More Experts Take on Assertions by the President on Tuesday Regarding Congress' and Energy Policy

Well, our president/comedian who a couple of months ago didn't know what the nightly news had told us a few days earlier that gasoline prices would be near $4 a gal by summer held a news conference Tuesday to let us know he knows how to fix things, but that Congress is standing in the way. Marketplace, the business news program takes on his assertions by going to experts in the field of energy and fuel prices:

Kai Ryssdal: I don't know the last time the President pumped his own gas, but he's probably got staffers who filled him in on how much it's costing because he wasted no time this morning telling Americans he feels our pain.

Gas is up $1.40 a gallon over the past year, he said, and he knows why:

President Bush: One of the main reasons for high gas prices is that global oil production is not keeping up with growing demand.

Our senior business correspondent Bob Moon's been spending some time today going over the president's remarks.

Hi Bob.

Bob Moon: Hello Kai.

Ryssdal: Alright, so let's get to the fundamentals, as the economists like to say: supply and demand. Is that really what's going on here?

Moon: Well, we got a leading industry analyst on the phone, Kai: Barbara Shook at the Houston research firm Energy Intelligence and she begs to differ with the president:

Barbara Shook: The U.S. market is well supplied. Do you see anybody waiting in line at the filling station?

If our little Bushie heard that, it probably made his head hurt and sent him seeking out Bro. Cheney to 'splain why his song and dance Tuesday didn't work on everyone (though I'm sure it worked on the right wing radio types).

You can read or listen to the rest of the expert analysis on Bush's speech vs reality at Marketplace "Bush speaks, we read between the lines".

Other reasonings Ms. Shook deals with:

Bush's asserted that  supplies are tight because no new refineries had been built in 30 years. 

Ms. Shook said refining capacity is being added for "half a million barrels of refining capacity a day and there are plans for 100,000 barrels more capacity in the next half year.

The existing refineries are expanding, and demand is going down:

Moon: And Kai, remember what I just said about demand going down. We're actually using less gasoline lately. Well that means refineries here in the U.S. have actually been cutting back on production because their margins are tightening up.

So, in the midst of a crunch refineries are cutting back?  In 2002 the US Senate completed a study that found that the post refinery gasoline market was easily manipulated by just such tactics. 

What Ms. Shook concludes are the real reason for the high price of oil and therefore, gasoline are

• Speculation (We've heard about the bubble in commodities before, but it's no less valid for all that.)

• Falling dollar

In earlier posts I've noted that other experts say Bush's stuffing the Strategic Petroleum Reserve with oil (a very important analyst says specifically the light sweet crude that every refinery wants) adds to the bubble by making an artificial shortage of the desired raw material we all need.  I read recently that just the shortage, falling dollar, and  inflation aren't enough to cause the actual spike we are seeing, but that the rapid stuffing of oil into the SPR makes investors think an attack on Iran is imminent.  Whether Bush intends to attack Iran, or to manipulate the market so that reliable Republican donors in the form Big Energy have another windfall year on the backs of consumers, we are stuck with the results.

 

 

tags: gasoline prices  oil prices  iran  strategic petroleum reserve  

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