Gasoline Prices Highest in 9 Months – Whose fault Is It?

by Lisa Hussein

Crude Oil prices are up $2.65 a barrell since last May.  Consequently, we spoiled ones here in the U.S., will experience higher prices at the pump.  The question is, whose fault is it that our gas prices are up?  Is it President Obama’s fault?  The GOP Tea Baggers and Fox News would sure like you to think that.  But let’s look at the situation more closely.

Graph provided by Consumer Energy Report and BY ROBERT RAPIER

As you see from this graph domestic oil production is the highest its been in about 7 years.  All of this production is not necessarily the result of President Obama’s policies, nor is it necessarily the result of President Bush’s policies.  It is a combination of both, plus raising crude oil prices over the past decade and the response to that.    So the Republican idea of higher domestic oil production equals lower prices at the pump is simply not true.  There are too many other factors involved.  For instance, according to a cbc.ca (canadian) report our current prices are a result of the economic troubles of Greece, and the highly popular, Republican supported sanctions against Iran.

Crude prices rose after European leaders agreed to lend Greece €130 billion ($172 billion Cdn) to avoid a debt default and as Iran laid out conditions for future oil exports to European countries.

Earlier in the week, Iran said it was halting sales to Britain and France in retaliation for a European Union embargo taking effect in July over Tehran’s disputed nuclear program.

 

Why does Iran halting sales to Britain and France affect our prices?  Because all crude oil, including the stuff pumped from our own lands and territories go on the world market for any one to bid on.  Speculators, look at what’s happening in the world, Iran in particular, and bid accordingly.  i.e. supply contracts, demand stays the same = shortage in supply.  Shortage of supplies make speculators drive the price up.  Econ 101.  Drilling more today or passing the very very dangerous Keystone pipeline will do NOTHING for gas prices today.

Additionally, in the author’s opinion, higher gas prices are at least partially the result of the financial system’s deregulation.  The deregulation that began here under conservative governing and continued across the planet as conservatives were voted in, in various developed countries caused the housing market collapse.  Greece’s issues are a delayed reaction to that collapse.  The notion that if one leaves the market alone, it will work itself out, has been proven to be a faulty argument over the last 90 years.  Mainly because that notion rests on the assumption that the stakeholders of industry’s primary purpose is for the greater good.  However, any sane person knows that stakeholders only think about short term gain for the shareholders sometimes at the expense of long term growth.  Greed, in essence, is the factor that conservatives refuse to acknowledge and consequently their denial will keep them in the loop of deregulation-at-any-cost-insanity forever.

The results of Obama’s energy policies will not be felt (for the most part) until he wins his second term, at the earliest, and some results will not be felt until after 2016.  In any case, regardless of the noise coming from Fox News, the GOP candidates, and the Tea Party, President Obama’s decisions are NOT the cause of higher gas prices at the pump today.

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