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A conspiracy to cut gas prices? Sure. Buy this bridge, too

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We are such reactionary dopes when it comes to the price of gasoline. Raise your hand if you’ve wasted gasoline by driving around town trying to find a price 2 cents lower than the $2.98 down the block from your house just to save 30 cents.

This comes to mind as I filled my Jeep Liberty today at $2.49 a gallon. (The national average for regular unleaded this week is $2.37.8, according to the federal Energy Information Administration.) I had stopped driving my Jeep when I filled it at $3.13 a gallon in August.

Gasoline prices have declined by 25 percent (more or less, depending on who’s tabulating and how they’re doing it) in just about two months. That, says The New York Times, has Republicans sighing in relief. And, also sayeth The Times, the falling pump price has Democrats and conspiracy theorists crying foul.

From today’s Times:

Six weeks from the midterm elections, the falloff is comforting the Republican majority up for re-election in Congress, limiting the impact of a potentially damaging issue. But Democrats hope to gain power on Capitol Hill, in part, by hitting on the toll that high energy costs have taken on American consumers and trying to draw connections to what they see as the Bush administration’s kowtowing to big oil interests.

Both views are moronic. First, too many factors affect gasoline prices to allow President Bush to call pals in Big Oil and literally order prices to drop on a specific schedule. From The Times:

Prices are down largely because of a sharp drop in global oil prices, which peaked in July at $77 a barrel, and, while up slightly this week from recent lows around $60, are still under $63 a barrel.

Much of the drop can be attributed to a big sell-off by hedge funds and other speculative traders, who help determine the price of crude oil and other petroleum-based products on international commodity markets — and not to American oil companies, which control only a fraction of global oil supplies.

While the drop this fall is larger than under ordinary circumstances, it also fits a pattern that sometimes occurs at this time of year. Tom Kloza, publisher of the Oil Price Information Service, said a decline in prices after Labor Day was not uncommon because of lower demand in the months following the summer driving season. Demand then picks up in the winter, often leading to a rebound in prices.

Second, if you are a voter for whom the declining price of gasoline will be the specific tipping point that determines whether you vote Republican or Democratic on Nov. 7, let’s hope you use your head and consider the following.

• Imagine next summer. You want to take that August drive to the vacation spot you and your family didn’t this year — because the price of gasoline was more than $3 a gallon. Do you think gasoline prices, now hovering under $2.40, will remain under that next August? If you do, you’re deluded.

• Over the long term gasoline prices are not declining. According to the EIA, the average retail price for gasoline was $1.85 a gallon in 2004 and $2.27 in 2005. The likelihood that the average for 2006 will be under $2.50 is highly unlikely.

• For the next two years, the growth of demand for energy produced through crude oil will continue to exceed the ability to refine the oil necessary to meet that demand, according to Cambridge Energy Research Associates. The United States, due primarily to NIMBY issues, has not added significant refinery capacity in decades.

• What are you paying for home heating oil? You may be paying less at the pump, but you’ve probably paid an increase for your “secure” contract for heating oil. Now, the Associated Press reported this week that lower prices are likely — but the story quibbles through the caveats of a mild winter and continuing decline in crude oil prices. If you live in the Northeast, are you going to bet on higher or lower?

• If you believe that the technological leaps that allowed dramatic finds of apparently large oil reserves in the Gulf of Mexico are going to keep your pump prices low before we elect our next president, you’re overly optimistic. A Washington Post story says it’ll be at least seven years before those wells could produce up to 11 percent of our domestic production. The United States produces 5.1 million barrels of crude a day; it imports 12.3 million barrels a day. Those Gulf strikes aren’t going to amount to much any time soon. (See the EIA’s basic petroleum statistics.)

• The EIA released Friday its monthly list of the top 15 countries from which the U.S. imports crude oil and other petroleum. Canada tops the list — followed by Mexico, Saudi Arabia, Venezuela, Nigeria, Angola, Iraq and Algeria. Venezuela and Nigeria cut their production this week. We’re at war in Iraq. We’re also, some might say, at “war” with Mexico or at least seriously tussling about immigration and border security. The others, save Canada, are not fond of us. The Mideast is in chaos — and that will not change in my lifetime. And you wish to bet with your vote that the prices at the pump will remain under $2.40?

• Oh, yes. Alaskan oil. The Arctic National Wildlife Refuge. Claimed by Republicans as our salvation. According to The Washington Post, oil production has fallen in Alaska by three-quarters since its peak in the late 1980s. BP, the company that failed to properly inspect its pipes leading to a North Slope fiasco, shut down another field Thursday when workers detected a natural gas leak. The EIA estimates that there’s a 95 percent chance that 5.7 billion barrels of crude oil can be extracted from ANWR. The U.S. consumes 20,656,000 barrels a day, says EIA. At that rate of consumption, ANWR gives the United States a 276-day supply. That’s chump change in any effort to reduce dependence on foreign oil sources.

As the days roll by until we’re in a voting booth trying to figure out if that damn Diebold machine will actually count our votes, don’t cast your vote solely on the basis of the cost of gasoline. Don’t bet that president rigged the pump price. Don’t bet that Democrats keep prices down, either.

Instead, for the next few years, bet only on prudence and cars that get more than 40 miles a gallon.

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Written by Dr. Denny Wilkins

September 30, 2006 at 3:52 pm

Posted in Uncategorized

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