Thread: 2012 Fuel Costs
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Old 03-03-2012, 01:45 PM   #52
MAXUM
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Originally Posted by The Phantom Gourmand View Post
No doubt politics and Wall Street are having some effect of the prices we see at the pump. But I also wonder if all the bull crap over in the Middle East is making the biggest difference?
At least one candidate (who is no longer a candidate) promised us $2 a gallon gas if he was to become our next President.
Would you agree that our current President would lower the price to $2 a gallon before the November election, if he could, to guarantee re-election?
IMO I think the President has less to do with gas prices than any on the other 3 reasons mentioned above.
Clearly the Prez isn't setting the price from the oval office, thankfully we haven't gone that far off the cliff yet. However indirectly policy decisions that are made certainly would send signals to the markets that in turn drive the cost.

Since the middle east is the largest supplier of oil to the global market, any disruptions to that supply or even threats thereof would have an impact. Perception feeds speculation. Furthermore any US involvement (or lack thereof) to keep the region stable plays into that equation.

It's a bit disingenuous that any candidate promise gas to be sold at any particular price, that's just playing politics to score points. However there is no question that as I pointed out earlier that the president can influence the price indirectly by signaling either a friendly or hostile position in dealing with fossil fuel supply, refinement and use. Currently the smoke signals from DC are hostile in nature.

High gas prices are toxic to any president's approval rating and therefore so are his re-election chances. You can bet that if the people surrounding the current president believe this to be a big enough factor action will be forthcoming to reduce the price at the pump. It's anyone's guess what they will try to accomplish this since there is no question the current administration is not interested in about keeping the prices down.

One final thing, the cost of oil is set based on the value of the US dollar. Over the past few years with these 'quantitative easing' attempts, two thus far by the fed have flooded the market with essentially printed dollars resulting in deluding it's value. The US dollar is worth less so it takes more dollars to buy stuff. This drives inflation big time so the fact oil costs more can also be attributed to this as well. Whether or not it can be argued these QE programs by the fed have been successful in their intended purpose, the consequences are predictable, inflation, to what extent remains to be seen.

If gas prices to get as high as anticipated it's really going to wreak havoc on an already weak economy in the lakes region and north country of NH which is heavily dependent on tourism.
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