Riding The Juggernaut.com
Excerpt
“I mean if anybody says there’s some magical solution to the high price of petrol in Australia, will you please ring the Lodge and I’ll spend an hour all-ears listening to them.”
– Australian Prime Minister John Howard, August 1st, 2006
It was August 1st, 2006, when Howard made this disingenuous remark. The oil market had soared to record highs (over $US78 a barrel) in mid-July. There was widespread consumer anger at ever-rising bowser prices and record oil company profits.
And yet, by the time US mid-term elections came around three months later, the oil price had fallen a massive 20 percent.
And now, with the US elections over, oil prices are on the rise again. Here’s a little graph (slightly adapted) from Opec’s own website.
Yup, the lowpoint came on exactly the week of the US Midterm elections. Surprised? You shouldn’t be. The big question is, how did it happen, and why?
First, let’s look closely at what happened. Here, courtesy of Blogging Stocks, are the average weekly U.S. average price for Super Unleaded for that period (based on data from the
Energy Information Administration): Aug 21, 2006: $3.08
Aug 28, 2006: $3.01
Sep 04, 2006: $2.90
Sep 11, 2006: $2.79
Sep 18, 2006: $2.67
Sep 25, 2006: $2.54
Oct 02, 2006: $2.48
Oct 09, 2006: $2.43
Oct 16, 2006: $ 2.40
Oct 23, 2006: $2.39
Oct 30, 2006: $2.41
Nov 06, 2006: $2.39
Nov 13, 2006: $ 2.42
Nov 20, 2006: $2.42
Note the low point of $2.39, achieved in the week just prior to the US mid-term elections, and held to the very day before the election. This fine tuning by US oil retailers was no accident, either. Can you say “price gouging”?
Specifically, on November 6th, the ratio of the price/barrel of gasoline at the pumps and price/barrel of crude oil fell to 167% — significantly lower than the weekly average of 174% between August 21st and November 20th.
The conventional wisdom holds that the US government cannot significantly influence world oil prices, except through manipulation of the US strategic reserve. But in a globalized world, that sort of thinking is sorely out-dated:
During a meeting in the Oval Office, according to [Bob] Woodward, Bush personally thanked Bandar because the Saudis had flooded the world oil market and kept prices down in the run-up to the 2004 general election.
The remarkable link between the price of oil and Bush’s popularity has already been well documented:
H.L.s Take
There is talk of gas now going above $3.00 a gallon, You SUV drivers out there should be plenty pissed off at that. Today came news however that prices are going down due to the summer like weather we are having in mid January, (but shhhh don’t mention global warming…) The first time that tempetures return to normal, the prices will rocket up again. This is a very interesting article, read the whole thing and see what you think.