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Obama's Brutal Gaffe: Low Gas Prices Cratered Our Economy
breitbart.com ^

Posted on 10/17/2012 12:32:23 PM PDT by Sub-Driver

Obama's Brutal Gaffe: Low Gas Prices Cratered Our Economy

by Ben Shapiro 17 Oct 2012, 11:48 AM PDT

Last night, President Barack Obama dropped the biggest campaign gaffe of the season – only the media wasn’t watching. It happened during his testy exchange with Mitt Romney over gas prices. First, Obama denied that he’d done anything about denying licenses on oil and gas; he backed off of that shortly. Then he denied that production on federal land was down; he was lying. Finally, Romney hit him with this devastating line:

The proof of whether a strategy is working or not is what the price is that you're paying at the pump. If you're paying less than you paid a year or two ago, why, then, the strategy is working. But you're paying more. When the president took office, the price of gasoline here in Nassau County was about $1.86 a gallon. Now, it's $4.00 a gallon.

Obama’s response was horrendous:

Well, think about what the governor -- think about what the governor just said. He said when I took office, the price of gasoline was $1.80, $1.86. Why is that? Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney's now promoting. So, it's conceivable that Governor Romney could bring down gas prices because with his policies, we might be back in that same mess.

In other words, bringing down gas prices by drilling creates economic recession. That was Obama’s argument.

Does anyone think this president understands basic economics?

(Excerpt) Read more at breitbart.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events; Politics/Elections
KEYWORDS: 2012; democrats; drillheredrillnow; gasprices; nobama2012; obama; obamanomics; obamatruthfile
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To: webheart

Ya, did a search on the comments. Probably should check sources first before posting something like that. Too good to be true.


51 posted on 10/17/2012 1:29:05 PM PDT by SkyDancer ("I Believe In The Law Until It Interferes With Justice")
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To: ArGee

At the very least he should say it was a bipartisan problem, and that both parties did not agree to reform Fannie and Freddie’s mortgage lending practices when they needed to. He just lets Obama completely tar the Bush administration for the financial crisis, and uses that as his basis for saying we can’t go back to “Republican” rule. To me it’s a losing proposition to NOT challenge Obama on that.


52 posted on 10/17/2012 1:35:01 PM PDT by JediJones (ROMNEY/RYAN: TURNAROUND ARTISTS ***** OBAMA/BIDEN: BULL $HIT ARTISTS)
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To: Sub-Driver
I posted last night that Romney should have then said: “So you are telling us the economy is now twice as good as when you took office? That is why gas prices have more than doubled??”
53 posted on 10/17/2012 1:35:25 PM PDT by HereInTheHeartland (Encourage all of your Democrat friends to get out and vote on November 7th, the stakes are high.)
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To: Sub-Driver

I guess I wasn’t listening to the same debate. Seemed Obama said the bad economy created the low prices, which is perfectly reasonable in theory. I don’t get Breitbart sometimes.


54 posted on 10/17/2012 1:36:39 PM PDT by PghBaldy
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To: DannyTN
Shapiro may have been off with the drilling aspect, but not the rest.

High gas prices increases transportation costs. This impacts delivery of raw materials to manufacturing plants, delivery of finished products to stores, delivery of agriculture products (food) to stores, costs in consumer transportation (cars, buses, ferries, planes (avgas)). This drives up consumer prices.

High gas prices are the result of high crude prices and/or high global demand. Gasoline competes with plastics, heating oil and lubricants for crude. If gas goes up, it's also likely that lube oils are more costly, that heating oils are more costly, which in turn increases the operating costs of manufacturing plants, which also leads to increased consumer prices.

Less money in consumers' pockets due to higher costs results in less commerce for discretionary items. This is what leads to a poor economy.

So what about the idea that low gas prices is a leading indicator of a cratering economy? I don't think so. Gas prices are driven by supply and demand, but crude is also very fungible. If the theory is that a faltering economy uses less gas, and therefore low demand pushes prices down, therefore low prices reflect a poor economy that isn't using energy like it used to, remember that the crude would simply be sent overseas to economies that will use it. Oil companies will not settle for cheaper prices, they will sell the oil at competitive prices in other markets, reducing supply here and keeping prices constant.

