In the days before cable news, there was a term for election year tax cuts. It was “Priming the Pump.” The thinking was very simple; give the people a taste of their own hard-earned money, and tell them if they want it to continue they must return the incumbents to office. That particular ploy would not be effective with this regime however, since all their tax breaks have been for the limited numbers of the very rich.
Today’s version of this carries a completely new literal meaning. Prices for gasoline have dropped over a dollar from their highest point in the last year. Gas pumps are literally being primed for the upcoming elections. It appears the thinking goes something like this: If the voter only pays $2.159/gal when he was paying $3.199/gal, he will figure he needs to keep the incumbent in office in order to keep the price low. The problem with the voter thinking that is, he is very liable to find a new meaning to the term “November Surprise.” There are really no guarantees or even promises the prices will stay low.
This downward trend defies the rules of supply and demand. The Alaskan Pipeline in the last 9 weeks has had major problems and the supply of oil from this domestic (meaning cheaper) source has been severely restricted. If anything the price of oil should be going up not down, if it were truly a matter of supply and demand. When this subject first occurred to me, I went and checked to see if we were dumping oil onto the market from the country’s strategic reserve. If their website is to be believed, we are not doing that. The other possibility is that the oil companies and their cartel, OPEC, have decided they could afford to forego their obscene profit levels for a short period to ensure the continuing of the current single party rule.
In my research, I found protestations that the oil industry was just too large for such manipulations. All these protests of impotence came from incumbent Republicans. There is a reason we call OPEC a cartel, they can do whatever they damn well please. If any single member decides to get greedy, the others can flood the market and ruin the renegade’s profit level. If a member decides to undercut his fellow cartel members, he could well find himself without spare parts or transportation. This is not a play nice group. The United States represent their largest single market. It is in their self interest to keep oil friendly politicians in power, even it means not making a billion or two for a couple of months. They can always make up for it in spades on the other side of the election.
I found an alternate theory at http://deconsumption.typepad.com/deconsumption/2006/09/running_on_empt.html
I would like to “restate” what Mr. King said: What this means folks, is that hedge funds and institutional money that “TRACKS THE INDEX” were FORCED TO SELL 75% of their gasoline futures to conform with the reconstituted GSCI. And if anyone hasn’t noticed the timing of the price of the gasoline price collapse…just in time for November’s Mid Term Elections!
So don’t be fooled into believing that potential energy shortages have “magically been solved.” In all likelihood – much of the recent decline in the price of gasoline we have all “welcomed” has been the result of paper tricks being played on what amounts to a wealthy flock of sheep.
No matter who is doing the manipulating;