Prepare yourselves for the Shock and Awe Obama style that is certain to come this week.
Prepare yourself for a message and bombardment of populist bullshit the likes you haven’t seen in a long time.
High gas prices.
Election season right around the corner.
A fading President.
All perfect ingredients.
It has already started in fact:
WASHINGTON (AFP) – The White House on Monday lashed out at US energy giants expected to announce bumper quarterly profits this week, even as Americans see wallets hit by rising prices at the pump.
And it’s just gonna get worse. The rhetoric will be clear and unmistakable. It will rain down on all of us from the minute the first oil company drops the early press release. Clear indications that Obama has been building up to this are everywhere:
(CBS/AP)
RENO, Nev. – President Obama announced Thursday that the Justice Department is assembling a team to “root out any cases of fraud or manipulation” in oil markets that might be contributing to $4 a gallon-plus gasoline prices.
“We are going to make sure that no one is taking advantage of the American people for their own short-term gain,” Mr. Obama said at a town-hall style meeting at a renewable energy plant in Reno.
See. Obama has already established a no fly zone and is just prepping the field for the next wave. His enemy, big corporations, have the next move and they’re penned in; they have to take that next step, and when they do…
“Major oil and gas companies are going to report this week, significant, if not record profits,” said White House spokesman Jay Carney.
Record profits.
High gas prices.
Belt tightening.
Continued hardships.
High unemployment.
Don’t look now, but here come the warships!
However, I am here to help you out a little. Not so much a bunker, but a counter offensive.
1. As you hear folks talk about the record profits and contempt of the oil industry, offer your friends a choice of investments. On the one hand, they can opt for Investment A. This investment will return them a profit of $1. On the other hand, they can opt for Investment B. THIS investment will return them a profit of $5. When the inevitable question comes up of “How much do I have to invest?”, you may comfortably tell them, “It doesn’t matter. Profit is profit regardless of investment.”
2. Ask them what the Federal government’s profit was on the gasoline America consumed last year. When they shrug that shrug that says, “I don’t know.”, you may tell em it was $25,376,665,440.00.
Get ready America. Shock and Awe. Just be prepared to fight it.
| $25,376,665,440.00 |
You have five companies, all offering the same product. Despite being in a supposedly competitive market, all five consistently raise their prices in unison and still make record profits.
Now pretend you aren’t in love with corporations, what do you think about that fact pattern?
Their prices rise in unison because they all have access to the same data (I.e., a global commodity market for oil). Gasoline follows oil prices because as oil prices increase the feedstock cost of gasoline increases, so prices rise. They are not colluding. They are simply making rational economic decisions.
The reason oil prices are rising is because it is becoming increasingly expensive to extract, demand is growing from China and India, oil is denominated in dollars (which are depreciating), and gasoline is seasonally more expensive in the summer.
Obama is simply playing election politics.
You have five companies, all offering the same product.
It’s a product like gold is a product. Or corn. Or pork bellies.
It should no more surprise you that oil sells for the same independent of the company than the fact that copper sells for the same price whether it’s Cullen Resources or d’Anconia Copper.
I further think that the price of oil is rising because the value of the dollar is falling.
Not sure if you play fantasy baseball, but if you would consider a team of 25 players and a player salary cap of $250 it’s pretty easy to see that the average price per player is 10 bucks. What do you think is going to happen to the price of players if the owners increase the money supply to $500?
I’m guessing the salaries double.
How do you square all that talk about why oil is getting more expensive to extract with the fact that the companies doing the extracting are showing record profits?
Oil is not a free market commodity, it is already heavily regulated domestically and internationally in a million different ways. I don’t think macroeconomics 101 type analysis works in describing oil markets.
It sucks as a consumer that prices can fluctuate so badly for a necessity, but it’s supply and demand all the way through the consumption chain. I don’t doubt that there’s some political influences there, but overall I agree with Sean that it’s mostly economics.
Personally, i don’t mind the prices fluctuating as far as my gas tank is concerned. I invest in oil & gas stocks so I don’t feel the pinch as bad (although the profits haven’t really found their way into the stock prices yet).