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Strelnikov_ Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:00 PM
Original message
"Why Oil Prices Are Falling"
Edited on Wed Sep-27-06 09:02 PM by loindelrio
Got so many 'interesting' responses when I posted this in Editorials, I thought I would just throw it out into GD.

Guess I am just wasting my time in trying to develop a clear, concise theory as to how they are artificially lowering gas prices, so when I engage a Reich-Winger on the issue, I can present a well thought out portfolio on how they are pulling it off.

Then again, running around in circles crying 'Chimpy's To Blame' and not being able to offer a theory as to how always carries the day, doesn't it.

But I guess I'm just wasting my time. Facts are so tiring.

(Hint: The articles, if you read between the lines, contain nearly all of the clues as to how they are reducing prices beyond the normal autumn drop in unleaded prices.)


Michael Klare, Why Oil Prices Are Falling
http://www.tomdispatch.com/index.mhtml?emx=x&pid=124698

Is this the result of some hidden conspiracy between the White House and Big Oil to help the Republican cause in the elections, as some are already suggesting? How does a possible war with Iran fit into the gas-price equation? And what do falling gasoline prices tell us about "peak-oil" theory, which predicts that we have reached our energy limits on the planet?

Since gasoline prices began their sharp decline in mid-August, many pundits have attempted to account for the drop, but none have offered a completely convincing explanation, lending some plausibility to claims that the Bush administration and its long-term allies in the oil industry are manipulating prices behind the scenes. In my view, however, the most significant factor in the downturn in prices has simply been a sharp easing of the "fear factor" -- the worry that crude oil prices would rise to $100 or more a barrel due to spreading war in the Middle East, a Bush administration strike at Iranian nuclear facilities, and possible Katrina-scale hurricanes blowing through the Gulf of Mexico, severely damaging offshore oil rigs.

. . .

For all these reasons, immediate fears about a clash with Iran, a possible spreading of war to other oil regions in the Middle East, and Gulf of Mexico hurricanes have dissipated, and the price of crude has plummeted. On top of this, there appears to be a perceptible slowing of the world economy -- precipitated, in part, by the rising prices of raw materials -- leading to a drop in oil demand. The result? Retailers have abundant supplies of gasoline on hand and the laws of supply and demand dictate a decline in prices.



Another view.


Cheap Gas Until The Election?
http://www.augustafreepress.com/stories/storyReader$40623

"The Republicans are in a bad situation, even soccer moms know this. The best chance they have now is lower gas prices," says Michael Kane, energy affairs editor at From the Wilderness Publications, which publishes a daily e-mail newsletter on world energy and political news.

"When it comes to heating oil and natural gas, your bill may go up, but you pay what you pay for it. The price is not on billboards around the country. But people shop comparatively for gasoline. It's a real billboard sticker. Cheap gas is about the only push that the Republicans have right now, given that their backs are against the wall in Iraq."

. . .

"Following what the storage numbers say, each week the amount of oil and gas reserves is going up," says Kane. "The people who are involved at the refineries know the market, they know the cycles and they know that they don't need that much gas. By flooding the market when you know that demand is low, and then on top of that when the economy is slow, you know that there's even less demand." Even though supplies are high and prices are falling, refineries have continued to run at higher than 90 percent capacity in recent weeks.

. . .

Most oil executives, Kane says, are Republicans, and they feel that the GOP will protect their interests on Capitol Hill better than Democrats would. Yet, Kane does not see an organized conspiracy to manipulate voters before the election. "I doubt there was even one phone call," he says. We're seeing a coordinated campaign, but it's not a conspiracy. It's just everybody knowing what benefits them. It's a question of all the parts of the machine turning in the same direction at the same time."


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bullimiami Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:15 PM
Response to Original message
1. i think they were artificially high. we were being gouged and noone cared
to stop it.

its all speculation and market manipulation.

im scared. raise prices. im going to back off on the supply just a tad = inventory a little lower. raise prices.

now all things being equal iraq instability, israels attack on hezbollah and bush threatening iran, the alaska pipeline problem and the rift with chavez ... should not be causing lower prices.

but they are lowering.

its all speculation and marketeering and we are being had over and over.
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unkachuck Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:25 PM
Response to Original message
2. can you say....
....election?....but on November 8th, win or lose, the repugs and big oil will start jacking up the price....and for all the noblest of reasons....you know the standard propaganda lines....