Higher prices is the result of low supply as well as higher demand. Eventually, supply will match demand at a market price point. Romney was saying that Obama cut off drilling in the Gulf of Mexico, the east coast, and federal inlands. Obama also blocked the Keystone pipeline from Canada. These all contribute to lower supply, which is driving up prices.

If Obama is saying that lower gas prices means a bad economy, and therefore that higher gas prices means a good economy, he's wrong.

-PJ

55 posted on 10/17/2012 1:37:57 PM PDT by Political Junkie Too ( It doesn't I naturally when you're not natural born.)
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To: PghBaldy

I heard Rush talking about this today and was reminded of how little I think of Rush’s mind t times. It is perfectly reasonable economics that when times are bad, prices go down. The fact that he, and people here don’t see that is bewildering.


56 posted on 10/17/2012 1:42:32 PM PDT by PghBaldy
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To: PghBaldy

Food prices are on the rise, because gas is on the rise. All other consumer prices will rise due to the cost of transportation.

Gas prices are controlled by the ME which is in chaos - look for higher prices and more inflation. This will not improve the economy or create jobs.

The only winner will be public transportation for people who have to park their cars or move closer to a job (if they have one).


57 posted on 10/17/2012 1:52:41 PM PDT by sodpoodle (Life is prickly - carry tweezers.)
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To: Sub-Driver
get the women and children out of the aspirin factories this weekend!!!

.

58 posted on 10/17/2012 1:52:41 PM PDT by Elle Bee
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To: Political Junkie Too

The low gas prices are more of a coincident indicator not a leading indicator. They might even be slightly lagging.


59 posted on 10/17/2012 1:54:51 PM PDT by DannyTN
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To: USNBandit

What about Obama’s claim that Romney stood in front of a coal-fired power plant in MA and allegedly said that this plant is harming people?! That has got to be either a lie or taken grossly out of context, did you catch that?


60 posted on 10/17/2012 1:56:22 PM PDT by Frank_2001
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To: Political Junkie Too

However, it was actually an oil price shock that set off our economic crisis. That’s what caused the dry up of disposable income, the rise in unemployment, the mortgage defaults and the bank liquidity crisis, in that order.

So actually an excessive rise in oil prices is a leading indicator and causative agent of an economic recession.


61 posted on 10/17/2012 1:57:14 PM PDT by DannyTN
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To: DannyTN
So either way you look at it, Obama was wrong? It wasn't the low prices by themselves, but the excessive rise in prices, as Romney alluded to?

-PJ

62 posted on 10/17/2012 2:01:27 PM PDT by Political Junkie Too ( It doesn't I naturally when you're not natural born.)
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To: DannyTN
Are you sure the mortgage defaults weren't the trigger? I don't see the link between mortgages and gas prices.

I thought the mortgage issue was banks loaning money to people who couldn't afford it. Once they bought homes at the high real estate bubble, the bubble burst and the home values declined, leaving the mortgages upside down (mortgages worth more than homes). So, people walked away from their mortgages.

That wasn't a case of high consumer prices using up money that would go to mortgages. People didn't have the incomes to pay for the mortgages onces the ARMs adjusted. They wouldn't have, no matter what the gas prices were.

-PJ

63 posted on 10/17/2012 2:07:07 PM PDT by Political Junkie Too ( It doesn't I naturally when you're not natural born.)
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To: depressed in 06

“The corollary of this theory is that paying $4.00 means that the economy is roaring. Imagine how we will be doing when we are paying $10.00.”

With that we’d probably “improve” to near-EU levels.


64 posted on 10/17/2012 2:10:37 PM PDT by Gil4 (Progressives - Trying to repeal the Law of Supply and Demand since 1848)
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To: Political Junkie Too
"So either way you look at it, Obama was wrong? It wasn't the low prices by themselves, but the excessive rise in prices, as Romney alluded to?"

No y'all are misunderstanding what Obama said. Obama didn't say the low prices caused the bad economy. He said the low prices were the result of the bad economy.

