Posted on 09/26/2006 6:56:37 AM PDT by ShadowDancer
Low Gas Prices: An Election-Year Ploy?
Many Think Politicians Manipulating Gas Prices
POSTED: 8:22 am EDT September 26, 2006
WASHINGTON -- There is no mystery or manipulation behind the recent fall in gasoline prices, analysts say. Try telling that to many U.S. motorists.
Almost half of all Americans believe the November elections have more influence than market forces. For them, the plunge at the pump is about politics, not economics.
Retired farmer Jim Mohr of Lexington, Ill., rattled off a tankful of reasons why pump prices may be falling, including the end of the summer travel season and the fact that no major hurricanes have disrupted Gulf of Mexico output.
"But I think the big important reason is Republicans want to get elected," Mohr, 66, said while filling up for $2.17 a gallon. "They think getting the prices down is going to help get some more incumbents re-elected."
According to a new Gallup poll, 42 percent of respondents agreed with the statement that the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections." Fifty-three percent of those surveyed did not believe in this conspiracy theory, while 5 percent said they had no opinion.
Almost two-thirds of those who suspect President Bush intervened to bring down energy prices before Election Day are registered Democrats, according to Gallup.
White House spokesman Tony Snow addressed the issue Monday, telling reporters that "the one thing I have been amused by is the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being."
"It also raises the question, if we're dropping gas prices now, why on earth did we raise them to $3.50 before?" Snow said.
The excitement -- and suspicion -- among U.S. motorists follows a post-summer decline in gasoline prices that even veteran analysts and gas station owners concede has been steeper than usual.
The retail price of gasoline has plunged by 50 cents, or 17 percent, over the past month to average $2.38 a gallon nationwide, according to Energy Department statistics. That is 42.5 cents lower than a year ago, when the energy industry was still reeling from the aftermath of hurricanes Katrina and Rita, which damaged petroleum platforms, pipelines and refineries across the Gulf Coast.
Industry officials said the competition among gas station owners to sell the cheapest fuel on the block is fierce.
"They want to gain market share," said John Eichberger, director of motor fuels at the National Association of Convenience Stores.
Jay Ricker, president of Ricker Oil Co. in Anderson, Ind., which owns about 30 gas stations and supplies fuel to 30 more, said he's thrilled to see pump prices sinking as fast as they are.
With prices falling, more customers are buying mid-grade and premium gasoline, Ricker said, and they're spending more cash inside his convenience stores, where profit margins are higher.
"I'd much rather sell them a donut or a fountain drink," said Ricker, whose stations are selling regular unleaded for a few pennies above $2.
Fimat USA oil analyst Antoine Halff said there is no doubt that "the downturn in prices is welcome news from an electoral standpoint for the ruling party." But he scoffed at the notion that the U.S. president had the power to muscle around a global market.
The plunge in prices, Halff said, is the result of growing domestic inventories of fuel, slowing economic growth and toned-down rhetoric between Iran and the United States, which has been critical of Tehran's uranium enrichment program.
The selloff has been magnified, Halff said, by the recent retreat from the market by many speculative investors who got burned by the late-summer volatility. Just last week, a prominent hedge fund told investors that it lost some $6 billion due to bad bets on natural gas prices.
That said, "the sky is not falling," said Halff, who believes oil prices will likely head higher again this winter and average more than $65 a barrel throughout 2007.
At the start of summer, oil analysts were worried about rising demand, the threat of hurricanes and the nuclear standoff between the West and Iran, OPEC's second-largest producer. As a result, crude-oil futures soared to more than $78 a barrel in mid-July.
But by summer's end, these fears had largely dissipated. On Monday, November crude futures settled at $61.45 a barrel.
"We have lots of gasoline supply," said Joanne Shore, an Energy Department analyst. Data maintaned by her agency show U.S. inventories of gasoline at 207.6 million barrels, 6 percent more than last year and slightly above the five-year average for this time of year.
Asked if it was possible that oil companies would reduce their prices in order to help Republicans, Shore responded: "What company in their right mind would step forward to kill their profit?"
At a suburban Miami Mobil station, where regular was selling for $2.66 a gallon, no one was buying in to the conspiracy theory.
"The decrease of gas prices is simply due to a seasonal adjustment of price," said Javier Gudayal, a 48-year-old civil attorney. "And that the Bush administration does not have the power to manipulate."
But in Los Angeles, which has some of the highest gasoline prices in the country, motorists wouldn't rule out the possibility of a government eager to sway the electorate.
Twenty-eight-year-old attorney Amnon Siegel sensed more than serendipity at work.
"I'm sure there's some sort of string-pulling going on," Siegel said, referring to the government.
You assume that this polling sample accurately reflects the composition of the US.
I own a lot too. Ride it out. The election will be over in November... winter coming on. Well make money between now and March.
Sounds about right.
Bush got better numbers than in the 2004 election!
No offense, Mr. Mohr, but you're a complete and utter moron.
The idea that the bigwigs in the GOP can somehow control the market price of crude is about as plausible as the Rove Hurricane Machine.
He's 66. How can you live that long and remain so effing dumb?
Yeah, but remember that they don't breed so much (they kill their own young). They have to recruit to make progress.
If true they had better vote GOP or Rove will make 4$/gal gas to punish them.
They said that if I voted for Goldwater the war in 'Nam would get worse. I voted for Goldwater and they were right.
Isn't it obvious? Who benefits by no repeat of Katrina, huh? BUSHCO and his evil minions, that's who!
I mean, another Class 5 hurricane with women and minorities hit hardest could drive the final stake into the Bush administration's heart this close to November! This HAS to be a Rovian plot to keep gas prices down to help the Republicans in the election.
DAMN HIM! WE NEED high gas prices!
/sarcasm off
How did President Bush get the price of oil lowered from nearly eighty dollars a barrel to under sixty? (Note--this price is set in the world market, and nearly all of the oil produced worldwide comes from outside the United States.)
I assume that whatever the polling sample, the AP feeds most news organizations in the US. The validity of the results, unless challenged in the papers and broadcasts, will remain as undisputed fact among the electorate.
42%, eh?
No wonder lottery tickets are sold at gas stations.
That was tongue in cheek; I'm really not worried. ;-D
Why was it $80 to begin with? There was no economic reason for that either. Look, I'm on our president's side. I voted for him and would again. But we're just being naive if we think that only Democrats would try to maipulate things to effect the outcome of an election.
Maybe.
Or teach. Or make films. Or broadcast the news. Or publish newspapers and magazines.
BTW, Bush refused to manipulate gas prices by tapping the federal oil reserves despite the Democrats wanting him to do so.
Supply and demand. The same reason it is under 60 today.
You still haven't answered my question--how does Bush control the world price of crude oil?
Oil got to $80 per barrel because people continued to use it. It is falling now because, as I understand, world storage tanks are brimming. OPEC is thinking of trimming production to keep the prices from sliding back to $30+ per barrel prices.
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