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The politics of oil: Recipe for a win?
Posted by: mcq on Thursday, April 27, 2006

I have to say I'm with Samuel Staley on this one:
Watching Republicans jockey for a lead position to bash oil companies and rein in gas prices is...well...bizarre.

President Bush, House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Bill Frist, R-Tenn., have all promised to investigate price gouging, though they know that isn't what is driving up gas prices. And Republican Sen. Arlen Specter, R-Pa., wants to tax the "windfall" profits of oil companies.

Of course, I gave up the notion that Republicans stand for free markets long ago (see steel, lumber and fish tariffs and farm subsidies under Bush for a few of the more recent reasons). As politicians think about the next election, which is always just around the proverbial corner, they are all too willing to trade free market principles for political expediency.
I couldn't have said it better myself. Politics and looming elections are driving the current witch hunt against "greedy oil companies". It's absurd, but in Republican political circles it is necessary. If you leave the field to your political enemies they'll take advantage of it, as they're already attempting to do:
Anger over gas prices is gaining traction in many midterm races around the nation as Democrats attack Republicans for being too close to oil companies. With many in the GOP growing uneasy, President Bush this week called for price-fixing investigations. Political analysts say the rising prices could dovetail with growing public concern over the war in Iraq to give Democrats an opening in several key races.
It's all pure spin. But, for Democrats, increasingly effective spin. The reasons for voter discontent vary, and while the oil companies are cited as part of the problem, most are sure that somehow it's the "government's fault". And guess who's in charge of the government?
At the pumps here, the oil companies may have been the most commonly cited target of consumer ire, but not the only one.

Many said they blamed the government and car manufacturers for failing to develop alternative sources of energy — particularly after the oil crisis in the 1970s.

"The government is definitely to blame for making oil our number one energy source," said Inna Shapovalov, 35, an immigration lawyer who was putting $35 into her Hyundai Santa Fe. "I wish we could all drive electric cars."

In a district that contains some of the most affluent portions of the state and large numbers of gas-guzzling luxury vehicles, none blamed motorists themselves for buying cars that use so much gas. National figures show that though the average vehicle mileage improved dramatically through much of the '80s, it has since dipped or held constant.

John Holzberg, 64, a Republican banker from Boca Raton, put gas into a Cadillac and cursed when the total of $43 came into view.

"I can't seem to figure out who's responsible," said Holzberg, who "doesn't like George Bush anymore." But he was sure it was making the electorate grumpy. "The economy is humming along, but nobody cares because everyone is focused — like I am — on Iraq and oil prices."
If Democrats want to nationalize the midterms, Mr. Holzberg has outlined the issues for them.

Iraq and oil. Add a dab of immigration and spin heavily. May serve up to 15 seats in the House.
 
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Welcome to politics, libertarians...
 
Written By: Joe
URL: http://
Welcome to politics, libertarians...
I was thinking it was more like "Welcome back to minority status, Republicans."
 
Written By: MichaelW
URL: http://
People b*tch about oil but it sure doesn’t seem to stop our economy or people’s spending and driving habits...
 
Written By: shark
URL: http://
Don’t speak too soon. Rove is now leading the "new" team who will end up being so much more attractive than the old one that Republicans will likely maintain their majority - even though they don’t deserve it. The Democrats are so unattractive and inept that I don’t see them beating the Keystone Kops, much less Rove. NotBush will not be enough. I think that nationalizing the election is a bad move for the Democrats. However, even my cat doesn’t care what I think.
 
Written By: Notherbob2
URL: http://
Meanwhile, from the article;
"The government is definitely to blame for making oil our number one energy source," said Inna Shapovalov, 35, an immigration lawyer who was putting $35 into her Hyundai Santa Fe.
It tickles me to no end people p!$$ing and moaning about the high prices while they fill up the truck for their lone daily commute. Try trading in the Santa Fe for an Elantra. You’re fill up cost is down to just over $20.

You makes a choice, you takes the consequences.

And, no, the government did not make oil our #1 energy source; the market did that over the past century because it has been a) cheap b) plentiful and c) convenient. Now that calculus seems to be changing. Expect real, effective relevant alternatives to start emerging in the not-too distant future.

That "electic car" pipe dream is so old it sports polyester and bell-bottoms.
 
Written By: D
URL: http://
Heh, here’s a simple plan.

1) elect the Democrats
2) they’ll raise taxes
3) they’ll wreck the economy
4) more people will be unemployed
5) those people wont be using gas, so our oil demand will go down

I wish these reporters would go around with a mirror. You want to know who’s responsible... look in this box.

