Price of gas was 1.50 when Obama took office, what happened?

Discussion in 'Business & Economics' started by cosmictraveler, Mar 6, 2011.

  1. cosmictraveler Be kind to yourself always. Valued Senior Member

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    Oct. 16, 2008—Oil prices fall below $70 a barrel, which is less than half of its July peak. Signs of $1.99 a gallon gas brings celebration to the masses. Some consumers begin to talk about dragging out their gas guzzling SUV's and Winnebago's for the first time in months.

    Nov. 3, 2008—U.S. Gas prices drop to $1.72 a gallon. Some gas stations even roll out a $.99 cent promotional deal. Treehuggers question whether the sudden drop is as good as most consumers seem to think it is.

    Dec. 17, 2008—OPEC removes 2.2 million barrels from its daily production. Crude oil collapses to $40 a barrel, becoming the lowest price in almost 4 years.

    Dec. 19, 2008—After weeks of negotiation, Bush approves the emergency bailout of the U.S. auto industries big three, giving them $17.4 billion in rescue loans. Treehugger questions whether the government is doing the right thing.

    Dec. 22, 2008—Toyota unveils its first operating loss in 70 years of business. Sales drop for the Prius considerably. Low gas prices appear to be minimizing the hype over the hybrid vehicle.

    Dec. 26, 2008—Gas prices tumble to $1.64 a gallon. Some areas seeing prices as low as $1.45 a gallon. Crude oil is just a little over $40 a barrel still.

    Dec. 31, 2008—Crude oil prices plummet below $37 a barrel while the U.S. average price for a gallon of regular unleaded gasoline falls to an amazing 5-year low of $1.61.

    Did I miss anything? Would any of you care to offer a prediction on what this next year should see in terms of oil and transportation?

    http://www.google.com/url?sa=t&sour...edjbk1&usg=AFQjCNEidbzdDMixZD2hmgAF_i4Zm0vkCg


    So there's no inflation, NOT! Why haven't the MEDIA been yelling about this increase as they did when Bush was in office? The media again shows us who they are really for.
     
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  3. clusteringflux Version 1. OH! Valued Senior Member

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    The real driver of price at the time was lower global demand. Many oil consumer countries were suffering bad economies along with the US.
    While stimulous measures went out and some people went back to work and brought demand up a bit the main factors are the peak oil predictions and middle east politics creating an uneasy market.
    While I don't care much for the current adm. I don't think you can lay much blame on Obama even considering the ridiculous handling of the the BP disaster.
    In general most people just expect price trends to keep rising on average......which may not help matters.
    Many people would lead you to believe the days of cheap energy are going to be limited until we (USA) make huge changes in either our usage or our sources. And their motivations for doing so are becoming increasingly widespread as people attach themselves to the various political winds of change that may provide them the next opportunity in a trans-energetic future.
     
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  5. James R Just this guy, you know? Staff Member

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    Instability in the Middle East is the main thing pushing up oil prices right now.
     
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  7. joepistole Deacon Blues Valued Senior Member

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    And when Obama took office were in the middle of the Great Recession. Prices go down in recessions not up.
     
  8. clusteringflux Version 1. OH! Valued Senior Member

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    Agreed, but the OP also makes a valid point that some part of current commodity pricing is due to factors that could be interpreted as inflationary.
    This seems to be accross the board and the US officials are now willing to admit to some increase in inflation.
    To what extent it effects petro is not yet known. It's entirely possible that when consumption ramps up we will find ourselves with the highest prices we've seen yet in regards to gasoline.
     
  9. Captain Kremmen All aboard, me Hearties! Valued Senior Member

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    Is Obama responsible for the world price of oil?
    How?
     
  10. clusteringflux Version 1. OH! Valued Senior Member

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    No he's not but we've all witnessed politicians blaming the failures of their predescessors for every problem on god's green earth.
    Obama was notoriously good at this so he should expect some degree of backlash when reality doesn't insantly mold itself to his will.
     
    Last edited: Mar 7, 2011
  11. spidergoat pubic diorama Valued Senior Member

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    Libya is heading towards a democracy, we should be heartened by this, even if it means higher gas prices.
     
  12. cosmictraveler Be kind to yourself always. Valued Senior Member

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    But it produces about one percent of the total production.

    The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, 25% of GDP, and 80% of government revenue. The weakness in world hydrocarbon prices in 2009 reduced Libyan government tax income and constrained economic growth. Substantial revenues from the energy sector coupled with a small population give Libya one of the highest per capita GDPs in Africa, but little of this income flows down to the lower orders of society.

    http://www.google.com/url?sa=t&sour...fSrYRU&usg=AFQjCNH-Wks7jpu58HE7inNJHz0TQzznug
     
  13. cosmictraveler Be kind to yourself always. Valued Senior Member

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    Well we are supposed to me in the middle of a recession today, so why aren't the prices lower as you are stating then?
     
