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Bush's explanation for high gas prices refuted

Original post made by Shelley on Apr 30, 2008

Yesterday in the White House Rose Garden, President Bush tried to explain that the reason for the high gas prices is because the supply is not meeting up with the demand. This is untrue. From Marketplace, Bush speaks, we read between the lines" Web Link:
TEXT OF INTERVIEW
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?
Moon: In fact, analysts have been reporting that gasoline reserves in this country have been on the rise since October and in recent months, we've got more stored up than we have since the early 1990's, so as Shook points out, we've got enough on the supply side. Then you've got demand and that's actually been falling since last July. None other than the Bush administration's own Energy Department now says the demand for gasoline here is on track to see the first annual drop in consumption in 17 years. And I might point out that analysts aren't the only ones who are questioning this supply and demand explanation. Let me give you a quote from the head of Exxon Mobil recently: "In terms of fundamentals, fear of supply reliability is overblown."
Ryssdal: Hmm. The president mentioned Alaska -- ANWR: The Alaskan National Wildlife Refuge -- a couple of times today. He said he hopes Congress will start worrying as much about gas prices when they think about ANWR as they do about environmentalism.
Moon: Well, Barbara Shook says more supply certainly couldn't hurt here, but this comes down to a very long and complicated political fight that's not directly connected to the price turn-up we're seeing today, so even if we do open up that exploration, it's not going to bring prices down right now.
Ryssdal: Let me ask you about refineries, Bob. The president also talked about those a couple of times today. Here's what he said:
President Bush: Another reason for the high gas prices is the lack of refining capacity. It's been more than 30 years since America built it's last new refinery.
Ryssdal: Mr. Moon, over to you. Is that the problem?
Moon: Well, Barbara Shook was a little confused by that one. She says we're already doing that:
Barbara Shook: We're expanding refining capacity in this country. We have probably more than half a million barrels of new refining capacity per day under construction right now and I wouldn't be surprised to see another 100,000 barrels per day of new capacity announced in the next six months to a year.
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.
Ryssdal: Alright, so to review, if it's not supply and demand, it's not refineries, it's not gas on the market, what is it?
Moon: Well, most analysts say it's a combination of a couple of things. They say as long as the value of the dollar keeps sinking -- and oil does get priced in dollars you know -- the price of oil has to go up then, so that the sellers can make up the difference in their purchasing power. That doesn't entirely explain this, though. Last year, for example, the dollar dropped a little over 10 percent, but at the same time, oil prices were up around 50 percent, so the major factor here seems to be the wave of investment dollars that are flowing into the oil market, the speculators driving prices higher. Here's a number for you: about $9 billion was invested in oil futures back in 2000. Well, that's now up to $250 billion and even the head of Exxon Mobil blames wild speculation for all this.
Ryssdal: Marketplace's Bob Moon and the president this morning. Thank you, Bob.
Moon: Thanks, Kai.
~~~~~~~~~~~~~~~~~~~
The era of cheap oil is coming to an end. Drilling in Alaska won't make it cheaper. The cost to drill it and get it down here won't be cheap. Sell you SUV, buy and subcompact car and take public transportation. This is becoming our new reality. Drilling in Alaska will simply prolong the problem.

Comments (8)

Posted by Stacey, a resident of Amberwood/Wood Meadows
on Apr 30, 2008 at 10:14 am

The Feds can stop the drop in the value of the dollar and do something productive like encourage and protect wealth production. But hey, all our production jobs went overseas as we played nice consumer. Oops.


Posted by Anne, a resident of Pleasanton Meadows
on May 4, 2008 at 9:48 am

WOW Shelley!!
What a "well-quoted" rant that was!!! I didn't know you had it in you! :) :) :)


Posted by Shelley, a resident of Downtown
on May 4, 2008 at 11:52 pm

it's really hard to tell the difference between rants and news nowadays, isn't it? i'm glad my post was informative. :):):):):)


Posted by Cholo, a resident of Livermore
on May 6, 2008 at 11:12 pm

I think the clergy raised the price of gas


Posted by rod, a resident of Del Prado
on May 8, 2008 at 8:57 pm

Bush sounded like a 2 year old throwing a hissy fit, did he even answer one question. i cant wait to get rid of him


Posted by Bill, a resident of Vintage Hills Elementary School
on May 12, 2008 at 8:33 am

Can this country survive until the next election?


Posted by mike, a resident of California Somerset
on May 13, 2008 at 11:34 am

maybe we can hook a pipe up to cholo he seems to be full of enough hot gas to power the entire planet


Posted by Reality, a resident of Pheasant Ridge
on Aug 23, 2008 at 5:39 pm

Thank goodness, the topic doesn't take into account growing global economies that are cutting into the supply of oil. I mean, we all know the rest of the world does not drive, especially the Chinese.

Two billion people with the fastest growing economy in the world have decided to skip cars and go straight to solar powered jet packs.

I love how the commentators sounds like the dumbest sub-humans on this planet by rejecting the concept of supply and demand, yet people believe them. Let's see, gasoline reserves increasing...could that be because people CANNOT afford ALMOST $5 per gallon gasoline?

Simple equation here:

NO MONEY TO BUY = less demand for product = increase in RESERVES BECAUSE THERE IS NOWHERE FOR THE GASONLINE TO GO.

QUOTE from EXXON EXEC? Well it's not like he has anything to gain from high gas prices due to limited supply. Certainly he is the greatest person to go to for evidence to support your claim. That's like asking a Pot-head if we should legalize weed.

New refining capacity: of course we are doing it right now, we should have been building for the past 30 years. Half million barrels new production a day, maybe another 100k, whew, looks like our problems are solved. I mean, it's not like we as a nation consume more fossil fuels that the rest of the world COMBINED. But a half million barrels more per day, yeah that'll do it. Ms. Shook's attempt at claiming new refineries have already been built is like picking a baseball team and saying, "I am telling you they are going to lose one day" and when it happens, saying "See, I told you so." Sorry Ms. Shook we aren't going to play that game.

Refineries cutting back in the US? What would you do as a business owner? You have a product that you used to sell 100 sets month. But for the past few months you are only selling 50 sets per month. Are you going to keep paying to make 100 sets per month or are you going to MEET...wait for it.........DEMAND!!!!

I don't know where this "expert" got her title of expert, because right now it seems like she got it out of a cereal box, I suspect Count Chocula (as that was my favorite cereal back in the day and it was always handing out PhDs and Masters degress...straight out of the box!!!).

And Shelley, drilling in Alaska will make it cheaper. Why? Because of...say it with me...SUPPLY and DEMAND. By the way, I just got a message from the 2 billion Chinese peeps...they want their gas...solar jet packs didn't work out real well.


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