I really don’t have much sympathy for people driving around in big cars, often well over the speed limit, who then complain about the price of gas.

Slow down, drive smaller cars, save gas. Seems pretty simple to me. (And something I’ve been practicing for over a year.)
 
Written By: Keith, Indy
URL: http://
In the midst of all this outrage over gas prices, does anyone else feel that what we are seeing is a revival of the mediaeval myth of the "Just Price"? Not surprising. Nathaniel Branden once wrote: "Scartch a collectivist, and you usually find a mediaevalist."
 
Written By: Bilwick
URL: http://
I view this spin as a weak retread: it’s a Naderite economic message appealing to base-consumerism.

The anti-corporatism in this spin, and its play to the basest of anti-market consumerism gives us a clue as to the Dem’s state-elections strategy. They want to position the party behind its various state-level, consumerist PIRG networks.

They have customized their spin so it to appeals to energy consumers that advocate for "cheap and plentiful" energy. Pelosi, Dean, Kerry, Durbin, Kennedy, et al seem to be asking the Naderites to front for them.

This spin is vulnerable on several fronts. The supply-side of the commodity price-equation annihilates the "price-gouger’s" analysis. And where the topic of our personal responsibility for our energy usage comes up, these Naderites usually clam up.
-Steve
 
Written By: Steve
URL: http://
Glad to see my local paper is taking a reasonable stance...

http://www.indystar.com/apps/pbcs.dll/article?AID=/20060427/OPINION/604270333
Our position: Who’s to blame for high gas prices? It’s the guy ahead of you in traffic.

The bipartisan noises emanating out of Washington over high gasoline prices have been even more nonsensical than usual.

Break up the Big Oil companies. Slap on price controls. Investigate for collusion. Tax windfall profits.

Yes, it’s an election year and the public is frustrated with gas prices pushing $3 a gallon. But neither reason excuses national leaders, including the president, the Senate majority leader and the House speaker, from ignoring economic realities.

Pump prices are high because of a little thing called supply and demand. Americans may complain about higher prices, but they’ve not changed their driving habits enough to make a difference. Economic growth also often leads to higher energy costs (again, it’s the old supply-and-demand thing), and the U.S. economy is humming along nicely. Growth in China and other parts of Asia also is pushing up demand in the world’s oil markets.

How about supply? It’s not a case of running out of oil, but it is a matter of where we obtain it. Political uncertainty in Iran, Iraq and Venezuela poses a threat to supply, driving up the cost of a barrel of crude.

A lack of domestic production and a shortage of refineries also mean that gas stations are posting higher numbers on their signs.

But aren’t the evil oil barons profiting from our misery? Not really.
Cato Institute researchers Jerry Taylor and Peter Van Doren concluded earlier this year that, "There is no evidence to suggest that recently reported oil company profits are particularly large when contrasted with the profit margins of all public companies.’’

The Federal Trade Commission also regularly checks gas prices around the country seeking evidence of gouging and collusion. Not much has turned up.

If you insist on identifying villains in the Great Gas Price Drama of 2006, the real ones are sitting in traffic all around you (you, of course, being innocent in all of this). We pay more because we pump more. And drive more (hey, the commute from Noblesville really isn’t all that bad).

It’s a message George W. Bush, Dennis Hastert and Bill Frist could deliver to the nation. But don’t count on it. It’s much easier to blame Big Oil than to look at our own reflections in the pump.

Copyright 2006 IndyStar.com. All rights reserved
 
Written By: Keith, Indy
URL: http://
Maybe Big Oil should just wait this one out, the conversation will inevitably turn to the evils of Big Pharma and of course, Big Tobacco is such a national bugaboo it should have it’s own halloween costume. Oh, and the horrors of Wal-Mart.

Does anyone in this country even remember what capitalism is, and why and how it works?
 
Written By: shark
URL: http://
Maybe Big Oil should just wait this one out, the conversation will inevitably turn to the evils of Big Pharma and of course, Big Tobacco is such a national bugaboo it should have it’s own halloween costume. Oh, and the horrors of Wal-Mart.
I personally think this is the Republican plan... TALK like Democrats, and then let the proposals die.
Does anyone in this country even remember what capitalism is, and why and how it works?


Capitalism makes ME money Shark, if you make money at MY expense, Shark, you’re Price-Gauging. Good Lord man, isn’t obvious?!?!
 
