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Jeff Ward: You Can't Blame the President for Record Gas Prices

If you really want to point a finger at the person responsible please gaze into the nearest mirror.

Gather round boys and girls, it’s story time.

Back in those 1979 days of yore, there were two greedy siblings named Nelson and William. We’ll just call them the Hunt brothers. And when no one was looking, the Hunt Brothers started buying up all the silver in the land.

Why, they bought so much silver that the price of that shiny metal skyrocketed from $11 to $50 an ounce in just four months. Legend has it that the Hunt brothers made $2-$4 billion on that move alone.

But then something not-so-strange happened. That wise and powerful sage we call “The Market” took over and the price of silver plummeted just two months later costing the heavily leveraged, evil Hunt brothers more than $1 billion. Poor Nelson even had to file for bankruptcy.

Let’s fast forward to 2012 when it came time for the people of the land to pick a new leader. And the Pennsylvania preacher and the Massachusetts flip flopper decried the evil African-American king for pushing pump prices to unforeseen heights.

Why, the crazy Minnesota lady said she’d simply wave her magic wand to make it tumble to under $2 a gallon while the scurrilous Eye of Newt said he’d settle on $2.50.

Now, boys and girls, I want you to tell me which one of those stories is actually the fairytale?

“This notion that a politician can wave a magic wand and impact the 90-million-barrel-a-day oil market is preposterous,” said Paul Bledsoe, strategic adviser to the Bipartisan Policy Center.

C’mon! It took the deepest economic downturn since the Great Depression to artificially knock down gasoline prices to their previous levels. And one man is somehow responsible for their recovery?

If you do really believe that, I might finally understand the GOP’s acute case of Obamaphobia because any man powerful enough to single-handedly move the petroleum markets is certainly someone worth fearing.

“Release the strategic reserve!” the peasants cry. We’ve already done that. The President released 30 million barrels of oil to mitigate any gas price hiccups as a result of disruptions in the Libyan supply line.

And if we did cut loose that paltry 36 day supply, it would no longer be strategic nor would it be a reserve.

Then the serfs shouted “Drill baby Drill!” But we’ve done that too. According to the Wall Street Journal, the Obama administration has overseen a 400-percent increase in the number oil domestic oil rigs since Mr. Bush went back to Texas.

Not only that, but domestic gas production is at a 30 years high and for the first time in our 236 year history, we’re actually exporting gasoline. The problem is, the world market is so vast and voracious that the added supply has had no effect on prices.

So then politicians petulantly pander, “We deserve cheap gasoline!” We already have cheap gasoline.

Just take a short hop across the pond where it’s $8 a gallon in Paris and $10 in Istanbul. You’ll pay $7 in Tokyo, $7 in Sao Paulo, and, at 6 bucks in Sydney, it’s a deal.

The only countries that enjoy cheaper gasoline than the U.S. are major petroleum producers like Russia, Saudi Arabia and Venezuela where supply still exceeds demand.

In the most marvelous of all ironies, it’s actually those aforementioned Republican candidates – the ones who called for a war with a nuclear Iran – that did more to drive up gas prices than the president could ever hope to do. It was speculation based on the fear of that conflict that drove gas prices to these record highs.

And those bipartisan sanctions on Iran have consequences too. Whaddya think is gonna happen when you cut off oil exports from a major petroleum producer? Gas prices will go down? Sometimes doing the right thing means having to grin and bear it.

We can’t forget those 2.5 billion Indian and Chinese citizens who are just getting their first taste of prosperity either. All those tech support calls and cheap Chinese Wal Mart trinkets start adding up. When you’re talking 37 percent of the worlds’ population, they’ll be driving gas prices for years to come.

And finally, as Walt Kelley so famously declared, “We have met the enemy and he is us.” We’ve become so oblivious, so delusional, and so whiny that, despite clinging to our SUVs, we somehow believe we’re entitled to low gas prices by the sheer virtue of being us.

Unlike Europe, where a Mini Cooper is considered a luxury vehicle, we, the people who consume 23 percent of the planet’s petroleum, refuse to adjust our driving habits to an inevitable market reality.

