Falling gas prices mean GOP joy:

[tigerhonaker]

Originally posted: September 13, 2006

Falling gas prices mean GOP joy

Posted by Frank James at 10:35 am CDT

Republicans are noting with some satisfaction that gas prices are falling. The specter of gas costing significantly more than $3 a gallon this fall had worried Republicans who feared that voters would take it out on their party in November.

But prices are well south of $3 and dropping. The Energy Information Agency indicates that gas prices in the Chicago area are now averaging about $2.86 a gallon, down from $3.27 a gallon a little over a month ago.

Several reasons account for declining gas prices. The sharply higher prices of the spring and summer helped dampen demand, which put downward pressure on prices, according to experts.

Fears of a total geopolitical meltdown in the Middle East abated somewhat after the Israeli bombs and Hezbollah rockets stopped crashing into Lebanon and northern Israel, respectively. The hurricane damage to Gulf of Mexico oil facilities that had been feared at the start of the current season, hasn’t happened, at least not yet.

Even so, because of the suspicions that attach to the oil industry and its ties to the Bush administration and GOP-led Congress, there are some conspiracy theories that dropping gas prices have more to do with politics than markets.

For instance, at an energy forum held at the Congressional Black Caucus conference last week, I heard Rep. Carolyn Kilpatrick (D-Mich.) suggest the price drop right before the November elections raised her suspicions. I heard similar comments on the nationally syndicated Tom Joyner radio show yesterday.

But if an axis of the White House, Congress and oil industry had so much control over gas prices, why would they have allowed the run up in prices to occur in the first place with all the political risks that would entail? For instance, inflationary pressures from higher oil prices could threaten the very economic growth Republicans are boasting about.

In any event, the House Majority Leader’s office this morning sent out an email this morning, the latest in a series, meant to bring to the attention of anyone who hasn’t been paying attention that gas prices are falling back to earth.

Here’s the House release which riffs off a comment CBS Evening News anchor Katie Couric made on last night’s program:

COURIC: "IT'S HARD TO BELIEVE, BUT THE PRICE OF GASOLINE JUST KEEPS DROPPING"

September 13, 2006

Katie Couric, the new anchor for the CBS Evening News, had this to say about plummeting gasoline prices last night:

"It's hard to believe, but the price of gasoline just keeps dropping. Nationwide it now averages $2.62 cents a gallon. That's down 42 cents in the past five weeks."

And on the front page of the Wall Street Journal today:

"The recent drop in oil prices could provide a welcome and surprising boost to consumer pocketbooks this fall, cushioning the economy from a falloff in home prices and construction while venting an important source of inflation pressure.

"Crude oil was at $77 a barrel as recently as early August. Yesterday, the price of the October crude-oil future contract settled at $63.76, a near six month low, down $1.85 from Monday, on the New York Mercantile Exchange. That helped spur stock prices to a four-month high."

House Republicans have worked hard on common sense energy solutions to help American families feeling extra pressure at the gas pump. And welcome news has greeted consumers all over the country over the last few weeks, with drastic declines in gasoline prices providing relief from high prices. According to yesterday's USA Today:

"Gasoline prices continue to tumble, almost free-falling toward levels not seen in five months.
"The nationwide average for regular was $2.618 a gallon, the Energy Information Administration reported Monday. That was 10.9 cents lower than a week earlier.

"'The reason prices are going down so far so fast is that they shouldn't have been that high in the first place. Two reasons they were: fear and speculation,' says Mike O'Connor, president of the Virginia Petroleum, Convenience and Grocery Association. It represents gasoline distributors who operate about 4,000 stations.

"O'Connor says $2 gasoline 'is more likely than unlikely' if the Gulf of Mexico isn't hit by hurricanes and if there isn't a flare-up of tensions in oil-producing regions."

Even as chronically negligent Capitol Hill Democrats continue to oppose responsible energy legislation that would help ease the burden of higher prices, House Republicans remain focused on common-sense energy solutions to help lower gas prices and Americans' cost of living.

The White House issued a press release along the same lines yesterday:

Economy Watch ...
Gas Prices Continue To Tumble

Average Gas Price Falls 11 Cents A Gallon In A Week. "Gasoline prices continue to tumble, almost free-falling toward levels not seen in five months. The nationwide average for regular was $2.618 a gallon, the Energy Information Administration reported Monday. That was 10.9 cents lower than a week earlier." (James R. Healey, "Average Gas Price Falls 11 Cents A Gallon In A Week," USA Today, 9/12/06)

Ø Mellody Hobson, President, Ariel Capital Management: "I Think Prices Are Going To Continue To Go Down." HOBSON: "Well, I think prices are going to continue to go down. There are two great things working in our favor. The first is that, many people don't know this, but there is a summer blend of gasoline that is more expensive than the winter blend. The summer blend is cleaner and more expensive - it has ethanol in it. And on September 15th, many of the States will switch to their winter blend, which is a couple of cents cheaper. And then, of course, the Alaska pipeline being at 100 percent capacity - that will happen at the end of October - that'll help as well." (ABC's "Good Morning America," 9/12/06)

 Hobson: "Our Inventories Are Actually Running About 4 Percent Higher Than The Five-Year Average." HOBSON: "The good news is that we're out of the peak driving season, so definitely demand is down. But at the same time, supply is up. Our inventories are actually running about 4 percent higher than the five-year average." (ABC's "Good Morning America," 9/12/06)