Written By: Joe
URL: http://
From today’s NYT:
The Congressional Joint Committee on Taxation estimated Tuesday that oil and gas companies would receive about $10 billion in tax breaks over the next five years that are specifically aimed at their industry.
Look, people aren’t stupid. They see oil companies receiving massive tax breaks. They see those same companies making massive profits. They see gas prices going up. And they see two oilmen at the head of the executive branch, and a Republican party closely allied with the oil industry. Oil companies overwhemingly favor the GOP when it comes to making campaign contributions. Between 1998 and 2004, Bush was by far the biggest recpient of all. Behind him were Barton, Delay, Tauzin, Nickles and Hutchinson - all GOP’ers.

There are many reasons why the price of oil is going up. Many of them have nothing to do with Bush or the GOP. But to call it "all pure spin" is ridiculous. The interests of big oil and the GOP are one in the same. People understand that. People rightly wonder why the oil industry needs massive GOP backed tax breaks - remember last years energy bill? - when they are reaping massive profits. Worse, the tax breaks are desinged to give them incentives to seek out new sources of oil. Given where the price of oil is going - do they really need them?

Why should the government go deeper into debt so that oil companies can make even more money? And if they aren’t taxing oil companies, who are they taxing? Want to guess?


 
Written By: mkultra
URL: http://
Oil future markets are reacting to a possible US strike on Iran and the threat of Iran possibly blockading the Straits of Hormuz. Bush is trying to pin the blame on the oil companies to distract the people from the real reason, which is tensions in the middle east (which, some could argue were the result of his actions).

If the people want relief from high gas prices next year (nothing can be done now, except rail against oil companies), throw the republicans out of power this fall
 
Written By: Ivan
URL: http://
If the people want relief from high gas prices next year (nothing can be done now, except rail against oil companies), throw the republicans out of power this fall
Yeah Ivan, good plan...
which is tensions in the middle east (which, some could argue were the result of his actions).
It’s Bush’s fault. And after he’s gone the and the DON’T Iranians forego their nuclear ambitions and if Iraq collapses into civil war, due to a premature redeployment of troops, the resulting Tensions will UNCAUSED by US actions and so no impact will be felt on oil futures prices. The problem is all about who controls Congress and the White House... isn’t that a little simplistic?
 
Written By: Joe
URL: http://
Joe,

The rhetoric coming from DC AND Tehran is what is driving up Oil prices. Now, we cannot do much about the rhetoric emanating from Tehran. But, we can cut the rhetoric from DC. The only way do that (again, not this year) is throw the Republican majority out.

I don’t want to distract this topic from the Original issue, ie, Oil prices. Maybe Iran going nuclear is not a bad idea, after all. The korean peninsula is at peace (an uneasy peace, but peace nevertheless), isn’t it ?
 
Written By: Ivan
URL: http://
Do you seriously think if we throw the Republicans out that the price of oil will magically drop?

How about an examination of which administrations (which party) were in power during the passage of laws that make it extremely difficult and/or unprofitable to build refineries.
How about the ones that make it extremely difficult and/or unprofitable to build more nuclear plants?

"Regulate the evil bast*rds outta business" is a perfectly functional strategy that continues to hobble us with regard to energy. With states like California playing NIMBY with power plants, as one classic example and people like whining Teddy Kennedy doing their to stop wind farms within LOS of his Martha’s Vineyard home.

You can’t keep putting ’somebody else’s problem fields’ around things today and expect to be ready to meet increased needs tomorrow. And the Dems have been expert at this sort of engineering because it ’favors big business’ and ’hurts the little guy’.
 
Written By: looker
URL: http://
When US troops were protecting Saudi Arabia, Kuwit (and even Iran) from Saddam, the price of oil was low. Now that they don’t need us anymore, the price is high. If we had someone in power who understood that the threat of force can be much more effective than its application we might be able to reduce tensions enough that prices would stop going up. Until then, the prices will just keep going up. We have an Iranian nuclear program to pay for.
 
Written By: cindyb
URL: http://
Bet me, the prices are done going up, because enough of us finally whined about it.
In our area my guess was that they’d stablize at just below $3.00 and so far that has played out.

The need to use ethanol is gone I suppose, which I hadn’t particularly counted on when I guessed this is how it would go. Of course that was another show, with the oil companies acting as if they were mom & pop shops who ’just found out’ about the change in regulations and were scrambling to deal with it. Yeah, sure, they can forecast oil out of the pipe in Mosul, onto a ship, to the refinery, to holding tanks for distribution, to a gas station in Des Moines, but these Ethanol/MBTE requirements, well, big surprise for them so they didn’t gear up properly and couldn’t meet demand....uh huh....

And all of a sudden the ’tensions’ from last week in the Middle East are gone?