  14. Tiassa Let us not launch the boat ... Valued Senior Member

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    Let's talk about ... football?

    Well, in the first place, this isn't the first time we've gone through it.

    In the second, what is Obama doing to drive up prices?

    But the Bush administration's greatest contribution to rising oil prices is its steady stream of threats to attack Iran, if it does not back down on the nuclear issue. The Iranians have made it plain that they would retaliate by attempting to block the flow of Gulf oil and otherwise cause turmoil in the energy market. Most analysts assume, therefore, that an encounter will produce a global oil shortage and prices well over $200 per barrel. It is not surprising, then, that every threat by Bush/Cheney (or their counterparts in Israel) has triggered a sharp rise in prices. This is where speculators enter the picture. Believing that a U.S.-Iranian clash is at least 50 per cent likely, some investors are buying futures in oil at $140, $150 or more per barrel, thinking they'll make a killing if there's an attack and prices zoom past $200.

    (Klare)

    Thirdly, I would also note that this is a curious aspect of people's memories that still puzzles me, because it can't all be politically selective.

    According to the U.S. Energy Information Administration° (Dept. of Energy), gasoline prices crossed four dollars a gallon in June, 2008, peaking at a nationwide average of $4.054 during the week of July 14. After that, prices at the pump began a steady crash: $3.896 for the last week in July, $3.828 a week later, $3.764 after that, and so on. The week ending November 10, 2008—when President Obama was elected—gas prices averaged $2.17/g. For the week ending December 29, 2008, the average cost of a gallon of gasoline in the U.S. was $1.59. After that, it began a slow but fluctuating climb: $1.813 by the end of January; $1.868 by the end of February. By the end of March, the price had climbed to $2.03; it slipped slightly in April ($2.016), and began its climb again in May.

    The $3.341 listed by EIA for the week ending February 28, 2011 is approximately what we saw in March and April, 2008 ($3.299-3.35).

    The underlying question is what is causing gasoline prices to rise at present. Unlike the Bush administration's catering to the petroleum industry, and much different from his warmongering about Iran, the factors attending the present rise cannot be so directly attributed to the Obama administration.

    Energy prices will hurt Obama. But the question of why there isn't some major media scandal about it at present is apparently somewhat complicated.

    Consider, for the purposes of illustrative analogy, American football.

    The quarterback is expected to "read" a defense as he sets up to start the play. This involves marking where everyone is, and watching how and where they move if you put one of your own players in motion. The quarterback might see a blitz coming, and audible to a "hot" route, in which a designated receiver breaks to an open spot as quickly as possible, and the quarterback tries to put the ball there at the right time.

    But the receiver is also reading the defense. This is vital, because if quarterback and receiver are not thinking the same, the ball might go inside while the player breaks outside.

    Anyone can tell you that basic fact about reading defenses.

    But understanding how that works? Seriously, I come from a football family—my father was a collegiate coach—and even I can't tell just by looking. That is, I'm still about fifty-fifty if I try to actively call where the receiver is going to break. I might as well be guessing.

    So it's easy enough to say that "94-Z Red" tells the weak side slot receiver to break his route and run straight to the open spot at Z (what that equals depends on the team, but for our purposes, that's the deep middle), but if the defense is blitzing with a "Cover Z", the receiver ought to break to X or Y (by this scheme, outside long or cross underneath).

    But which direction will he go? And will the quarterback bite on the fake? (If he knows his receiver well, no, he won't.)

    And here we get to the vital difference I'm trying to illustrate. Even I can tell you what happened on a certain play, but I can't necessarily tell you why. Even on film, in slow motion, it takes me a while to figure it out. And yet my father and his coaching friends? My dad is thirty years out of the game, and he can still read the game in real time. I know what is happening; he knows why it happens.

    And I think that's part of the media question here. With Bush, the politics, at least, were obvious. With Obama, not so much. And it really is, for the average citizen, a complicated explanation. Presently, Americans aren't much for complicated explanations. A newspaper filled with actual news and real, useful analysis would sell even worse than its flagging brethren. A cable news show covering real news, again with real analysis, would have very few viewers (and those viewers would be generally despised by many of their neighbors for seeming uppity and pretentious for having their facts straight).

    It takes a lot of column inches. Or, on its best days, NPR gives seven minutes to a story where cable news maybe gives two. Even in that context? Consider the radio show This American Life, in which they occasionally devote the full hour to a single story. And some vital questions are so complicated that you can't answer them in that period; see, for an example, TAL's "The Giant Pool of Money", which attempts to explain the housing crisis that wrecked the economy—it's a great episode, but doesn't come near to actually answering its own questions.

    So it's actually a hard story to cover in any substantial context. And it might still be too soon to revive the political angles. We can probably expect to hear about energy prices starting sometime this summer, as the candidates start lining up for the Iowa parade. But one of the problems with making a political controversy out of it is that the GOP doesn't really have anything to offer as far as policy solutions are concerned.

