Why Gas Prices Are Out of Any President’s Control

PrintSmith wrote:

Science Chic wrote:

PrintSmith wrote: The price of any commodity goes up or down depending upon the ability of the market to supply the demand for that commodity.

It would if it were actually the case that free market determines the price of oil, but it doesn't. Prices are artificially controlled thanks to government subsidies, and stockpiling of the item, and by stock markets freaking out and inflating the prices on unsubstantiated fears. So while you're statement

What will lower the cost of oil is increasing the proven reserves of the commodity compared to the demand for the commodity.

might be true for free market items, it is not the case for this item as the easily reached reserves are proven to be becoming more scarce and the more expensive, dirtier, harder to tap reserves will only cause prices to go up, regardless of amount on the market.

Tell me what effect Iran threatening to close the strait would have on the price of oil if there existed a means to replace that supply instead of having to suffer through the disruption of the supply that would occur if the straits are closed by Iran. I've got an answer for you - none. Being able to replace that supply easily would take the sting out of the threat, which would mean that only those oil producing countries that rely on the strait to get their product to market would be affected, the rest of the world would still get their oil whether the strait was open or closed. Having that ability would also lower the cost of the commodity overall because it would mean the supply was far in excess of the demand and easily able to meet the demand. Oil producing companies would be looking for buyers and using price to attract them away from other producers, resulting in an overall lower price. The threat of cutting back on supply would be insufficient to have the desired affect either. Who cares is Saudi Arabia cuts their production in half if Mexico is willing to replace that supply? No one, that's who. The problem gets to be when Mexico can't replace that supply because they can't increase the volume being transported, because they haven't built the pipeline to serve the wells they didn't drill. They know there is oil down there mind you, they have just decided not to do anything to establish how much there is precisely or to prepare it for sale in the market. Thus, the market is kept guessing at how long the supply can be met, which raises the cost, and we get the additional benefit of guessing whether the supply will be interrupted by world affairs, which drives it up a little more. Brilliant plan to keep the market stable, don't you think? The president agrees that it is. He's even gone a step further and driven up the cost of getting to the oil by coming up with a whole new set of regulations that must be complied with that has to be factored into the equation of whether or not it's even worth taking a risk drilling the well to begin with and going one step beyond that and saying that, unlike every other business around, you shouldn't be able to deduct the cost of your raw materials from your balance sheet before figuring out how much you owe in taxes anymore. Oh yeah, none of that combined won't have any effect on the total price - Cass Sunstein's co-author has told us that it won't, right?

PrintSmith wrote: The reason we pay less than other countries has more to do with this union not yet attempting to use fuel taxes as a means of appropriating money from the pockets of the population to raise revenues to be used to support a social welfare state via hidden means as is the case in other countries at this time. While true that the majority of the federal fuel taxes have been enacted as a "deficit reduction" measure, said reductions of course never occurring with the resulting revenue, it has not yet reached the point where our legislatues are actually attempting to finance their social welfare efforts with a hidden tax levied on the recipients of that social welfare as is done elsewhere, though that is the current "progressive" plan for here and why the "progressives" are looking to accomplish price parity with other countries by raising taxes on fuel to the point where the taxes levied on it are nearly equal with the cost of bringing the product to market.