Skip to comments.Yes, government policies could help bring down the price of gas -- today
Posted on 03/13/2012 3:16:55 PM PDT by tobyhill
With the price for a regular gallon of gas topping $3.80 on Monday, angry politicians are blaming the higher prices on speculators and greedy oil companies.
On Friday, President Obama announced that he was making sure that my Attorney General is paying attention to potential speculation in the oil markets. 23 Senators and 45 congressmen, all Democrats except for one independent, are calling for urgent action against the speculators they hold responsible.
These members of congress want the Commodity Futures Trading Commission to use its new regulatory powers under a law Obama signed two years ago to limit the amount of oil that speculators can buy.
This isnt a new concern.
During the 2008 presidential campaign, Obama campaigned against "the special interest politics that put the interests of Big Oil and speculators ahead of the interests of working people," and surely implied that an Obama administration would end these high prices by clamping down on speculation.
Possibly that is why a new Washington Post/ABC News survey released on Monday shows that soaring gas prices have taken a toll on Obama, with 50 percent of American's strongly disapproving of Obama's economic performance-- the highest in the poll's history.
Unfortunately, neither the Democrats in Congress nor Obama appear to have a clue how markets work.
(Excerpt) Read more at foxnews.com ...
Just an announcement that we are massively ramping up oil and gas exploration would cause prices to drop.
And Commie Energy Czar Stephen Chu.
We cannot afford the price of 4 more years of Obama.
At least that's what the media told us for years. Venal George Bush and his oil industry buddies spent teir time cooking up various ways to raise gas and oil prices to steal money from poor people.
Now that Obama is president the media has decided that a president really can do nothing to affect gasoline prices.
Poor Obama - he is is just a helpless sack of wimpy guts being blown this way and that by the winds of chance.
Sort of like a new millennium half-black Jimmy Carter.
They make 1-3¢/gal, while the criminal, corrupt, GREEDY FED/STATE GOVTs (combined) make well-over 50¢/gal, for doing absolutely NOTHING, except hampering exploration and burdening everyone with costly regulations and useless, costly blends. The "greedy oil companies" take all the risk.
Drop the taxes, and immediately LOWER PRICES.
Refute that, Obummer, in your 7-ton prez/3mpg limo.
Four more years of Obama will totally destroy this country.
The guys simply reads a teleprompter and runs up a charge cards for generations to come.
Only if he were believed. See the reaction to his statements "supporting" Israel.
Speculators buy in the hopes that prices will rise. Therefore, stick it to them by increasing the supply of oil; the price drops, the speculators lose money, the price of gasoline drops, everyone is happy (except for the "evil speculators", of course).
1. Greenlight Keystone XL
2. Re-open the Gulf to drilling
3. End "boutique" blending gasolines.
Just a few thoughts.
Step 1: Walk up to a microphone, and declare we will exploit all of our resources - drill in Utah and Colorado, Frack as much as possible, off the coast of Florida and Alabama, 30 day turnaround on deepwater permits in the gulf.
Step 2: Watch oil prices tumble.
People who say that speculation isn’t a problem are simply deluding themselves. As of today, speculators do not have to take delivery of oil. They can control oil with a token amount as the margin - a year ago, it was 6%. The margin on stocks is 50%.
The CFTC found that 70% of the demand for oil was actually speculators - people who have no intent to actually use or even possess the oil. This is why demand is low, inventory is high, and yet prices remain sky high. Speculators can gamble on the price with very little risk. Back in 2008 when the price spiked, speculators were controlling more than 80% of the market.
Speculators do not participate in a free market. It would be a lie to say that the market is free because a true free market is dictated by supply and demand. It would be one thing if they were simply statistically gambling on the price of oil. It’s another thing entirely when they actually affect the price of the real commodity.
But why is this a bad thing? The speculators use their brains and self-interest to keep the oil supply tight if they suspect that a shortage could happen in the future. If there was something stopping them from keeping the price high, such as an artificial government price cap, then everyone would simply start hoarding oil at the low price, and we might actually see gas pumps go empty. Because those hoarders would see the same conditions the speculators see...the Middle East on the brink, a U.S. not interested in producing its own supply and a possible economic recovery. Someone setting the price based on rational, free speculation helps keep the supply available in a time of crisis. A high price is better than a price cap and gas sold out everywhere.
...and his goal has been achieved with more pain at the pump on the way thanks to his anti-energy policies.
I recommend that a grassroots movement takes fire. Simply print copies of that graph, obtain some double-sided tape and stick it on the gas pumps you visit. If you see any in Tarrant County, Texas, it's part of my educational campaign to inform motorists about who to blame come November 2012.
We got 40 million people who drive to work, sit at a computer and use a telephone all day, and then drive home.
We have the technology which would allow them to do this at home...Saving billions of gallons of fuel, eliminating most traffic etc...
You’d think the government would give incentives to these employers to do this?
No way...It’s just too damn easy.
It’s a bad thing because a significant majority of the market is controlled by people who don’t want the oil and have little invested in it. If, for example, 81% of the demand for oil is actually speculation - which is what happened in 2008 - then speculation on rising prices becomes a self-fulfilling prophecy. If you want a real-world example of speculators controlling a commodity, look to silver. Last year, the price collapsed because the artificial demand was limited. Also, people cannot “hoard” oil without the physical wherewithal to do so. Right now, speculators can “hoard” because they don’t have to take delivery on the oil and they pay very little to control it. You’re confusing artificial demand with real demand.
I don’t really understand why you are trying to equate the regulation of speculation with price caps and gas shortages. There is nothing to indicate that speculators in any way “smooth out” changes in the price of oil. Recent history should be more than enough to make that clear. In 2008, Bush’s move to permit free exploration of oil drilling resulted in a massive crash of the oil prices with no actual change in supply or demand. That was a massive swing that had no real-world backing.
These markets are about informed people ANTICIPATING changes in supply and demand. That puts us ahead of the game and helps prevent REAL shortages. The “real” world is not limited to the present time, it also includes the future. There are entities like airlines that would hoard oil if there wasn’t an outside market controlling that price before it gets to the point where someone can hoard it and potentially cause a real shortage. If you’re talking about not allowing speculators to speculate, than that has the same effect as a price cap...it artificially lowers supply.
Isn't essentially all crude oil that is pulled out of the ground refined and consumed (other than what goes into the SPR)?