From canceling oil leases in his second week in office to denying the XL Pipeline this year President Obama and his administration have offered up a non-stop assault on affordable energy. Now that high gasoline prices have come home to roost, the president is flailing around for an energy policy.
His recent attempts at energy policy include: •Nobody can do anything about high gasoline prices. •Maybe I should release crude from the Strategic Petroleum Reserve. •There is a lot of drilling that I haven’t been able to stop. Don’t I get credit for that?
The latest attempt is to blame everything on speculators. And why not? Previous polling shows that 80 percent of Americans believe petroleum price spikes are caused by speculation, which means no more than 20 percent believe it is caused by the fundamentals of supply and demand.
There are several flaws in “the speculators did it” theory. The first is why do they only do it occasionally? That is, why don’t speculators want to make unconscionable profits all the time?
Second, why do the index funds and all the other bad guys only speculate in oil? Where are the profiteering speculators in natural gas, whose current price is about half of what it averaged over the last decade?
Third, there are sophisticated traders on both sides of the petroleum markets. For every speculator who makes money on a trade, somebody else will lose money. Blaming speculators on continued price increases requires an endless string of chumps to take the other side of the speculators’ deals. If anybody should be the chumps, it should be the newbies from the insurance industry and hedge funds, but they are at the top of the most-wanted list.
Finally, for speculation to drive up prices, the speculators must either cause oil production to slow down (which they haven’t) or to pull oil off the market. If the flow of petroleum and its products remains unchanged, the price at the pump will not change. If petroleum is pulled off the market, which can happen even though there are limits to what can be stored, it will eventually come back on the market. And the question becomes, “When the oil comes back on the market, is the price higher or lower than when it was pulled off the market?” The price will only be higher if the amount supplied at that time is lower or the demand is higher. In either of those cases, speculators have helped moderate price fluctuations and will be rewarded with profits. If the price is lower, then the speculators did a bad thing and will be punished by losing money.
The real problem is that combating high gasoline prices requires a greater supply, and this administration’s policies have pushed the other way. It seems the administration does not really want lower gasoline prices. Steven Chu, Obama’s non-car-owning Secretary of Energy, famously said we need to get our gasoline prices up to the $8-$10/gallon level they are in Europe.
Unfortunately for the president, the voters want more gasoline and lower prices. So, in the time-honored Washington tradition, he creates a boogeyman and blames his energy failures on speculators.
In his latest attempt to seem relevant to the economy that is sinking his re-election chances, President Obama demanded that Congress give him $52 million to seek out and end oil market manipulation.
“None of these steps by themselves will bring gas prices down overnight,” Obama said. “But it will prevent market manipulation and make sure we’re looking out for American consumers.”
However, in looking at the quote, one has to wonder who is responsible for “manipulating” the oil market?
Dictionary.com defines the term manipulate as, “to manage or influence skillfully, especially in an unfair manner.” When someone buys the commodity at a high price and the market brings the price down, they lose money, sometimes lots of it.
When someone buys the commodity at a low price and the market takes the price up, they make money, sometimes lots of it.
And while sometimes so-called speculators can drive prices up, the President of the United States can have a much greater impact on these prices simply by the policies he embraces.
This definition makes one wonder if the markets were being manipulated or if they were responding rationally when Obama appointed an Energy Secretary who publicly argued to the Wall Street Journal for higher gas prices only months before his appointment?
The definition of manipulate makes one wonder what the President himself is doing as he continues to threaten to veto a highway funding bill that would mandate approval of the Keystone XL pipeline. Is he manipulating the market by denying the Keystone XL pipeline that will allow the vast oil reserves in Alberta, Canada to reach the market, and increase the overall supply of oil?
The truth is the oil market is neutral. Investors and consumers compete to purchase the commodity in the open market making individual judgments on how the supply, demand, inflation and other factors will impact the price in the future.
If there is anticipation of a potential war in the Middle East, then concerns about supply will drive prices up, as they should.
If, there are significant new sources of oil coming on line, and investors believe the supply is secure or even abundant, the prices come down.
While Obama has attempted and failed to impact the demand for oil by throwing billions of taxpayer dollars at various failed new age energy schemes, he has succeeded in cutting the anticipated supply of oil that is being produced on federal lands, even as those sources he doesn’t control are increasing production overall.