Five dollar gasoline? Enjoy that while you can because I’m predicting, by the end of 2014, we’ll be paying $8 because, as the Hunt brothers so painfully discovered, the market always wins.

So even as you cringe while driving by those Randall Road gas stations, please remember that there may be a plethora of reasons to be unhappy with our President, but gas prices ain’t one of them.

The only way Newt, or any Republican, could bring gas prices back down to $2.50 a gallon is to engage in the same kind of market controlling socialist subsidizing nefariousness they love to level at the President.

Jack March 30, 2012 at 11:19 AM
Jeff - well said. However, because this President is black and happens to have a scary -boogey man name... the sick racist GOP right will continue to demonize this President thru crazy front men like Walsh and Santorum. I was watching a old news reel tape of former Pres. Bush commenting on how the OIL INDUSTRY doesn't need subsisdies when the barrel of ol was at $55dollars. An now with oil over $100 per barrel why would that opinion change.. unless you are a zombie righty. OH, I forgot ...its OBAMA'S fault.
Jeff Ward March 30, 2012 at 12:07 PM
Jack, Though I've accused the GOP of racism on other grounds, blaming the president for high gas prices has become a habit no matter who's in the White House. President GW Bush took his lumps for more expensive oil as well. And you're right, they really need to do away with oil subsidies. Jeff
Lux March 30, 2012 at 12:12 PM
Maybe he's not to blame for high prices but you can bet he's rubbing his hands in greedy anticipation of more record profits for the oil companies. According to Reuters: "During his time in the Senate and while running for president, Obama received a total of $77,051 million from the oil giant and is the top recipient of BP PAC and individual money over the past 20 years, according to financial disclosure records."
Patrick Sennett March 30, 2012 at 12:54 PM
And this fanciful tale ignores the market forces generated by investors, who know that, while Obama is President, there will be zero appetite for expanded exploration or development of available resources, and certainly no increased drilling on the small portion of federal lands that hold promise. Nope, just more wind and solar giveaways to crony capitalist buddies, bundlers and donors. If your tale is correct, and not my addendum, why did gas prices suddenly plummet when GWB announced to the world in 2008 that we were going to drill everywhere? I'll tell you so you won't have to click over to Media Matters for the wrong answer. The answer is, people who were investing in oil saw, at least at that moment, that supply was going to increase for a while so they'd better put their money elsewhere. Of course, Obama did all he could when he took over to suppress federal leases, entangle those with existing leases in snares of red tape so they couldn't drill, and banned offshore areas from leasing entirely. Don't get me started on the mosquito breeding ground known as ANWR. And spare me the "seasonally-adjusted-most-production-ever" line put out by the White House. If production was doubled, prices would be lower.
Colin C. March 30, 2012 at 01:34 PM
As usual, everyone seems to forget history. The current demand for and price of gas didn't just happen overnight. Back in the 70s we had a gas crisis and some of the more forward thinking leaders in this Nation realized that it would only get worse in the future. Jimmy Carter started a massive program of energy conservation and research for alternatives to oil. When Reagan came into office he made a bad joke of that whole effort and cancelled everything that was being done. If, instead, he had redoubled those efforts it is quite likely that today we would not be dependent on foreign oil at all. The recent efforts to began a National program to alleviate our energy problems is starting up where we were 30 years ago. Because of our poor political choices we just wasted three decades and have absolutely no right to complain. Remember that famous quote: "The electorate has neither hindsight nor foresight nor can it see the truth today. It is blind."
Jeff Ward March 30, 2012 at 01:59 PM
Patrick, And once again you're wrong! A 400 percent increase in rigs over George W. Bush is impossible to ignore. Even if we did drill everywhere we don't have the kind of reserves that would make any kind of dent in the world market. Haven't you noticed our "spring" weather? The answer lies in changing our driving habits and alternative energy, not in fossil fuels. You can spare be your partisan bleep! Jeff
Jeff Ward March 30, 2012 at 02:14 PM
Colin, We have no one to fear, but ourselves! Jeff
Jimmy March 30, 2012 at 02:58 PM
