Why Bush is doing nothing about gas prices

[Atman]

First of all, I don't necessarily think he SHOULD do anything. Our gas is wicked cheap, all things considered. BUT...this story blew by under the radar yesterday. If anyone has seen a print link, please post it. I heard this mentioned on a talking head show.

Instead of stopping the filling of the SOR, or tapping into it, or pressuring OPEC, what do you supposed Bush's motive might be for NOTwanting to "do something?" Well, come on...we all know Bush doesn't do anything unless it profits him or a contributor. So, from this talking head session...

The Bush admin is proposing ELIMINATING OR SUSPENDING REGIONAL FUEL MIXTURES as a way to lower prices. Yup, those pesky air pollution regulations under the EPA are making it too difficult on the poor producers, and if we could just eliminate them, and allow the petros to sell just one formula nationwide, they could make more gasoline and lower our prices.

Got that?

Knowing Bush, this is absolutely real, and makes perfect sense -- from an oilman's perspective. Use more of it, and make it easier for the petros to produce. Just what the nation needs.

[chelsea0011]

1. He doesn't drive

[BradCKY]

2. Well

ANWR failed to pass maybe that will go up to vote again.

However I think a lot of it has to do with the destablization in the Middle East going on currently, gas prices going up as revenge.

That said we do need cheaper fuel prices, in many cities people don't have many viable alternatives to cars at the moment, and building those would take quite a while, so those higher prices are hurting many.

Personally I just want to get off oil altogether and replace it with another source, if we could ever get a president that would lead the fight in fuel cell research.

[lectrobyte]

3. you just have to follow the money

I think you are right on target. Although politically it is baffling unless he plans to do something closer to election time to save us from high gas prices and come off as the hero. In the meantime, it has to be profitable for the oil companies...

What looks like a failure to the outside world (W's earlier business venture that went bust) worked out for him since he sold the stock before it tanked and walked away with millions.

[Atman]

7. Oh, politically, he'll do something

He'll announce some plan right at the start of "driving season." Prices will nudge downward 5 cents (although they will have gone up 50). He'll get a slight bump in the polls.

That's our Bush. Whore it up, and kill future generations for your own personal short-term gain.

[JM]

4. A hike in gas prices

also makes producing expensive reserves more profitable.

People think the price of oil is a flat, one-size-fits-all concept, but it isn't. Geography determines the local cost of extracting a barrel of oil. Our oil is more expensive, so companies look elsewhere to invest where the cost of extraction is easier.

Now that oil prices are going up, the relative cost of extracting US Oil goes down, so companies find reinvesting locally becomes more profitable.

Basically it is a multi-barreled approach. The pinch hits hard at home when the price goes up, so the government is pressured to increase domestic production. Increases in domestic production increase domestic profits. Increases in domestic production then lower the cost. Increases in domestic production also will hit back at OPEC, although not very hard.

What I am hoping will happen is that alternative energies, once though of as expensive, will now look more attractive in the face of rising oil prices. As the price goes up and the trend appears to continue in that direction, people will eventually hedge their bets that newer technologies, once produced in large scale, will be less expensive.

Later,
JM

[BabsSong]

5. Two thoughts

First, I'm sensing that by fall there will be a miracle fall in prices attributed to the great leadership of Bush---the oil barrons didn't pump money into him and then by their actions end up destroying him. Second, I wish Dems would seize on the "their doing it because we attacked Iraq" message so that the morons here maybe begin to realize that the big bad bully can't just "have it's way with the world" because 'the world' still has the bully by the balls if it wants to squeeze tightly. It's political season---let's start playing some politics.

[Ilsa]

6. Great points.

Make it a crises so people feel compelled to give up their clean air, etc, drill in environmentally sensitive areas, etc. It might be another ploy to make it easier to enrich the oil companies.

The US has to get serious about energy. Squabbling over the rising costs of gas is a diversion from reality, IMO (yes, the overall effects on inflation, etc will be dramatic). But i think people are delusional about where the US is, especially compared to other nations, when it comes to the problem of procuring energy sources.

[ProfessorGAC]

8. Another Reason

The petro industry works on a fixed proportional margin basis. They do NOT pick a desired dollar margin for each gallon of gas and then pass on the raw material cost increases. The margins are a fixed percentage of RMC plus all direct and indirect burden of manufacture.

So, (i'm making these numbers up for simplification:
- Let's say they want $0.15/gallon at an oil price equivalent of $0.75/gallon with total burden of $0.15/gallon, which would mean a sales price of $1.05/gal, and an operating profit of 14.3%, and margin over cost of 16.66% (again, it's higher, but i'm using simple numbers for illustration), instead they say:
- They want the 16.66% no matter the change in oil prices, or a cost plus system. So, when oil prices rise to $0.90/gallon and their total absorption is still )$0.15/gallon, they add the 1/7th margin to $1.05, yielding a sales price of $1.225/gallon. They then make an extra 2.5 cents on every gallon. So when oil prices go up, profits go up!

I know the finished gas is sold on the commodity markets, but trust me on this. This is the financial philosophy they use, and the data indicates that despite the supposedly free market of the commodity exchanges, what i describe is EXACTLY what's happened since at least 1980. The data makes it abundantly clear.

So, the petro folks like high oil prices because it drives their absolute profitability higher.
The Professor

[ElsewheresDaughter]

9. bush* using "high gas prices" to ram cheney/kennyboy's energy bill on us