And Obama said Romney could cause more low oil prices by crashing the economy with his policies. Not that Romney policies would lower oil prices and cause a crash, but that his policies would crash the economy, and oil prices would fall as a result of the bad economy. Thus Romney would successfully bring oil prices back down by crashing the economy.

I don't remember exactly what Romney said about prices, other than that they had increased due to Obama's policies.

65 posted on 10/17/2012 2:15:05 PM PDT by DannyTN
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To: ConservativeMan55

I too was scratching my head, and yes, I shouted
“WTFFFFFFFFFFFFFFFFFF!”

So according to Obama, a recession will drive down gas prices and a strong economy = high gas prices?

Ummmm. Don’t think so.
Notice CC decided to remain “a fly on the wall” for that one though.


66 posted on 10/17/2012 2:23:45 PM PDT by a real Sheila (RYAN/romney 2012)
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To: webheart

NONE of those guys said that or else they’d be part of the 99% right now.


67 posted on 10/17/2012 2:25:05 PM PDT by a real Sheila (RYAN/romney 2012)
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To: a real Sheila

He would be correct. Strong economy equals more demand for fuel equals higher prices. When demand fell like it did in 2008 prices fell. Why did demand fall?


68 posted on 10/17/2012 2:26:58 PM PDT by Double Tap
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To: Double Tap

but the enigma here is that clearly our economy is NOT currently strong, but gas prices are through the roof.


69 posted on 10/17/2012 2:30:50 PM PDT by a real Sheila (RYAN/romney 2012)
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To: Political Junkie Too

My take on oil prices is somewhat different. No one here is addressing the Fed’s impact on oil prices. Oil is traded in US dollars. The Fed has been printing money for the past 4 years, big-time. So the real value of a dollar has been diminished, by how much I couldn’t say. So the sheiks want more of these cheaper dollars for their barrel of oil.


70 posted on 10/17/2012 2:33:46 PM PDT by Gee Wally
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To: Sub-Driver

That was the most asinine comment I’ve ever heard. I’m thinking we should be wishing for $10 gallon gasoline so we can have a good economy.


71 posted on 10/17/2012 2:35:19 PM PDT by Protect the Bill of Rights
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To: a real Sheila

Our economy is stronger than it was in 2008-2009, but that isn’t the whole picture. Crude oil is traded on the world market and rises and falls on worldwide demand, not just how we are doing here. China and India are becoming huge consumers of oil.


72 posted on 10/17/2012 2:40:01 PM PDT by Double Tap
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To: All

the sad thing is that what he said, makes sense to about 30-40% of the population.


73 posted on 10/17/2012 2:44:32 PM PDT by newnhdad (Where will you be during the Election Riots of 2012/2013?)
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To: thackney
You've probably already answered this question to someone else, but:

What is causing the outrageous gasoline prices with crude hovering at 92 bucks?

74 posted on 10/17/2012 2:44:50 PM PDT by ROCKLOBSTER (Celebrate "Republicans Freed the Slaves" Month)
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To: Sub-Driver

even your pets had to laugh! yah, then why is it 4.00 a gallon now?


75 posted on 10/17/2012 2:52:41 PM PDT by Who_Ate_My_Dog
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To: Sub-Driver

Gas prices in Jan-05, the start of W’s second term were about $1.85. The week prior to the Lehman collapse in Sep-08 they were about $3.80. 4Q08 GDP declined by 8.9% and Jan-09 payrolls fell by 818,000. I have to believe that such a hit to the economy goes along way to explaining the gas price in Jan-09. Also, if 1.80 gas is so great, why was Newt only wiliing to promise $2.50?


76 posted on 10/17/2012 2:52:51 PM PDT by oincobx
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To: Sub-Driver

The price of gas in Jan-05, the start of W’s second term was about $1.85. The week prior to the Lehman collapse in Sep-08 it was 3.80. That was followed by 4Q08 GDP of -8.9% and Jan-09 payroll declines of 818,000. I have to believe those circumstances were a key component to the gas price levels seen in Jan-09. Also, if $1.80 gas is so great, why was Newt only willing to commit to $2.50?