WRONG AGAIN ward!!! While PRIVATE land drilling has increased over the last few years, FEDERAL land drilling permits have been significantly reduced during obama's presidency. Alternative fuels? Please direct me to the car dealership selling reasonably priced wind-powered and/or solar-powered vehicles. Hybrid or plug-in electric vehicles? Well, since both hybrid and electric vehicles require a power source for battery recharging, they rely on fossil-fuel-based power plants. Hybrids rely regenerative-braking and combustible engines (gasoline/oil). Plug-in electrics rely on power outlets which derive their power from fossil fuel power plants (coal or oil), or nuclear power plants. Not exactly what most people would consider "alternative fuels." And, by the way, the next time you'd like to label anyone a "racist" for disagreeing and/or protesting obama's destructive policies, have enough internal fortitude to do it personally (face-to-face).
Jeff Ward March 30, 2012 at 03:10 PM
http://blogs.wsj.com/economics/2011/08/27/number-of-the-week-how-many-rigs-are-drilling-for-oil/
CrankyCub March 30, 2012 at 03:23 PM
The GOP & Fox News went out of their way to say the President had nothing to do with gas prices when they were high under George W Bush. Now they are trying to blame President Obama. Total Hypocrites and disgusting as well. Let's deal with the facts and the truth for once.
CrankyCub March 30, 2012 at 03:26 PM
PS to those of you arguing supply and demand. Even if we ruined ALL of America's resources digging for Domestic oil it would not affect these gas prices. The foreign oil producers say they have plenty of oil and can ship as many as we need and/or want. It is the SPECULATORS who push up gas prices. Nothing about supply and demand. Do some research and turn off Faux news.
Jimmy March 30, 2012 at 04:05 PM
Your limited knowledge of "speculators" is astoundingly woeful. While speculators (glorified gamblers) consider numerous factors in their pricing strategy, the two primary and foremost factors they consider are volatility from regional instability (political unrest and potential conflicts/wars) AND volatility in production output (including drilling, refining and delivery). Absent of any potential regional conflict/war, if obama declared just an intention to SIGNIFICANTLY increase domestic oil production, the speculators would begin assuming a significant increase in the world oil supply and, thus, would speculate/drive oil prices downward. Therefore, contrary to your clueless assertion, "supply and demand" does in fact greatly impact oil prices, and that's regardless of whether I watch FOX NEWS or not.
Jeff Ward March 30, 2012 at 04:16 PM
"Jimmy," Dude! I traded futures for two years. And if Obama made that announcement, oil prices would drop on that fear for about a month, and then, being market driven, go right back up. On the other hand, if he said he the U.S. would start seriously rivaling the Chinese on solar power development - that would have an effect. The U.S. does not have the reserves to affect it long term. Your lack of knowledge regarding speculative markets is utterly astounding. Jeff
Jeremy March 30, 2012 at 08:48 PM
Is there anyplace I can read local news without having the Pro-Obama agenda rammed down my throat?
Tom Gorr March 30, 2012 at 09:14 PM
Patrick, thank you for saving me a lot of typing..."what he said"...as an aside, who is willing to bet against gas prices magically dropping precipitously oh say a month or so before the election? You can bet that when they do, the current administration will be more than happy to take credit for what they previously stated they had no control over!
Jim Ryan March 30, 2012 at 09:35 PM
Lux - The article was not according to Reuters. It was an article written by Politico (sound familiar?) and carried by Reuters. In fact, Obama received $77,051 (that's seventy seven thousand, not seventy seven thousand million) from BP employees and not the BP corporation. Anybody rubbing their hands in greedy anticipation of record profits is certainly not looking to garner many votes from everyday Americans who are being whip-sawed by gas prices. Almost seems counter-intuitive.
Eric March 30, 2012 at 10:03 PM
JW wrote: "We already have cheap gasoline. Just take a short hop across the pond where it’s $8 a gallon in Paris and $10 in Istanbul..." As if Europe and Turkey are some sort of economic model we should aspire to! try using that same asinine argument about wages, "In Indonesia and Bangladesh people earn 2 dollars a day, you're already overpaid Mr. Minimum Wage worker!"
Jeff Ward March 30, 2012 at 10:08 PM
Eric, Thank you for proving my entitlement mentality point! I couldn't have done it better myself! Jeff

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