Big Oil. Supply – and prices – can swing wildly in just a few days.
For instance, on September 14, 2006, the Central Valley Business Times of California reported refineries increased their output of gasoline and diesel, yet just six days later, on September 20, 2006, the same source reported production of gasoline and diesel in California declined.
Only micromanaged price manipulation makes much sense as an explanation, as the experts say things are good for oil producers right now. If this is so, such benign global conditions do not cause the sort of price fluctuation activity that has been reported by the sources I quote above.
But political motivation to fuel the engine of continued Republican political dominance fills the tank very nicely.
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