Obama Lowers Gas Prices

[Steverino]

Lately the price of gas has been falling.

As you may recall, only a few short weeks ago Obama was being blamed by the GOP for the rising summer gas prices. So he must now get the credit from the GOP for lowering them right? Sure, and pigs will fly, haha.

It's all a crock anyway. Prices rise and fall due to the world wide oil commodity markets reacting to economic news, wars, etc. as much as anything else.

http://www.csmonitor.com/Business/La...S-retail-sales

Luckily, I don't watch those gas prices much anymore now that I have a Chevy Volt to runs on electricity for 80% of my driving.

[solar_dave]

Gas is lower? Oh I haven't bought any in months. so I guess I don't care.

[frankydude]

Gas? sounds familiar!

Francois & Line
B2653 C19249

[lil' dave]

It was $3.07 when I was in Alabama on Monday. $3.75 in Central Illinois.

[ShannonVolt]

I'm up to 99% electric, so my trusty myvolt website tells me. Using gas to fill up my vehicle was so last month ago. (from my old pickup).

[ckeel4]

The president can raise and lower gas prices as much as the Standard oil companies will let him. In much the same fashion as a kid asking for a change in allowance. He can communicate with big oil and get them to adjust their fabricated "supply and demand" numbers. But there is always a quid pro quo. I predict lower gas prices to the election day, Obama gets larger campaign contributions from big oil than any politician in history, and by 2015 gas is $5/gal.

[DCFusor]

The general worldwide economic collapse is a heck of a lot deeper than reported by the mainstream media, or especially central bankers who "when times get tough, have to lie" (a real quote from Juncker) - or be accused of being "pro-cyclical". So, while we might even be at peak oil, demand is crushed and inventories are at all time highs right now.

There's another ulterior motive going on here - world governments who don't like Iran's nuke projects that much (in other words, nearly all of them) want to keep the bbl price low so Iran can't make much money trading oil with the couple (India and China) who have not signed on to the embargo.

Yeah, I trade this market for a living. Not all is as it seems...and you sure can't go by the media.

[ckeel4]

DC...that makes sense but if inventory is at an all time high, which I assume would include higher then the 1990's, wouldnt supply and demand dictate that crude prices return to 2000 level prices? Doesnt that just point to international price fixing as from what I understand it still only costs around $1.00 to procure and refine 1 gallon of gasoline? I just spoke to a friend from Venezuala (spends 4 weeks there a year) and gasoline is around $1.00 a gallon. I deeply value your input as an insider in the trade.

[DCFusor]

Remember that under-reported but very actual inflation? All that quantitative easing (by whatever name)....print more money against the same (roughly) amount of goods and services and there you have it. It's not as bad in the US, where we are (for now) the worlds reserve currency, but it comes home to roost first in other places (we get to spend it first, before the effect of devaluation appears). We'll be catching up soon enough.

There are already a lot of bi and multilateral agreements being made to ditch the dollar as the required currency for international exchange...and when those bucks held in reserve for that come home, look out.

CB's have printed quite a few trillion bucks (or euros or whatever) in the last couple years...compared to existing money supply, this is actually a pretty large number, and the reason oil went so high back in June last year and March this year. More money, same amount of "stuff" and all that does is make the price go up. These bailouts are all for the banks, who are still allowed to "mark their book to unicorn" at present. If you think the Greek bailouts have anything much to do with Greece, instead of the banks they owe money to, you need to follow the money closer - it's all going right back out of Greece to banks in the rest of the Eurozone (mostly).

Just like the AIG bailout was simply signed over to Goldman Sachs - they testified to that in congress, so...if they really wanted to bail us out instead, there would have been simpler ways. But that's not who buys the governments of the world, we're just pawns in this.

Extraction costs are going up as well, it's different in each oilfield, but bordering on 80/bbl right now average. Some of the governments who dislike Iran are other OPEC nations, and can afford to pump even at a loss just now to get their way on something else they think is pretty important. Iran's cost? About $83/bbl - which "for some strange reason" is today's price for crude.

And yes, all commodities are manipulated to the extent possible. Morgan Stanley was responsible for the 140/bbl oil that triggered the last collapse of the house of cards, and lied to congress about it (but admitted it two weeks later in the press). Funny thing, we can hang Barry Bonds for lying to Congress about personal steroid use, but ignore that? Yep, obviously. I can give a lot more detail, but hey, this is a car site. For awhile there, MS had rented every boat, bathtub, swimming pool and tank on earth to hold oil off the market till they could cash in their futures contracts...

