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realclearworld

Why gas is nearly $4 a gallon

Interesting exchange during the last debate between Barack Obama and Governor Mitt Romney:

Gov Romney: The proof of whether a strategy is working or not is what the price is that you're paying at the pump. If you're paying less than you paid a year or two ago, why, then, the strategy is working. But you're paying more. When the president took office, the price of gasoline here in Nassau County was about $1.86 a gallon. Now, it's $4.00 a gallon.

Obama: Well, think about what the governor -- think about what the governor just said. He said when I took office, the price of gasoline was $1.80, $1.86. Why is that? Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney's now promoting. So, it's conceivable that Governor Romney could bring down gas prices because with his policies, we might be back in that same mess.

So it was Bush's bad policies that drove the economy down, and with it the gas prices.

Let's ignore the obvious, and not even point out that if what Obama said were true, gas would be damned near free by now, if not for the taxes.

Let's examine the policies, and their impact on gas prices:

Why gas is $4 a gallon

Any questions?

5 comments to Why gas is nearly $4 a gallon

  • Fuzzy_Bunny

    I'm not really interested in arguing the point beyond this post, but I suspect that the financial crisis events of 2008 had much more to do with the drop in the price of oil (and subsequent drop in the price of gasoline) around then than any decision about lifting off shore drilling bans did. Feel free to disagree, but consider that oil was dropping in price all around the globe around that time. It's a bit of a stretch to imagine that oil dropped $100 a barrel world wide (between July and December) because of a decision made about drilling off the shore of the USA. The latter local event simply isn't a big enough of a deal to explain the former global one.

    As for today, consider that there is a fairly (though certainly not guaranteed) seasonal effect that often sees gas prices decline in the fall. This year the effect is starting later than usual, but the media over the last week has been reporting that gas prices are falling and are about to fall even more dramatically over the next week or two. What timing, huh? E.g.:

    http://www.usatoday.com/story/news/nation/2012/10/20/gasoline-prices/1641935/

    About the seasonality in gas prices:

    http://www.ibankcoin.com/peanut_gallery/index.php/2009/05/20/trading-gasoline-seasonality/

  • "I'm not really interested in arguing the point beyond this post."

    Then sit, listen, and be a Bunny of your word and say nothing else.

    The financial crisis of 2008 began with the gradual repeal of Glass-Steagall begun under Bill Clinton in the 1990's which culminated with his signing of the Commodity Futures Modernization Act of 2000.

    The drunken sailor-like spending spree that began in 2007 (the year that Democrats took control of both houses of Congress) through the election of Obama and the Democratic super majority took the art of printing money (which destroys its worth) through the roof, and when those little green pieces of paper that we call money are printed in such excessive amounts, they are worth less, and Arabs want more of them for a barrel of oil.

    All those (and many more) actions by Democrats crushed our economy (which is Obama's plan) and got us to $4 a gallon gas.

    • "The financial crisis of 2008 began with the gradual repeal of Glass-Steagall begun under Bill Clinton in the 1990's which culminated with his signing of the Commodity Futures Modernization Act of 2000."

      Bingo. If you go back an additional six years, the Community Reinvestment Act enforcement changes, implemented by Elian's kidnappers, Bill Clinton and Janet Reno, was the real start of the housing crisis that led to the economic debacle of 2008.

  • CountNomis

    Look, a very good reason that the price of oil stays up is that in spite of all the drilling, the oil is being shipped overseas rather than being allocated nationally. That is a fact, one that is seldom pointed out. Something that I also suspect is that there is collusion between the various companies towards price fixing. Companies have done this before and it is extremely hard to bring to court.

  • The primary reason that anything is costing more these days, is the massive amount of fiat currency printing that's gobe on these past several years.

    You can't inject that much money into the money supply and not expect the value to drop. It;s like adding water to good chicken soup. You'll have substantially more soup, but with less substance.

    As a nation, we've lost nearly 40% of our wealth since 2007.

    If your house was valued at $265,000 in 2007, it is now worth $159,000, median incomes have dropped a national average of 7.7%, and the cost of groceries has increased 58% since 2007.

    All of that goes right back to the devaluation of the dollar via excessive printing of currency.

    It' a 40% tax increase on every American alive.