    In the end, it's not a card the opposition is anxious to play. And perhaps that, in itself, explains the lack of media scandal about gas prices. But we can expect to see a "natural" price increase as the weather clears up and people start driving around in the sunshine more, which coincides nicely with the need to rally the voters starting in Iowa. I would expect we'll start hearing about this issue by the end of May.
    ____________________

    Notes:

    ° U.S. Energy Information Administration — The data is accessible via the linked page, but must be downloaded in XLS format.

    Works Cited:

    Klare, Michael T. "The oil price villain? Bush". The Toronto Star. June 29, 2008. TheStar.com. March 6, 2011. http://www.thestar.com/comment/article/450919

    U.S. Energy Information Administration. U.S. All Grades, Areas, and Formulations. February 28, 2011. EIA.DOE.gov. March 6, 2011. http://www.eia.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html

    See Also:

    Chicago Public Media. "The Giant Pool of Money (#355)". This American Life. WBEZ, Chicago. May 9, 2008. Radio. ThisAmericanLife.org. March 6, 2011. http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money
     
  15. madanthonywayne Morning in America Registered Senior Member

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    Quantitative easing, superlow interest rates, trillions of dollars of deficit spending..... all of these things are inflationary. Throw in middle eastern chaos and how can the price of gas not go up?

    I recently bought a bunch of supplies and the price of pretty much everything was up about 20% since my last big order a year ago.
     
  16. kmguru Staff Member

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    The middle=east turmoil is an excuse to raise prices since large oil supplies are controlled by a few very large companies. Once Libya settles down, price will come down. Besides, Obama may open up the strategic oil reserve. Another factor is when price goes too high, people stop driving, then demand drops and hence price will come down too. But if there is turmoil in Saudi Arabia, gas price could goes up again...
     
  17. chimpkin C'mon, get happy! Registered Senior Member

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    I read something about the oil reserve having to get opened-because they are worried about the integrity of one of the big salt domes...
    Here it is...
    http://www.chron.com/disp/story.mpl/business/7430875.html

    Oh, but it's only a few million barrels...meh, we burn through more than that in a day.
     
  18. spidergoat pubic diorama Valued Senior Member

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    I guess supply is pretty tight then.
     
  19. cosmictraveler Be kind to yourself always. Valued Senior Member

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    Yet Obama states , "there is no inflation!". Two years now and however the government figures inflation rates, they are saying it hasn't gone up, what do they look at when they try to figure out the inflation rate only one thing in the economy...housing? For housing is about the only thing that went down because the government and business said it should. All food products have increased, clothing as well and these are things we use everyday.

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  20. cosmictraveler Be kind to yourself always. Valued Senior Member

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    The only thing I see happening is that oil companies are grabbing as much profit as they can. Watch and see the prices will somehow, like with the last election period, come amazingly down so that Obama looks like he has worked another "miracle" just like they did with the Republicans just before last elections when prices came down from over 4.00 a gallon to under 1.50. It is just coincidental that the prices are high when ever they want them to be and lower as well. It is all a contrived game in which we the people get the shaft and businesses get the money.

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    When will this raping of the consumer ever stop? I really do not see an end until there's no more money to be made then the government steps in to take over control as Chavez did in Venezuela! Watch what happens over the coming years.

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  21. Syzygys As a mother, I am telling you Valued Senior Member

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    Well, in capitalism, who can blame them? Also they are not always responsible for dictating the price. When the price ran up to $140 per barrel, that was because too many hedge funds were trading it. At least that was the explanation.

    Also, different companies make different profits on the average price. It depends on your operating cost.

    When a limited commodity meats insatiable demand?? Never.

    Mind you, too high oilprices make alternative energy more affordable, so oil production countries are not interested in having the price artifically inflated...

    Also, when you measure something in dollars, and the dollar weakens, everything else measured in it rises.... Economy 101
     
  22. cosmictraveler Be kind to yourself always. Valued Senior Member

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    I understand, but where's the ethics here? If the country is in a deep recession so why screw the citizens even more when you don't have to. Last time this happened the oil companies made over 100 billion in NET PROFITS, thats after everything , including the oil they purchased, was paid for. I wonder what they will earn this time, 200 billion or????

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  23. Stryder Keeper of "good" ideas. Valued Senior Member

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    For any of you budding Political Column cartoonists, I have this rather interesting image depicted in my head. It's a picture of the earth with a shape like a buttcrack down it's middle, and the moon with a face peering around like someone looking over their shoulder with a cosmic hand reaching around and pointing and the centre of the crack (The centre being perhaps the middleeast, or maybe the US, perhaps another country that too doesn't like high costs), with the caption "To all the Oil Derricks (possibly pronounced dicks), You certainly know where to shaft us."
     

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