....bicycle my friend!....I'm riding my bicycle more and more and I'm enjoying it....and you're talking to a person who hates exercise....
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Another Bill C. Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:27 PM
Response to Original message
3. According to Bush,
The president does have the power to influence gas prices:

“I think the president ought to get on the phone with the OPEC cartel and say: ‘We expect you to open your spigots’ …The president of the United States must jawbone OPEC members to lower the price. And if, in fact, there is collusion amongst big oil, he ought to intercede there as well.”
Financial Times, February 2, 2000

“I would work with our friends in OPEC to convince them to open up the spigot, to increase the supply. … Use the capital that my administration will earn, with the Kuwaitis or the Saudis, and convince them to open up the spigot.”
New York Times, June 28, 2000

“We're dependent upon crude. … I would hope the administration would convince our friends in OPEC to open the spigots.”
Los Angeles Times, June 22, 2000

“I think Americans ought to be asking, ‘Where's all the capital we earned overseas after defending some of our OPEC nation friends?’”
Associated Press, March 20, 2001

“Well, we've got good relations with a lot of members of OPEC. If the president does his job, the president will earn capital in the Middle East, and the president should have good standing with those nations. It's important for the president to explain, in clear terms, what high energy prices will not only do to our economy, but what high energy prices will do to the world economy.”
CNN, January 26, 2000
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TNDemo Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:28 PM
Response to Original message
4. I went to hear Bill McDonough speak last night.
He mentioned that when he was a student in 1973 he remembers hearing one of the members of the oil cartel being interviewed and two things from that interview have stuck with him. One was a question about the end of the oil age and the oil guy said, "Well, the stone age did not end because they ran out of stones." And the next thing was about alternative forms of energy taking over. He said that they will drive up the price of oil and once investment in alternative energy starts taking hold, then they will drop the price of oil and the investments will flow out of the alternatives and back to oil. Then they will raise the price of oil again and the cycle would start over. He said it would take about a decade for each cycle but it would effectively bleed investment from alternative energy and keep it from ever taking hold. He showed a graph about how that cycle has occurred three times in the last 30 years.
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Strelnikov_ Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:46 PM
Response to Reply #4
7. IMHO The WOT Is Simply Cover For The Looming Supply Constraints
Edited on Wed Sep-27-06 09:50 PM by loindelrio
The purpose of the 'War On Terror' and all of it's subsidiaries are related to Peak Oil as follows (IMHO, of course):

- By maintaining a constant state of tension, high petroleum prices can be explained away as a temporary spike due to politics. This way, the public's attention can kept from the accelerating supply problems worldwide, thus preventing them from starting to make other arrangements for a post-carbon world (they can't have the addicts kicking too soon).


- Whoever controls the remaining (cheap) petroleum reserves stands to make a fortune in the years immediately following the peak of production. Even the most optimistic scenarios indicate it would take twenty years to mitigate the loss of petroleum production following peak. During this period of transition, the 'addicts' will have no choice but to pay, and pay, and pay.


I agree with the price cycle argument presented, but the looming supply (currently supply growth) problems are going to minimize the ability to periodically flood the market.

The WOT is plan B (or phase 2, if you like).

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Vinnie From Indy Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:33 PM
Response to Original message
5. As I posted on your OTHER thread
Edited on Wed Sep-27-06 10:05 PM by Vinnie From Indy
Quite simply, the consolidation and vertical integration of energy producers and oil companies has given us markets that can easily be manipulated. Whether the choice is to manipulate supply or production or delivery or a combination of all three, these companies can easily manipulate the price. IN addition to the ability to manipulate prices, these companies know that they have nothing to fear from enforcement as BushCo run Federal agencies will not apply the law nor will they investigate illegalities seriously.

I personally think you would have to be a stone cold idiot to even imagine that the energy business operates under a totally "free market" scenario.

I also find the "fear factor" bit of nonsense to be most likely just another highly paid PR firm's work FOR the oil companies. People are asking questions and the oil industry pays a PR firm to focus group a few lies and then they run with them to try and cover their asses.
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Strelnikov_ Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:39 PM
Response to Reply #5
6. ..
Edited on Wed Sep-27-06 09:40 PM by loindelrio
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NCarolinawoman Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-27-06 09:58 PM
Response to Original message
8. I saw some guy on CNBC say that the oil company execs
don't need a phone-call from Bush/Cheney. It is already blatantly obvious to them that lowering oil prices will help the Republicans retain power. They don't want the Dems to get in control and hold hearings and increase their taxes. After the election, prices will probably go up again.

As far as my own thoughts go: The talk still abounds of the likelihood of the Bush administration bombing Iran. The oil company people must know this, but it doesn't effect prices. I guess that shows how important it is for the oil companies to have a Bush/Cheney Congress in power. Does that mean an attack on Iran will be put off until after the election and oil prices will then go sky-high .......higher than ever before? I guess we will find out. :(
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