Back in October 2006 I paid $2.01 for a gallon of gasoline and I thought to myself that I would never see the day when gas dropped below $2 a gallon. Well, today I paid $1.98 per gallon. I guess Democrats only thought they would see prices this low as we approached the 2008 elections. In the month prior to the November 2006 elections, as was in the elevator at work and heard a woman remark that the republicans were intentionally manipulating the price of gas down so as to win the elections. This ‘manipulation’ was widely reported in the drive by media, one example of which can be found on the USA Today website (http://www.usatoday.com/money/industries/energy/2006-09-25-gas-poll_x.htm?csp=15). I don’t believe Bush or the republicans have that kind of power, nor could I believe that any rational person would believe such a conspiracy theory. But according to the USA Today “Many Americans look for political manipulation as gasoline prices plunge.”
“According to a new Gallup poll, 42% of respondents agreed with the statement that the Bush administration “deliberately manipulated the price of gasoline so that it would decrease before this fall’s elections.” Fifty-three percent of those surveyed did not believe the conspiracy theory; 5% said they had no opinion. Not surprising, almost two-thirds of those who suspect President Bush intervened to bring down energy prices before Election Day are registered Democrats, according to Gallup.”
Even with the drive by media propagating this insane theory, 53% of Americans realize there is no basis for this line of thinking. To me, the headline should have been something to the effect of “Most Americas Reject Political Manipulation of Gasoline Prices.”
Though I fall in with the majority not believing this conspiracy theory, I thought I would do some research into the facts of the case. If we look at retail gas prices since 1990, we do see some interesting trends, none of which, though, indicate a Bush/Republican manipulation.
As you can see in the chart (data points taken from http://www.economagic.com/em-cgi/data.exe/doewkly/day-mg_rco_us), gas prices remained relatively flat during the 1990s, then began raising for the last two years of the Clinton administration, leading up to the Bush/Gore election of 2000. If Bush did have power to manipulate gas prices, he sure didn’t use it in 2000. Approaching the elections of 2002 and 2004, again prices were on the rise, but perhaps Bush was comfortable enough with his and the Republicans re-election chances that he didn’t feel the need to manipulate down the gas prices. Now it is nearly three months after those elections in which Bush deliberately decreased the price of gasoline and gas prices continue to fall. It’s a good thing Bush is such a benevolent dictator to continue to give us low gas prices, even after his party was defeated at the polls. Or perhaps he is already getting started on the price manipulation to help his GOP buddies win in 2008. (I’m sorry; I’ve been fighting the urge to be sarcastic, but I finally gave in.)
So if it is not Bush affecting the price of gas, what is it? Could there are other factors at work here in our free market economy? I’m not an oil expert or an economist, but I am a thinker, and I think the price of crude oil could be a larger factor in the price of gasoline. Imported crude oil ranged between $10 and $20 a barrel during the 1990s (http://www.economagic.com/em-cgi/data.exe/doeme/raimuus). In 2000, prices spiked to $30 a barrel, roughly corresponding to the spike you see toward the end of the Clinton administration. In 2004, crude oil priced spiked again, this time to $40 a barrel, corresponding to the gas price increase you see as the 2004 elections approached. Throughout 2005 crude oil prices continued to climb until they peaked over $60 a barrel in the summer of 2006. Now, January 2007, crude oil prices have dropped back down to around $50 a barrel. All of these fluctuations in the gas price you pay at the pump are correlated with the ups and down of the crude oil market.
No doubt gas prices will continue to raise in the future, whoever or whatever is the culprit. A gallon of gas soon may be even more expensive than a gallon of milk. Yep, milk has consistently cost more than gas, averaging over $3 a gallon for several years now (http://www.economagic.com/em-cgi/data.exe/blsap/apu0000709112). Forget ‘big oil’, I want to know how ‘big dairy’ is keeping the price of milk so high and what their political agenda is. (Sorry, that sarcasm is rearing it’s head again.)