Of course not! But today in an article in the Post-Tribune here in NW Indiana, a person interviewed told the reported something of that sort:
“The wave of $2-a-gallon gasoline that has been sweeping across the country finally hit Northwest Indiana.Mohammed Shad, whose family has owned the Speed Mart at Indiana 130 and Indiana 149 west of Valparaiso for five years, said he lowered the price for regular grade gas at the convenience store outlet to $1.99 at 6 p.m. Tuesday night after seeing the market continue to slide downward from $60 a barrel this week.”
There are actually two gas stations, the one above and the Family Express station at 130 and Tower Road, in a gas price war driving prices about 15 cents lower than surrounding areas. Next we get to the most worrisome part:
Evelyn Murchek of Portage said she was driving by when she spotted the sign and turned in for a fill-up that was 14 cents a gallon cheaper than her last one. “At first I thought it was the price for E-85. It probably has something to do with Obama,” she said.
What? Are you serious? That’s absolute hogwash. If anything the price drop on a gallon of gas is 80% the economic recession, and 20% the implicit threat from the Republican Congress that they will push again this year for more oil drilling domestically. Remember the #dontgo movement during the summer? Speaker Pelosi sent Congress home without voting on oil drilling, so the Republicans stayed in the dark with no microphones or media coverage and kept debating the issue to demand that Congress return. Barack Obama may have a lot to do with positive feelings for some, but he has absolutely nothing to do with gasoline dropping under $2.00 … If anything his environmental policies and ideas will push oil right back up to over $100 soon. And by the way, gas prices have been under $2.00 in lots of states for weeks … Indiana especially NW Indiana is late to drop because of foolish EPA rules that make us make special gasoline for our area, which costs more.
Clearly gas prices are being dominated by one major factor–the price of oil being in free fall. Of course, the next question is why is oil in free fall? I suppose that Obama could have something to do with it. The reason is that the economy is incredibly weak and those engaging in futures pricing believe that the economy is going to completely tank therefore there will be a very low demand for oil and gasoline.
So if Obama has anything to do with it, it is because he is inspiring the markets to expect a protracted economic failure.
Face it, man-on-the-street interviews are more like moron-on-the-street interviews anymore. That woman probably hasn’t had an original thought in her life.
Nathan, could point. I felt bad using her name, but she gave it to the newspaper and must not have foreseen how foolish the comment would appear. I’m still floored by the people who firmly and emotionally believe that merely having a leader who is “liked” will improve the economy, raise our standing in the world, and usher in some kind of national nirvana
I haven’t looked at the above linked post, but we should be aware that “Peak Oil” is really largely a farce. There is a lot of oil out there and when you include oil that we are not utilizing yet because existing sweet crude is so easy to come by right now, our reserves will last a long time.
This woman could be partly right. Everyone knows Bush is cozy with Big Oil and did nothing to reign in their price gouging. Most investors recognize that this means windfall profits for Big Oil as documented during Bush’s tenure, so investment money is poured into oil futures that drives the price up more and more. I read an interesting article about an investor (also a buddy of Bush) who poured the lion’s chair of his capital into oil futures when Bush was elected, and then dumped them this past summer as Bush is on the way out. I would say it’s not so much Obama’s win, but Bush’s departure (and good riddance).
PS: Make that “lion’s SHARE of his capital”. By the way if oil companies do try to rake in windfall profits during Obama’s tenure I hope he does something about it. The price of oil and gas at the pump was one of the things that broke household budgets, caused inflation with goods and services and drove us into a recession. Oil and gas is too important a commodity to allow corrupt business practices or monopolies, perhaps they should be regulated like utility companies.
What do you define as a “windfall profit”? 5%? 10%? 15%? Do you even know what profit margins the oil companies have been making?
Clearly gas prices are being dominated by one major factor–the price of oil being in free fall. Of course, the next question is why is oil in free fall? I suppose that Obama could have something to do with it.
How?
It’s not the supply that has changed. It’s the demand.
And the demand seems to have dropped mostly because of a worldwide economic collapse. If people can’t get credit to buy washing machines, there are fewer people driving to the stores to sell washing machines, fewer trucks delivering washing machines to stores, fewer people driving to the factories to build washing machines, fewer trucks delivering steel to the factories, fewer people driving to work in the steel mills, fewer trains delivering iron and coke to the steel mills, etc.
You also have a drop in demand as people change their usage patterns. This includes everything from old cars hitting the junkyards and economy cars replacing them, to farmers planting oats instead of corn, to people switching from fuel-oil furnaces to gas furnaces or even to wood-fired stoves.
Oil and gas is too important a commodity to allow corrupt business practices or monopolies, perhaps they should be regulated like utility companies.
Oil and gas companies are already subject to the same anti-trust laws as most other companies. They’ve done a lot of investigations since the 1970s, and never found large-scale price-fixing.
In most states, utility companies are only regulated as to the costs they are responsible for. Two weeks ago, I got an ad in the mail from Shipley Energy, who offered to sell me natural gas, freezing the price for the next year at about 80% of what the incumbent gas company, UGI, has been charging. One week ago, UGI announced that they were cutting the price of natural gas by about 16%.
Competition is more effective than regulation, when you give it an opportunity to work. If a third company were to come along and want to sell me city gas instead of selling natural gas, they wouldn’t be able to, because with only one set of pipes, there’s no way to get city gas to me, and natural gas to my neighbors.
(In case you don’t remember city gas, it was a manufactured gas. I don’t know of any place that still offers it. In order to switch between city gas, LP gas, and natural gas, you would want to change the orifice size on your furnace, water heater, dryer, range, yard light, and whatever else other gas appliances you use.)
How?
Sarcasm, Harl. Sarcasm.
Your analysis on oil and gas prices are dead on. But you also need to remember that oil prices, in particular, are priced largely on future expectations of demand rather than current demand. So what we are seeing is that the market believes that the demand over the next few months will be very low. But the implication is that the price of oil will rise BEFORE the economy recovers.
When the Great Depression hit, there was a big drop in the stock market. There was an apparent recovery that lasted for months, and then the bottom fell out of the market again.
I don’t think I’m the only one who thinks we haven’t bottomed out yet, that there’s going to be a big drop come, oh, maybe next March or so. The DJIA could easily hit 5000 or even lower.
Black Friday had significantly more shoppers than last year, and the average consumer bought slightly more than last year. That tells me we’re not as bad off as we claim to be.
But now that everybody’s emptied out his bank account to take advantage of Black Friday specials, we’re cruising for another dip, one that will hit hard and go deep. I don’t like the idea of it happening, but I don’t think there’s anything I can do to prevent it.
Once THAT one hits, the market (and the economy) will drift south for a little while before it slowly, slowly, starts heading north again.
Anyone who hoards oil products is likely to get his fingers burnt. Nobody’s going to be able to target the bottom well, and even if they could, it’s going to be a slow rise from there to prosperity.
Right now is a good time to hoard cash. And I’d suggest that buying a home safe, and keeping rolls and rolls of coins in that safe, might make a lot more sense than trying to earn 3% interest in the bank.
Then, when the second dip comes, take a look around at businesses for sale. You’ll be able to pick up some good businesses dirt cheap, if you have the cash to buy them and keep them going.
Anyone who thinks Obama is responsible for a drop in gas prices is retarded. Gas prices are considerably lower because of a severe drop in global demand, mostly coming from China — the country that consumes the most oil on the planet. When demand drops, price drops. It’s a simple economic rule. Obama has NOTHING to do with this — directly or indirectly. He hasn’t even taken office yet!
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