Refining and shipping add more cost - like the steel business, old refineries aren't as efficient, and some countries with newer ones can do it better. We might see $2/gal in a dream world...but I doubt it, more like $2.50 for a short time, then back up - you just cannot print real wealth.

We here can afford to recall that gasoline is heavily subsidized in various ways and in various places. In some Arab countries it's been as low as .35c a gallon till recently - a way to buy off their populations - their concentration of wealth is even worse than here, and that's a way to hold off revolutions. One might consider that all this middle east violence we've paid for should be part of the cost of gasoline - we intervene there, you betcha, but ignore genocide and starvation in countries with no oil, so the cost of our military is a subsidy on petroleum - one our kids and grandkids will be paying off for generations....not to mention, lives and making people hate us who tend to have long memories.

To further complicate matters, in Europe, they like diesels - but require very low sulfur content, which is mainly only available as Libyan light sweet - do some of the wars make more sense now? Sulfur is really hard to get out of oil (read, expensive) and we in the US don't require quite the "sweetness" in our feedstock to get what we want here. Oh yes, Libya and Iran and Iraq have all moved to try to get off the dollar as the trade currency. Funny thing to have in common, eh?

Arab spring was actually driven by the central banks creating inflation in most commodities. When the price of something like wheat goes up - it matters not a bit to us who are paying $3-4 for a box of cereal - there were only a few cents worth of wheat in it to begin with (eg we are used to being thoroughly ripped off for things like this already). But if you're very poor, and buying things like wheat in bulk to bake your own daily bread, doubling your input costs is a pretty big deal...Driving up the corn price (since we use it for ethanol) has a similar effect...which drives up the costs in fertilizers and so on - it's all connected.

While in the markets, the 4 most dangerous words are "it's different this time" - it really is. No, human nature, which is what that statement is talking about, never changes much. But...it used to be a crisis was usually localized to one country or even smaller. Now when we sneeze, the world catches cold, and those "financial engineering" schemes went worldwide, so there's no longer someone "outside the problem" to step in and fix things up.

One of the things that has changed, a lot, is what percent of world economy goes to paying those crooks those nice bonuses, and paying people in that business in general - it's up thousands of percent over the last 50 years or so...do they create that much additional value over people who make stuff or invent stuff that's actually useful to other than themselves?

OK, enough rant - but that's the picture I see here. Oil is going to track the global economy - it always does, sooner or later, it must due to supply rate constraints, and right now, the beggaring of most of the rest of the planet has killed demand...that won't last forever I suspect. Also, remember, if you shut down a refinery due to reduced demand (so you can still make profit on the ones that are left), when demand increases, there are significant re-start costs that will drive prices higher quicker than just the feedstock going up in price. And that's the current situation.

Just remember, two silver dimes will still pay for a gallon of gasoline....more than that just now. It's not that gas has gone up, it's our money that's gone down. We rich guys don't notice it, as we spend a lot on things like fancy gizmos and thingamajigs that with improving technology, go down in real and even nominal cost all the time...but to someone living a lot closer to the lower limit, things look very very different.

You can go look at a couple interesting websites, ZeroHedge and The Oil Drum for more. You have to learn to read past their various slants (which can be extreme), but no one else has any facts at all at this point. If this trading stuff were easy, we'd all be rich, right?

[KyleH]

I would like to add that people are not doing so well in this economy where people are car pooling, reducing visits to stores, and in general planning less road trips because of the cost of gas. More fun closer to home for kidos.

Add that with shale-gas is supplying natural gas to power plants where it is no longer refined as much from crude oil, we are using less gas at the power plants. I suspect the current administration can tweak a few number with OPEC "politically", and with a worldwide slowdown in China, there is just fewer demand for crude oil than 3-6 months ago.

Being an upcoming election, I suspect the goal of this administration is to get it down to $2.99. Barring any crazy disasters (natural or otherwise) such as hurricane, iran issues, or even north korea mess, I suspect we can see $2.99 gas for september right before the refinerary's switch to winter production. Then, another effort to lower gas after the worse of winter to rev up election-year politics.

If gas > $4., the GOP will use as ammunition. If gas < $2.99, then Obama can say a little face. J-O-Y for something to look out for.

-KyleH