Monday, October 09, 2006
Gas Prices and ElectionsTwo primary forces drive the price of anything: supply and demand. Demand for gasoline has been rising exponentially--not merely due to the popularity of SUVs in North America, but mostly by the emergence of India and China on the world stage and their subsequent need for petroleum products. Reflexively, the supply is decreasing and fixed. No economist in his right mind can tell you that the price of oil will go anywhere but up. This is not the President's fault, although temporary issues in the Middle East certainly don't help. Furthermore, the recent decrease in the price of oil can also not be credited to the President. Or can it? The price of gas fluctuates largely based on reserves. The amount of oil in reserve is based on reports from major suppliers--Saudi Arabia being the largest. These reports are easily manipulated, and frankly, Saudi Arabia holds the keys to the kingdom when it comes to temporary fluctuations in the price of a barrel of crude. It just so happens that the Bush family is extremely good friends with Prince Bandar bin Sultan of Saudi Arabia. In fact, there is historical precedent to assume that today's gas prices are the result of manipulations intended to influence the upcoming election. I don't have to go very far back to show the history here. I only have to go back to the last election in 2004. CNN reported, based on a Bob Woodward finding, that Prince Bandar agreed to temporarily increase production, which would increase the reserve and thus lower the price of oil--all for the purpose of getting President Bush re-elected. If you look at the chart, you'll see a fairly sharp dip in November of 2004. How fortuitous for the Republicans! Also, how fortuitous for the gas companies, since Republican policies allowed them to make record profits in January of 2005. After the 2004 election, the price jumped right back up and continued skyrocketing We see a similiar trend now. It doesn't take a brain surgeon to figure out what is going on.