2006-09-25

Falling Petro Prices: Where's the Parade?

Petro prices in my neighborhood are about to fall below $2/gal. I believe I saw $2.06/gal this morning. We free marketeers predicted a few months ago that the rising prices that caused Nadir and others to form pitchfork-and-torch protests would engender a variety of factors causing a subsequent price drop, including modification of consumer behavior and increased efforts to explore, retrieve, and process. These things all occured. The conspiracy hypothesizers of course believe that wicked oil executives turn their price dials according to what they want: increase the price to increase profits, or decrease the price to reward and assist capitalist candidates (republicans). As one friend proclaimed to me recently: "Apparently they figured they made enough money off of the $3/gal price, and now they want to help their republican friends."

So how to explain the 8 years of super-low petro prices under Clinton, which contributed crucially to those good economic times? Why not turn the price dial down to help Bush I, then turn it up to hurt Clinton in his reelection, and then to hurt Gore?

3 comments:

Nadir said...

I suspect prices will rise after November when demand increases for winter. You would say this is economics. I would say this is politics.

Prices were artificially inflated because of instability in the Middle East and the summer driving season. They were fueled by record oil company profits.

Oil companies aren't politicians, so it matters less to them who is in office. The Bush/Cheney cabal does have some pull in the energy industry, so they can pressure their friends to lower gasoline prices. The net result: a two or three point boost in Bush's approval rating. Americans are less pissed off when their lives are better.

Nadir said...

By the way, gas prices are still high in Canada because they have incredibly high taxes. But their roads are better, they get assistance for college, their artists can get money from the government to create their work and further the culture of the nation, and if they get sick, they can go to the doctor without being turned away for lack of insurance.

Paul Hue said...

Nadir: How did Mid East instability make petro prices "artificiall" high? What is "artificial" about investers moving their investments to markets that are more stable?

Canada has better roads than many US states, but has about double the unemployment and people get taxed about double the US average. And the "universal healthcare" there means that "everyone" has access to medical care that on average fall's below the US average. All this explains a net immigration of Canadians to the US.