77 posted on 10/17/2012 2:53:30 PM PDT by oincobx
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To: Political Junkie Too
"Are you sure the mortgage defaults weren't the trigger? I don't see the link between mortgages and gas prices."

Positive. Look at a chart of oil prices for the 2000's. Then look at a chart of unemployment. There was a spike in 2002 that we never fully recovered from. The economy was reflecting a weak economy then, outsourcing had already begun to take it's toll. Then you see unemployment start rising much faster almost a year before the banking crisis hit the fan.

Most people who got mortgages, had jobs and could afford the mortgage when issued. But once oil went up, they started having trouble. Once it went up enough, they started losing their jobs and the defaults grew.

Mortgages take it on the chin in every recession and in hindsight it looks like a real estate bubble. It's usually not. Sometimes there are speculative bubbles but those tend to be regional. Mortgages are a symptom of the general health of the economy. When people lose their jobs they default.

The defaults grew until a money market fund broke the dollar for the first time in history. Money market funds are limited to investing in short term investments. That's one of the things that drove the market in mortgage derivative products. Derivative companies would split the mortgage payments into a series of cashflows. Payments due in the near future would be bundled into a security sold to the money markets. Payments occurring later in the life of the mortgage would be bundled into a security sold to the life insurance companies.

When that money market fund broke the dollar it scared the banks and liquidity dried up almost instantly.

Meanwhile, the bipartisan repeal of Glass Steagall in the late 90's had allowed banks to invest in riskier stuff. They mollified the FDIC by claiming they had hedged their risk with offsetting credit default swaps. The FDIC accepted this despite that they had failed to regulate them and didn't know if the company that had issued them could really stand behind them.

On top of that the Federal Reserve had exempted different types of bank accounts and various funds until the effective reserve ratio was about 1%. So that when the credit crisis hit, followed almost immediately by a liquidity crisis, the FED had no reserve to fall back on. Thus President Bush was forced to go to Congress and issue an emergency appeal for loans to stop the liquidity crisis. This public appeal killed any remaining consumer psychology that was left.

It was a comedy of errors, but the mortgages were not the cause, a weakened economy due to unwise trade policies, high gas prices and unemployment is what caused the defaults. There was some mortgage fraud but it wasn't that much.

You can say that the loosening of mortgage standards and subsequent tightening made the situation worse. But we would have had problems anyway.

78 posted on 10/17/2012 2:55:54 PM PDT by DannyTN
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To: oincobx
"Also, if $1.80 gas is so great, why was Newt only willing to commit to $2.50?"

Gas prices are driven by world wide demand and supply and to some extent speculation.

Any politician actually predicting a price is sharing a hope and a prayer. There are some things that they can do to help drive the price down, but to guarantee a price, or even that the price will go down, no.

79 posted on 10/17/2012 2:59:03 PM PDT by DannyTN
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To: oincobx
"Also, if $1.80 gas is so great, why was Newt only willing to commit to $2.50?"

Gas prices are driven by world wide demand and supply and to some extent speculation.

Any politician actually predicting a price is sharing a hope and a prayer. There are some things that they can do to help drive the price down, but to guarantee a price, or even that the price will go down, no.

80 posted on 10/17/2012 2:59:16 PM PDT by DannyTN
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To: Sub-Driver

bookmark


81 posted on 10/17/2012 3:12:04 PM PDT by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: DannyTN
So we're back to what I asked earlier, it's not the low gas prices that Obama said, it was the rise in gas prices. If prices remained low, it might not have happened? If we secured our own oil supply by drilling domestically, we could have hedged against global demand swings and lessened the shock of sudden increases?

-PJ

82 posted on 10/17/2012 3:22:38 PM PDT by Political Junkie Too ( It doesn't I naturally when you're not natural born.)
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To: Sub-Driver

I thought Obama’s words were a little wacky, too. I didn’t view it like the author did as “drilling creates recession.”

I heard Obama say “recession causes fuel price increases.”

I’m trying to wrap my head around that. If I don’t have a job, and don’t have as much money, then I can’t buy as much fuel, so increasing the supply of fuel and decreasing the demand for fuel causes a price increase.

That’s news to me. I always thought greater supply and lesser demand caused a decrease in price.