All this leads to the obvious question: would a government assigned to root out manipulation of the oil market which has led to politically untenable high gasoline prices investigate someone who: •Had a high ranking executive express a strong desire to have gasoline prices significantly higher; and •Engaged in policies that are designed to choke off the supply of domestically produced oil?
If so, then perhaps the first person perp-walked for manipulating the oil market should be the man who lives in the big White House on Pennsylvania Avenue in Washington, D.C..
Of course, that would require that this President engage in some self-examination of the wreckage created by his policies rather than constantly seeking someone else to blame.
Originally posted by USFiero on 4/17/2011: It's been from $3.67 to $3.78 per gallon... and what happened to the price of coffee? The cost of beans has really shot up.
It is back to these prices now. Down from nearly $4/gallon.
Can I be the bearer of bad news today?? Huh--Please?---can I? I wouldn't bet on low pump prices much longer. Dutch Shell today, shut down 325,000 barrels crude processing per day in refining at it's big Port Authur Texas Motiva plant due to corrosion problems and it's expected to be down several months--some analysts predict as much as 1 year before Motiva is back on line. The lack of feedstock coming from that portion of the plant is expected to cause shortages in other parts of the plant including the gasoline refining units. http://in.reuters.com/artic...dINL1E8HLBZ020120621
Also, hurricane season is here. Altho just a tropical disturbance right now, there is already a storm potential in the Gulf of Mexico north of the Mexican Yucatan, with movement forecast to the North and/or NW.
quote
It stretched from the northwest Caribbean into the Gulf and was expected to move slowly northwest to north in the next two or three days. It was too early to know whether the system would threaten energy interests clustered in the northern Gulf of Mexico.
"It'll probably be out in the central Gulf of Mexico over the weekend. Beyond that it's very difficult to say," said Jack Beven, a senior hurricane forecaster at the hurricane center.
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This one will probably die out due to dry gulf air and strong shear, but there will most likely be others to follow--the tropics are heating up.
Businessweek - 2 hours ago By Brian K. Sullivan and Dan Murtaugh on June 24, 2012 Anadarko (APC) (APC) Petroleum Corp., BP Plc and other companies stopped production in the Gulf of Mexico as Tropical Storm Debby strengthened, as forecasters projected a track that cuts through ...
In June it looked like gas was on the way down, getting to the mid $3.2X - but now its back in the $3.4X per gallon. Did Hurricane Katrina come back?
Posted the last week in June:
quote
06-23-2012 03:46 AM
Can I be the bearer of bad news today?? Huh--Please?---can I? I wouldn't bet on low pump prices much longer. Dutch Shell today, shut down 325,000 barrels crude processing per day in refining at it's big Port Authur Texas Motiva plant due to corrosion problems and it's expected to be down several months--some analysts predict as much as 1 year before Motiva is back on line. The lack of feedstock coming from that portion of the plant is expected to cause shortages in other parts of the plant including the gasoline refining units.
That plant is still down and will be for the foreseeable future.
Went to the gas station, it was $3.56 a gallon. The Chevron refinery in Richmond, California caught fire and is shut down - only supposed to affect the West Coast, but I wonder if there is a psychological ripple effect? (I saw your post about the Dutch Shell shutdown in Texas MaryJane - missed that at first)
[This message has been edited by USFiero (edited 08-08-2012).]
AAA calls it the steepest one-month climb in gas prices since they started keeping track in 2000.
The average price for a gallon of regular unleaded Friday was $3.67, up from last month's $3.38. Diesel's up almost as much.
For trucker Anthony Bagley, who was topping off his 200-gallon tank Friday at a truck stop in Millersville, Md., the price hike means lost income, lost profits and lost savings.
"Seventy-five gallons so far -- almost 300 bucks," he told Fox News. "Ridiculous. It's killing me. No money in it, it's not worth it."
Asked what the price hike would do to his business, Bagley said, "Eventually it's going to fold."
Industry analysts say the sudden spike in fuel prices has one root cause.
"It all goes back to the price of crude oil, and that has been ramping up quite a bit. It went from $78 dollars a barrel all the way up to $93, $94 dollars a barrel in the past month or so," says Rayola Dougher of the American Petroleum Institute.
