Posts Tagged ‘oil futures’

Blame Democrats for Sky-high Gas Prices

June 25, 2008

Let us not forget that we are two years into the “commonsense plan” announced by House Speaker Nancy Pelosi:

Washington, D.C. – House Democratic Leader Nancy Pelosi released the following statement today on President Bush’s, Speaker Hastert’s, and the Republican Congress’ empty rhetoric on gas prices. Key facts on the Majority’s failure to address gas prices follows Pelosi’s statement.

With skyrocketing gas prices, it is clear that the American people can no longer afford the Republican Rubber Stamp Congress and its failure to stand up to Republican big oil and gas company cronies. Americans this week are paying $2.91 a gallon on average for regular gasoline – 33 cents higher than last month, and double the price than when President Bush first came to office.

“With record gas prices, record CEO pay packages, and record oil company profits, Speaker Hastert and the Majority Congress continue to give the American people empty rhetoric rather than join Democrats who are working to lower gas prices now.

“Democrats have a commonsense plan to help bring down skyrocketing gas prices by cracking down on price gouging, rolling back the billions of dollars in taxpayer subsidies, tax breaks and royalty relief given to big oil and gas companies, and increasing production of alternative fuels.”

She placed the blame for previous “high” prices (dang, they sure don’t seem so high now, do they?) on “President Bush’s, Speaker Hastert’s, and the Republican Congress’ empty rhetoric.” And she promised that we Democrats have the solution.” She blamed Republicans for the past, and put the responsibility squarely on her party for the future.

And just what has happened since the Democrat’s “commonsense plan” went into effect?

On January 21, 2007, just after the Democrats took over the Congress, the national average price per gallon of regular self serve gas was $2.18 per gallon. As of June 20, 2008 it was $4.075 a gallon.

That’s one great plan you’ve got there, Nancy.

You put that pretty dress of demagoguery on, Democrats. Now you wear the damn thing.

“Commonsense” and “Democrat” are antonyms. And Nancy Pelosi’s phrase, “Democrats have a commonsense plan” is an oxymoron. Maybe by the time gas tops $5 a gallon, enough Americans will recognize this.

Of course, Democrats – who are only good at blaming others for their messes – are still blaming everyone but themselves.

One of the dogs they are riding now are “oil futures” and “speculation.”

A brief explanation of futures contracts and oil prices has this:

A futures contract is an agreement to buy or sell a quantity of a product at a set price and date in the future. The New York Mercantile Exchange began trading oil futures in nineteen eighty-three.

Futures markets now largely set the price of oil. Yet these contracts rarely involve an exchange of real barrels of oil. Most oil is traded on what is called the spot market or through other contracts between producers and users. The prices, however, are usually based on futures prices.

Doug MacIntyre is senior oil analyst with the United States Energy Information Administration. He notes that the position of the government is that market forces of supply and demand are driving today’s high oil prices. But he also notes that more money has been going into futures.

This money can be from oil producers and users. But it also comes from banks, big investors called hedge funds and speculators with no need for oil. Speculators try to guess the direction a market will go; in some cases they profit when prices drop.

Realize for a second that it’s not “big oil” driving up the prices: it’s employee unions, banks, investment portfolios, retirement funds, and the like.

For the sake of (absurd) argument, let’s say that Democrats are completely right, and that supply and demand have nothing to do with the price of gasoline. The question becomes, why has the price of gas risen $1.90 a gallon? Why has it increased a whopping 86.93% since the Democrats took over the Congress?

Let’s see, if I were going to gamble on whether the cost of something would go up, would it occur to me that a party coming into power that promised that they would tax the hell out of an industry, hit them with “excess profit” fines, regulate the hell out of them, push all kinds of environmental restrictions on them, and keep them from increasing their domestic supply of product, tell me that the cost would A) go up or B) go down?

If you picked B, you are intelligent enough to invest in the market and earn a profit; if you selected A, you are stupid enough to vote Democrat, and to believe their stupid oxymoronic slogans.

Now, if Democrats like Maxine Waters (who said during one of those Democrat communist show trials of oil company executives), “And guess what this liberal would be all about. This liberal will be about socializing … uh, um … “Would be about, basically, taking over, and the government running all of your companies. …” get their way and we go the way of Hugo Chavez’s Venezuela, what do you think the speculators will “speculate” about the price of gasoline?

The show trials – and the shrill cries to socialize (or nationalize) the oil industry – are all part of another component of the Democrat’s “commonsense plan” to demagogue and demonize the oil industry instead of actually providing more energy.

Nancy Pelosi’s “increasing production of alternative fuels” has sent the corn commodities market sky high (hey, you can blame speculators for that market, too!). We are taking food off our tables and – by an expensive process that ends up producing less energy than it takes to produce it – providing ethanol. There’s some oxymoronic “commonsense” for you!

John F. Wasik puts it this way:

The U.S., in its quest to reduce its reliance on expensive imported oil, may soon consume as much as half its domestic corn crop for fuel production, though the economic benefits have yet to materialize. Ethanol produces one-third less energy than a gallon of gasoline at an average wholesale cost of 33 percent more, according to a U.S. Government Accountability Office study….

The other byproduct of the ethanol obsession is more-expensive food. Higher corn prices have boosted the cost of producing beef, poultry and thousands of processed products.

Food prices have climbed an average of $47 per person due to the ethanol surge since last July, according to an Iowa State University study published in May; corn futures reached a 10-year high of $4.28 a bushel in February. All told, ethanol has cost Americans an additional $14 billion in higher food prices.

These increases have also pushed up sugar prices, which rose to a three-month high in New York on July 18 on speculation that demand for the commodity will strengthen to help produce ethanol, an alternative to oil. Brazil is the largest sugar grower.

Meanwhile, the U.S. government has yet to discover whether its 51-cent-per-gallon ethanol subsidy is efficiently stimulating production of the fuel. One thing the bureaucrats know for sure: It cost the U.S. Treasury $2.7 billion last year with possibly more subsidies on the way.

That article is nearly a year old, now. The corn-ethanol lunacy has gotten much worse since then, and will get worse yet. You can wear the stupidity over your “alternative fuels” too, Speaker Nancy.

Nancy Pelosi is the new postmodern version of Marie Antoinette: “Let them eat ethanol.”

Or, hey! More windmills! That’ll keep your car running! Anything, anything but increased production of the one thing that actually fills your tank. That’s “the commonsense plan.”

I like the way Steve Gill put it:

The Democrats have pursued a clear energy policy since capturing control of
the Congress. First, increase taxes on the oil companies, which increases
the price at the pump. Second, prevent access to new oil sources by
continuing to ban exploration and drilling, which restricts supply and
increases the price at the pump. And finally, increase regulation and
bureaucratic red-tape imposed on the oil industry in order to satisfy the
demands of environmentalists, which increases the price at the pump.
Contrary to their campaign promises, Democrats have done virtually
everything they can do to raise the price of gasoline for U.S. drivers.and
their plan has worked to perfection. The only question is why they aren’t
doing more to take credit for the success of their plan?

Frankly, it’s up to us to make sure the Democrats take their fair share of “credit.”