 Hobson: The Alaskan Pipeline At Prudhoe Bay Is "Getting Fixed Faster Than Everyone Thought." HOBSON: "What has helped us is the problem that we had on that Alaskan pipeline at Prudhoe Bay, that's getting fixed faster than everyone thought. That represents 8 percent of production, so that's helping." (ABC's "Good Morning America," 9/12/06)

Ø Neil Gamson, Analyst, U.S. Energy Information Administration (EIA): "The Driving Season Is Over. There's Plenty Of Gasoline In Inventory And Crude Oil Prices Have Been Dropping A Lot. It's Mainly Market Fundamentals." (James R. Healey, "Average Gas Price Falls 11 Cents A Gallon In A Week," USA Today, 9/12/06)

http://newsblogs.chicagotribune.com/...g_gas_pri.html

[xcel]

Hi Terry:

___I wonder why the White House and politicians the country over are cheering $2.60 + average gasoline prices? That is still the highest average price in the history of the US on a year over year basis? Oh, foolish me. I forgot that the elections are coming up in a few weeks

___Good Luck

___Wayne

[tigerhonaker]

Originally Posted by xcel

Hi Terry:

___I wonder why the White House and politicians the country over are cheering $2.60 + average gasoline prices? That is still the highest average price in the history of the US on a year over year basis? Oh, foolish me. I forgot that the elections are coming up in a few weeks

___Good Luck

___Wayne

Wayne,

I can't believe that I am reading this from "You". Now would anyone ever think that {Upcoming-Elections} would have any Bearing at all on "GAS-PRICES" right before the {Elections}.

MAYBE !!!!!
Terry (tiger)

[laurieaw]

hey, folks, nothing political about this......nope, not a bit....

do you think the resident in the white house knows WE can spell manipulation?

all this means is that everybody will return to the complacency of yesteryear, until the next jump.......

[Chuck]

Tom Joyner is a familiar name....he has been a radio personaility at a couple of Dallas radio stations. For awhile, he would do a segment in Dallas, fly to Chicago and do a segment there.

Lower gas prices are a stay of execution - if the current pattern of doing little to nothing during these breaks continue, things will get worse when higher prices return.

[brick]

Originally Posted by laurieaw

until the next jump.......

That's just the thing. We have the R's celebrating and the D's in a panic, all because the price of gasoline is dropping rapidly in the most volatile market since the 70s. Funny thing about volatility is that we could see gas in the $2.00 range but it will last, what, a week? I would love to see my fuel budget shrink but we would have to be idiots to start planning as if it will last.

Just goes to show that nobody on either side of the aisle really understands the big picture. It's about getting re-elected, and screw the long-term consequences I vote "no confidence" on the lot of them.

[Sledge]

Just wait until your friend who was considering a Fit or Corolla pulls up in their new H2

I swear, many of my fellow Americans have the attention span of a 2-year old.

[tbaleno]

I thought gas prices always drop in the winter.

[skywagon]

$2.23 in MPLS this morning

[Chuck]

Originally Posted by Sledge

Just wait until your friend who was considering a Fit or Corolla pulls up in their new H2

I swear, many of my fellow Americans have the attention span of a 2-year old.

This is my story of the US Energy problem:

• In 1973, the Middle East punished our support of Israel by imposing an oil embargo. This was the start of Pain at the Pump. Back then there were also waiting lines.
• Government, Detroit, the general public got semi-serious about the energy crisis - CAFE standards were passed in 1975.
• Oil would continue to be high enough to dampen the economy thru the 1970's, including the fall of the Shah of Iran in 1979.
• Governent let up on energy policy in the 1980's, although deregulated oil was probably a good thing. Many think the plunging price of oil helped bankrupt the former Soviet Union. By 1988, the average US vehicle got 27mpg - I think. What I'm sure of is it peaked.
• Unfortunately, Detroit noticed the sales of the Jeep SUV in the mid 1980's were good. At least it was moderately-sized and had the car unibody construction. Ford and GM would imitate, execpt they would increase their profit margin by skipping the unibody construction - safety standards did not require them.
• Mid 1990's SUVs went the way of "Happy Meals" and got supersized. Tax laws made the purchase of SUV as a "business vehicle" a steal.
• Faced with the high-priced UAW labor and the cheap construction of Truck/SUVs that did not have to meet car CAFE and safety standards, Detroit put their eggs in the SUV basket.
• Engine effiency improved greatly from 1980 to 2006 - zero to sixty acceleration went from an average of 15 seconds to under 10 seconds. This partially accounts for fewer subcompacts getting over 40mpg (improved safety standards another reason....)
• From 2000 to 2005, gas prices roughly double to about $3.00 a gallon - Detroit automakers suffer drops in Truck?SUV sales in 2006.

Thru this quarter-century, government, Detroit, the general American public chose to behave as if gas prices would continue at $1.50, or at least pretend there would be a painless fix if the price jumped. As the late Cowboy's Coach Tom Landry responded to a reporter to point blame on a very bad playoff loss - "It was a team effort" - everybody is to blame. There has not been serious Federal energy legislation by either party since 1980, Detriot has been at best lukwarm to hybrids and EVs, Meanwhile, much of the public seems to think sedans are too small or too uncool...