Is Obama powerless over gas prices?
The price of gas has been hovering right under 2 bucks a gallon for some time and I am thankful. The media has repeatedly informed us that we consume less fossil fuels now so the reason for these “high” pump prices, they say, is something of a mystery. Having said that, I can’t help but recall similar gas prices in first years of George Bush’s Presidency. In ‘01 and 2, two dollars per gallon was a concern for a lot of folks, myself included. I felt like I was being taken advantage of because fuel was/is a product that I had to have regardless of it’s cost. Back then the Post-Dispatch printed a letter I wrote on this subject. In my note I wondered if George W Bush was letting Oil Companies raise the gas prices or was he, the President of the United States, powerless to stop them from doing so. Since then all kinds of explanations for elevating gas prices have been put forth including Wall Street Speculators and Trouble in the Middle East to freak storms and excessive greed but those are just excuses. So now I’m asking you President Barack H Obama, the same question. Are you powerless to stop the sky-high BIG OIL profits that will result from $2 and up gas prices or, like W Bush, will you just let it happen?
Timothy C Donahue
St. Louis
I’m pretty sure he’ll go after their profits in due course. It’s what he does.
Since you asked, the price for oil and gas are set on Wall Street. Oil and gas futures traders set the price. If the price goes up, they in turn charge more for it. Traders don’t worry about what they can sell it for, if the price goes up at the pump we still buy it. It’s called deregulation and that was done back in the 70’s.
We can’t really blame the oil companies for the price, they don’t set it. They can have some influence by setting production levels but that’s about it. If a refinery has problems, that will raise prices in certain regions as we don’t have enough excess refining capacity. Every attempt to expand or build new ones has run into problems, usually environmental issues. Refineries are also referred as infrastructure and without enough infrastructure, we will have limits on gas availability. If demand goes up or something effects supplies, Wall Street raises the price and we get stuck holding the bag.
Can President Obama help us here, he can in limited ways. He can do as former President Bush had done by trying to increase oil production domestically to increase the global supply. He could also try and help the oil companies get some new refineries built. Both of these would help keep the price down or at least more stable do to sufficient supplies.
Alternative fuels would help as well though many of them cost almost as much to refine as gas. Alcohol is a good example of this but there is the added benefit of replacing some of the gas used to keep the amount of oil used down. The same applies to biodeisel.
obama has about as much control over the price of gas as he does over the price of soybeans, milk, orange juice or any other commodity. Those prices are set by market forces. Ever hear of supply and demand? Come to think of it, Obama does have some control over the price of gas….it’s called TAXES. The federal tax on gasoline is more per gallon than is the profit to the oil companies. He could reduce TAXES, but of course he is not about to do that.
Yes, getting rid of the 18.4 cents/gallon federal tax would just make a huge difference. Well, in a way, it would. At 18.4 cents/gallon is it not paying for current roads - how wonderful it would be to depend even more on general funds for roads.
Simian
The only effect this rookie president
will have on the price of gas,
is to drive the price up with
his silly meddeling in our economy.
Obama is powerless over everything except; raising taxes and wasting our tax dollars
Bush/Cheney warned the American people in 2003 of gas prices reaching $5/gal.
Funny, the former oil men had their predicitions come true despite their lack of control and manipulation over market fluctuations….and bonuses.
In some respects Obama can have an affect on gasoline prices, but primarily indirectly. Also, as gbones pointed out, the stock market has as much - if not more - control on prices than the oil companies producing it. Furthermore, the refineries can directly affect prices when they see demand decreasing, to squelch the supply so as to maintain a profit margin. And then, apparently I’ve heard/read that the oil price we see listed on the stock exchange isn’t necessarily the “real” oil price. The stock market uses oil from one region as a benchmark price. But oil is bought from all over the place and not every place sells at the same price. West Texas sweet crude used to be the more expensive oil, and thus the basis for the stock market benchmark price, but at least as of a month or so ago, it dropped below OPEC prices. So, much of the oil our refineries buy may actually be more expensive than what we see on the stock exchange, and that price is reflected in part at the pump.
And let us not forget that at any time that some international event occurs where our oil supply might even have a hint of being threatened, the refineries and gasoline companies as well as the financial institutions all see an opportunity to bet on higher prices.
But, if it is true that we as a nation really are decreasing our oil and gasoline consumption, lets not let failing prices or even relatively stagnant prices change our ways. Let us continue to be smart about our gasoline consumption and personal finances and budgeting.
That said, I have a feeling we’re going to see $4 gas again soon for one or more reasons, whether that be due to the economy, natural disasters or international crises.
lOGUS,
We have decreased demand dramatically. The government’s answer seems to be cap and tax to make up lost revenue, though I don’t think it will pass. Without added refining capacity and domestic production; both of which we will never see with the current president and congressional makeup, there is not much we can do about it except keep conserving. We had $4.00 a gallon at the $140-$150 per barrel range. Just my opinion, it is going to be a real shame to see $4.00 gas at $100.00 per barrel.
Sadly Bud, I think you’re right… and we may see higher fuel costs with even lower oil prices.
I would not be surprised if we see very high inflation by this time next year and the stock market tanking to levels we haven’t seen since the 80s - which would be disasterous now.