I frankly think they took it as high as they thought they could charge without us squealing too loudly. We rolled over and played virtually dead when they moved it past $2.50. We squealed, finally, when it got near $3.00. Uncle Sam allegedly ’took an interest’ and now, miracle of miracles, it hasn’t risen the average 5 cents a day that it was playing at for the last two weeks.

Also called ’what the market will bear’ I suppose.
 
Written By: looker
URL: http://
The korean peninsula is at peace (an uneasy peace, but peace nevertheless), isn’t it ?
Well because the UNITED STATES HAD NUCLEAR WEAPONS, but not because the DPRK had nuclear weapons!
 
Written By: Joe
URL: http://
The korean peninsula is at peace (an uneasy peace, but peace nevertheless), isn’t it ?

Yeah, the same "uneasy peace" they had in Europe on the day before Archduke Ferdinand was gunned down.

You’ve just endorsed that situation, with nukes thrown in.

 
Written By: shark
URL: http://
If we had someone in power who understood that the threat of force can be much more effective than its application we might be able to reduce tensions enough that prices would stop going up.

LMFAO so let me get this straight: you say that the best way to reduce tension with a belligerant nation is by threatening it?

HAHAHAHAHAHAHAHAHAHAHAHA............*wiping tears off eyes* oh man that is funny.

 
Written By: shark
URL: http://
Gazelles have an "uneasy peace" with the local pride of lions at the start of any given day.

 
Written By: looker
URL: http://
No, see, if a Democrat threatens a nation, everyone knows not to take it seriously. Because after all, they’ld have to get permission from the UN first, and that ain’t gonna happen.

But if a Republican threatens a nation, Golly GEE, he might actually mean it. And we can’t have that.

No, far better to install strong dictators in these countries so that they’ll remain stable (even if the price of that is citizens in those countries who are not free, and who want to kill us for it.) Back to the good ol’ days of realpolitik...
 
Written By: Keith, Indy
URL: http://
How about an examination of which administrations (which party) were in power during the passage of laws that make it extremely difficult and/or unprofitable to build refineries
What does this have to do with the price of Crude ?? The reason that you are paying $3 at the pump is that Crude is at $72 a barrel, up from $55 a month or two ago. How will building more refineries fix this problem ? Crude is up because of the supply-related fear that is pervading the markets.
Well because the UNITED STATES HAD NUCLEAR WEAPONS, but not because the DPRK had nuclear weapons!


Actually, because both have nukes and the means to cause serious harm to each others interests ( we can flatten them and they can do the same to Japan, S. Korea)
Yeah, the same "uneasy peace" they had in Europe on the day before Archduke Ferdinand was gunned down.
It has been 3 years since of the axis of evil speech. The North Koreans immediately kicked the IAEA out and resumed Uranium enrichment. The situation hasn’t gone downhill, has it ??
No, see, if a Democrat threatens a nation, everyone knows not to take it seriously. Because after all, they’ld have to get permission from the UN first, and that ain’t gonna happen.

But if a Republican threatens a nation, Golly GEE, he might actually mean it. And we can’t have that
Clinton bombed the Chinese Embassy in Belgrade. What did GWB do when our spy-plane went down in China ??
 
Written By: Ivan
URL: http://
Bilwick:
In the midst of all this outrage over gas prices, does anyone else feel that what we are seeing is a revival of the mediaeval myth of the "Just Price"? Not surprising. Nathaniel Branden once wrote: "Scartch a collectivist, and you usually find a mediaevalist."
-My thoughts exactly. The current debate brings to mind the difficulties millers and bakers faced in England during the Seventeenth Century. Just like the peasants of that time, the vast majority of people today are rather ignorant of the economic factors involved when prices increase. Rather than work on the reasons behind the problem, the majority would rather just storm the mill and pay whatever the crowd fancies as the right price. Some things never change.

Ivan:
Oil future markets are reacting to a possible US strike on Iran and the threat of Iran possibly blockading the Straits of Hormuz. Bush is trying to pin the blame on the oil companies to distract the people from the real reason, which is tensions in the middle east (which, some could argue were the result of his actions).
-The oil markets are reacting to a plethora of events and trends, not just tensions with Iran. Chad and Sudan, two oil-producing nations, are currently seeing production problems related to civil unrest. Niger, which accounts for a significant percentage of total American oil imports, has seen civil unrest in the Niger Delta region significantly impact oil production. And let’s not forget about fallout from Venezuela’s nationalization of oil platforms and decision to break contracts with several oil companies. Add to that increasing competition for oil from India and China, and you have increasing prices.
If the people want relief from high gas prices next year (nothing can be done now, except rail against oil companies), throw the republicans out of power this fall
-And that will accomplish exactly what? The Democrats certainly won’t push for greater domestic oil production and the expansion of refinery capacity, much less bring about peace in every troubled oil-producing nation.
 