83 posted on 10/17/2012 3:25:33 PM PDT by xzins (Retired Army Chaplain and Proud of It! True supporters of our troops pray for their victory!)
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To: USNBandit

What was the previous year’s gas prices before 0bama? There was no sudden fall IIRC.

And, 0bama said gas prices were so low b/c we were on the VERGE of a great recession... not that demand was low already.

No, he screwed the pooch on this one.


84 posted on 10/17/2012 3:36:19 PM PDT by Principled (Vote Romney to stop Obama. Vote for conservative Reps and Senators to stop Romney. [ZET 7/30/12])
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To: a real Sheila
"So according to Obama, a recession will drive down gas prices and a strong economy = high gas prices? Ummmm. Don’t think so."

Actually that is the way it works. A weak economy means less demand and a lower price. A strong economy means more demand and a higher price. It's a little distorted because of the cartel OPEC. But it still works. The OPEC members also have enough non-oil investments that they strive to get the highest price they can without tanking the economy.

Supply and Demand Curves

85 posted on 10/17/2012 3:46:14 PM PDT by DannyTN
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To: Gee Wally

Bingo. The price of gasoline in silver or gold is pretty flat.


86 posted on 10/17/2012 3:51:18 PM PDT by FreedomPoster (Islam delenda est.)
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To: Political Junkie Too
Yes, if we could have kept oil prices steady during 6 or 7 years leading up to 2008, we might not have seen a crisis at all.

However, I do think the economy was being weakened by the constant outsourcing overseas due to free trade. Both oil and job exporting was driving up unemployment and reducing disposable income. We "might" have been able to handle one or the other, but both were deadly.

87 posted on 10/17/2012 3:52:02 PM PDT by DannyTN
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To: Gee Wally
Here:


88 posted on 10/17/2012 3:59:37 PM PDT by FreedomPoster (Islam delenda est.)
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To: Principled
>>>What was the previous year’s gas prices before 0bama? There was no sudden fall IIRC.

Gas prices peaked in Jul-08 at $4.09. As I noted earlier in the thread, they were still at $3.80 just before the Lehman Brothers collapse in mid Sep-08. Prices moved below $2.00 in mid Nov-08 and bottomed out at $1.63 at the end of Dec-08. Over $2.00 over a couple of months is pretty significant

>>>And, 0bama said gas prices were so low b/c we were on the VERGE of a great recession... not that demand was low already.

That he got wrong. We weren't on the verge of the great recession, we were in the midst of it. 4Q08 GDP declined at a rate of 8.9% and Jan-09 payrolls fell by 818,000.
89 posted on 10/17/2012 4:25:04 PM PDT by nc28205
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To: Double Tap

***** “Not absurd at all. It is fact. Sorry some of you can’t get it, but this is a losing argument. Crude oil and gas prices crashed in mid 2008 when the world economy took a dive.

Fact” *****

And it is twice the price now because the Economy is twice as good? Is that a FACT too?

Don’t know about anyone else but in my business the phones were ringing today... all because Zero looks like he is on his way out... of those I discussed Politics with the biggest concern was “What the FOOL will do on his way out and can or will Romney be able undo it”

TT


90 posted on 10/17/2012 4:33:12 PM PDT by TexasTransplant (Radical islam is islam. Moderate islam is the Trojan Horse.)
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To: All; Double Tap
Not absurd at all. It is fact. Sorry some of you can’t get it, but this is a losing argument. Crude oil and gas prices crashed in mid 2008 when the world economy took a dive.

Fact

PRICE is but an indicator premised upon many things including supply and demand. Obama was arguing demand in regard to the supply issue that Romney brought up -THEREFORE in my opinion Obama was either clueless or adding another layer of lying to cover his ass as far as his efforts to reduce American supply of energy...

91 posted on 10/17/2012 4:37:09 PM PDT by DBeers (†)
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To: Gee Wally
My take on oil prices is somewhat different. No one here is addressing the Fed’s impact on oil prices. Oil is traded in US dollars. The Fed has been printing money for the past 4 years, big-time. So the real value of a dollar has been diminished, by how much I couldn’t say. So the sheiks want more of these cheaper dollars for their barrel of oil.

