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Does Obama Deserve Some Credit for Oil Price Decline?

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We've seen incredible swings in the price of oil and gasoline over the past year.  Oil reached nearly $150 per barrel and gasoline exceeded $4 per gallon last summer and now they are below $40 and $1.50, respectively.  Experts agree that the upswing was not completely due to an increase in demand or decrease in supply, but also due to speculative trading by oil traders who were taking advantage of what some would call imperfections in the market to drive the price up and profit from it while doing so.  But is the global economic crisis and resulting decrease in demand at the core of the precipitous drop in oil and gasoline prices?  Surely it's a factor. Is it the only factor or even the major factor?

We've seen drops before.  After rapid increases in the price of oil the world gets busy developing alternative fuels to gasoline and oil and more efficient cars.  OPEC sees that as a threat to the demand for their product.  OPEC then steps in and cuts prices by increasing supply.  The result is that the drive for more efficient cars and cheaper alternatives to fossil fuels wanes and the mainly Arab nations that supply the world with energy can sleep better at night, knowing that billions of U.S. dollars will continue to flow into their coffers thus funding the lavish lifestyles of their rulers and oil barons, and, to an unknown extent, funding terrorism as well.

With Barack Obama coming into the White House soon OPEC is once again nervous about the increased activity in developing alternative sources of energy that might decrease the demand, and therefore the price, for their product.  Another Republican administration in Washington would have been content to continue to invest in an oil-based infrastructure, even if more of the oil for the world's largest consumer of that oil, the U.S., would have come from within its own borders.  (Remember "Drill, baby, drill!"-?)  It is clear that the drive to get away from the depleting resource that oil is, is much stronger now that Obama is about to set up residence on Pennsylvania Avenue.  And so, OPEC waves their magic wand and prices drop. 

It will be interesting to see how long prices at the pump stay below $2 per gallon.  (I paid $1.37 the other day.)  Just as interesting will be how gasoline prices and the level of investment in alternative energy sources move together, or not, as they have in past.

 

A graduate of the State University of New York at Buffalo with an MBA in 1980, John went into the banking business from 1981-1991. John went into the gymnastics business with his wife, with whom he has two children, in 1992 and grew it enough by (more...)
 
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Of course it is because of Obama. He can work wond... by sbaker on Tuesday, Dec 23, 2008 at 9:04:56 AM
The article accomplished its goal the second you d... by John Basel on Tuesday, Dec 23, 2008 at 2:50:13 PM
Alternative fuels?  I'm not sure these ar... by PrMaine on Tuesday, Dec 23, 2008 at 10:04:53 AM
The only effect Mr obama has or can actually take ... by Hayesml47 on Tuesday, Dec 23, 2008 at 10:18:23 AM
THe oil speculators deserve credit.... by Bucky the Commoner on Tuesday, Dec 23, 2008 at 5:26:58 PM
We use a lot of oil in this country but we do not ... by Mad Jayhawk on Wednesday, Dec 24, 2008 at 1:17:58 AM
You make it sound as if oil speculation, which is ... by John Basel on Wednesday, Dec 24, 2008 at 8:04:06 AM