Written By: Inebriated Arsonist
URL: http://inebriatedarsonist.blogspot.com/
What does this have to do with the price of Crude ?? The reason that you are paying $3 at the pump is that Crude is at $72 a barrel, up from $55 a month or two ago.
Crude is an input for the refineries. They may or may not be able to pass along their own price increases. If the prices are going up at the pump, that indicates a bottleneck at the refineries. In fact, OPEC recently declined to increase output precisely because increased output wouldn’t do much good. Refineries are already pretty much at capacity.

Incidentally, the price of a barrel of oil is not currently $72. That’s the price of a futures contract on oil. The current price (as of this moment) is $66.94
 
Written By: Jon Henke
URL: http://www.QandO.net
It has been 3 years since of the axis of evil speech. The North Koreans immediately kicked the IAEA out and resumed Uranium enrichment. The situation hasn’t gone downhill, has it ??

And just like in pre-WWI Europe, you could’ve observed that what with all the alliances and rhetoric and troop buildups and saber-rattling, things "haven’t gone downhill" right up until the moment it all went downnhill, off the cliff, and straight to hell.

And imagine if Serbia and the Austro-Hungarian Empire had nukes?

But hey, it’s all good to you, as long as you can get .50/gallon off on your gas!

May I suggest to you Ivan, that you’re taking an incredibly shortsighted view
 
Written By: shark
URL: http://
Arsonist:
The oil markets are reacting to a plethora of events and trends, not just tensions with Iran. Chad and Sudan, two oil-producing nations, are currently seeing production problems related to civil unrest. Niger, which accounts for a significant percentage of total American oil imports, has seen civil unrest in the Niger Delta region significantly impact oil production
Chad and Sudan (I remember Colin Powell talking about the situation there couple of years ago) have been having issues for a long time. Moreover, they are not OPEC members and I doubt that they would have any significant impact on Crude prices. There is no large-scale civil unrest in Nigeria and certainly not on a scale large enough to send the markets into a tizzy.
And that will accomplish exactly what? The Democrats certainly won’t push for greater domestic oil production and the expansion of refinery capacity, much less bring about peace in every troubled oil-producing nation.


The question is not about whether the Dems will bring stability anywhere. But about Republicans causing instability in the first place, especially in an already volatile region - the middle east. *That* kind of foolhardiness needs to be punished.

Jon:
Crude is an input for the refineries. They may or may not be able to pass along their own price increases. If the prices are going up at the pump, that indicates a bottleneck at the refineries. In fact, OPEC recently declined to increase output precisely because increased output wouldn’t do much good. Refineries are already pretty much at capacity.
We import refined products. We don’t have to much of a refining capacity problem as the refineries that went offline after Katrina are now pretty much online at full capacity. We import distillates to fill the gaps in our refining capacity, especially in spring and summer when demand goes up.
Incidentally, the price of a barrel of oil is not currently $72. That’s the price of a futures contract on oil. The current price (as of this moment) is $66.94
Of course, $72 is for the may futures. That is what I said in my initial post and we are gonna see even higher prices in the month of May given the volatality in the middle-east
 
Written By: Ivan
URL: http://
So, it was Republicans who caused the instability in the Middle East...

OK, right, and pigs fly.
 
Written By: Keith, Indy
URL: http://
Anyone care to make predictions where the price of gas will be come November this year? Democrats are hoping that it stays >$3.00 (SF region) for the forseeable future. I don’t think that’s likely.

Presuming some stablizing in producer nations (esp. Iraq), more ethanol coming on-line (with reduced tariffs), and seasonal drop in demand, I’m guessing it’ll be around $2.30 and be a non-issue in the elections.

For the record, I think Bush’s call for gouging investigations is indeed pandering - but nothing to get worked up about. There’ll be no "witch hunt" because of course no gouging is going on to be found out. What Bush is doing is a defensive maneuver, taking away one of the oppositions clubs. Consider for a moment if Bush did NOT pander on this issue - the Dems and MSM would raise the issue to a fever pitch as some sort of cover-up by Bush. He didn’t have much choice than to say "OK, we’re looking into it."
 
Written By: equitus
URL: http://
I predict the Democrats are going to drag their feet on anything that could lower gas prices this year...

I mean, that would ruin their sales pitch.
 
Written By: Keith, Indy
URL: http://

 
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