Good point -YES, that impacts price.

92 posted on 10/17/2012 4:39:57 PM PDT by DBeers (†)
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To: ROCKLOBSTER
>>>What is causing the outrageous gasoline prices with crude hovering at 92 bucks?

We are driving fewer miles, purchasing more fuel efficent autos and producing more domestically, yet the price remains high. Given that we are a net exporter of refined gasoline even at the current price levels, I would say that it is global demand that is driving our gasoline prices.
93 posted on 10/17/2012 5:10:58 PM PDT by nc28205
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To: the_Watchman
And, more importantly, the increase in prices during the Obama term is due primarily to reductions in supply and pressures on oil produced energy due to taking a lot of coal out of the equation.

A couple of other major causes of the increased price of gas:

Inflation is really the biggest driver--printing endless amounts of money to cover deficit spending is making money worth less, which is have the effect of making oil/gas cost more.

Also, we now export much more gasoline than we used to, meaning that gasoline is also now a fungible product and subject to pricing based on an international market in addition to just a domestic one.
94 posted on 10/17/2012 5:32:54 PM PDT by rottndog (Be Prepared.....for what's coming AFTER America.)
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To: Sub-Driver

Obama might argue that recession leads to low gas prices, due to lack of demand.

And he’d be right – during the worst throes of recession, gas prices (along with all other prices) drop. But Obama didn’t argue that.

Instead, he argued that low gas prices destroy the economy. Which is simply asinine.

And if that asinine argument means that Obama is fine with high gas prices, we’re set for a second recession.


95 posted on 10/17/2012 5:52:50 PM PDT by NoLibZone (I know what it is to be Black,to be hated for who I am, more so than Whoppi does. I'm a Republican.)
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To: PghBaldy

But times are bad now so the price should be below 1,89.


96 posted on 10/17/2012 5:56:42 PM PDT by NoLibZone (I know what it is to be Black,to be hated for who I am, more so than Whoppi does. I'm a Republican.)
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To: DannyTN
I still think that oil behaves differently because it is globally fungible.

As I said earlier, if demand falls in the United States (for whatever reason), the price won't fall because the supply will be adjusted as the oil companies sell their oil overseas instead.

A global commodity like oil won't behave like a domestic product that can only be sold locally or it's wasted, resulting in lower prices to at least get something for the product.

-PJ

97 posted on 10/17/2012 6:01:39 PM PDT by Political Junkie Too ( It doesn't I naturally when you're not natural born.)
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To: the_Watchman
>>>And, more importantly, the increase in prices during the Obama term is due primarily to reductions in supply and pressures on oil produced energy due to taking a lot of coal out of the equation.

1. Domestic oil production is up. In fact, it is higher than at any time since 1998.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=M

2. Much of the the reason coal production is down is because it cannot compete with the sub $4 natural gas prices. NG production is about 25% above where it was in the mid 2000s due to fracking in the shale formations.

http://www.eia.gov/dnav/ng/hist/n9010us2m.htm

On a BTU equivalent basis, $4 ng equates to about a $50 coal price. Appalachian producers do not operate well at that level.

3. Current futures prices for ng are below the $4 level through most of the next year and are below $4.50 for pretty much for the next 4 years.

http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html

If those trends hold, those coal mining jobs aren't coming back no matter who is president.
98 posted on 10/17/2012 6:56:03 PM PDT by nc28205
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To: Sub-Driver

Last night, President Barack Obama dropped the biggest campaign gaffe of the season – only the media wasn’t watching.


Oh, the media was watching. They just didn’t care.


99 posted on 10/17/2012 7:16:12 PM PDT by chessplayer
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To: SkyDancer
These are funny! Too bad the partisan hacks & comedians waited until now to start mocking 0dumb0. I especially like Conan O'Brien's line.... "Q: Have you heard about McDonald's' new Obama Value Meal? A: Order anything you like and the guy behind you has to pay for it. --Conan O'Brien"

Even Letterman had some good one-liners.

100 posted on 10/17/2012 8:13:21 PM PDT by rcrngroup
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