But other factors have contributed to the rising cost of fuel. Drought across the U.S. is reducing corn yields, spiking the price of ethanol. Refining capacity is down, with two plants in the Midwest offline and a third in California damaged by fire. Tensions in the Middle East remain high. And despite new technologies that have opened up vast domestic deposits, many of those areas remain off-limits to drilling -- much to the consternation of conservatives, who lament the Obama administration's reticence to open more federal lands and waters to drilling.
"What the president has control over and what he can do immediately is stop delaying permits and leases, so that way our drillers can start drilling," Rory Cooper of the conservative Heritage Foundation said. "Stop this land grab where 70 percent of our available oil shale in this country is underneath federal land and we can't get to it."
The Obama administration has steadfastly maintained that more domestic oil is being pumped now than at any time in recent memory. And while it has espoused an "all of the above" approach to feeding the nation's energy needs, it remains hesitant to increase the nation's reliance on fossil fuels.
Drought conditions have encouraged many in the administration's base, especially environmentalists and climatologists, to argue that climate change is indeed happening. NASA scientist and climate activist James Hansen wrote recently in a Washington Post opinion piece, "There is still time to act and avoid a worsening climate, but we are wasting precious time. We can solve the challenge of climate change with a gradually rising fee on carbon collected from fossil fuel companies."
For truckers like Sean Scipel, such a prescription would be hard medicine to swallow.
"The cost of fuel goes up, the cost of what we deliver goes up, because we have to try to cover it," he said. "So then the stores charge more, and then the people are the ones who end up losing out."
Perhaps the reason the US has one of the lowest (despite taxes - or maybe because of them) overall prices on gasoline is because we use 44% of the world's supply? And our military alone uses as much/more than the country of Greece by itself? Another argument for keeping a strong military - to subsidize energy costs?
Last week I left home for N. Texas and gas was $3.50+/- here. Got up there and it was $3.19. Returned home a week later and it is $3.20 here (cash price) $3.25 credit/debit--at an Exxon sta.
Well, after 'bottoming out' around $3.06 - $3.09 the prices has risen back to about a dime per gallon higher. Not quite as low as last year at this time, but certainly not as high as it was a few months ago.
The news is full of 'Gas Prices Crash!' headlines, but really we are right around the same prices we were last year - which were putting a hurt on the economy. So I don't see this as an improvement, but at least they aren't rising as they did year over year.
I can get gas for $2.97 here in Kerrville but it is $3.59 in Seminole where I work at present. The demographics are not much different as far as nearby refineries go.
Just drove from Idaho to mid califonia. Prices from 3.15 to 3.63. Why such a disparity? They weren't that far apart either. I often see two stations right next to each other with a twenty cent difference. Why would anyone pay the higher price? Gasoline is gasoline. As long as people are willing to ignore competition, someone will be willing to overcharge. Competition will only work to bring down prices if we shop. I have noticed though that when prices go up it is almost universally the same in my area. I'm not saying that there is price fixing going on but
Been holding steady here, $3.05-$3.09 since late Oct. Occassionally see it lower-not higher except in Houston proper, and down on Galveston Isle/Bolivar Peninsula--where everything is at a premium..
Well, end of the year. Gas prices bottomed out right around $3 a gallon a couple weeks ago, but have returned to around $3.20 a gallon. Happy New Year!
Still $3.09-$3.11 range here. Some places still under $3/gal.
Texas gas prices increase 4 cents Updated: Monday, 31 Dec 2012, 8:35 PM CST Published : Monday, 31 Dec 2012, 8:36 PM CST
HOUSTON (AP) — The average price across Texas for a gallon of regular unleaded gasoline increased 4 cents this week.
AAA Texas reported Thursday the average price increased to $3.07. Motorists in Texarkana are paying the most, with an average of $3.12 per gallon. Drivers in Beaumont are paying the least at $3.02 per gallon.
The average price for fuel in Texas is 19 cents less than the national average of $3.26.
Interesting proposal being put out by our state's governor Bob McDonnell. He wants to eliminate the state gasoline tax and raise the state sales tax. I am not sure how I feel about that.
