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Bush Adminstration is the Cause Behind Higher Oil Prices

The Bush administration's policy and approach to dealing with the economy is being driven by election year politics, which in turn is driving the cost of oil even higher, and increasing the chances of a recession in 2009 (after the election).

I suspect that tanking the economy and throwing the country into a recession is a Rovian-style strategy -- Republicans know they will lose the election this November, so they are making sure America enters a deep recession, that could well turn into a depression, knowing that the next President will have a tough time during their four year term.

But what is clear is the political impetus by Republicans in this move to throw Americans out of work and tank the US dollar further.

The declining dollar makes our goods cheaper overseas, but the rising cost of oil will drive inflation. The answer is to stop the dollar's decline and reverse the price trend on oil, but the Bush administration has absolutely no intention of doing either.

It's an election year, and although they haven't much of a chance at the White House, they will do all they can to hold onto their seats in the House and Senate, as well as give John McBush a better chance at the Presidency.

Oil futures shot up to nearly $139 a barrel Thursday after OPEC's president said oil prices could rise well above $150 a barrel this year and Libya said it may cut oil production.

Light, sweet crude for August delivery rose as high as $138.95 a barrel shortly after the New York Mercantile Exchange opened before retreating some to trade up $4 at 138.55.

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said he believes oil prices could rise to between $150 and $170 a barrel this summer before declining later in the year. Khelil said he doesn't think prices will reach $200 a barrel.

The head of Libya's national oil company said the country may cut crude production because the oil market is well supplied, according to news reports.

"Shokri Ghanem, the nation's top oil official, declined to say when a decision would be made on whether to lower production, or give any indication of the size of the cut under consideration," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note.

Driving prices higher will cost Americans their jobs. GM is teetering on the brink of bankcruptcy, and if Citibank fails the dollar is going to go through the floor.

And all the Republicans are concerned about is locking and boosting oil company profits.

Oil futures were also rising as investors reassessed comments the Federal Reserve made Wednesday when it held a key interest rate unchanged. Many investors who had expected the Fed to raise interest rates in August now think a rate hike is unlikely until after the November election or next year, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Republican economic policy in Washington is being driven by election-year politics. Inaction now means the dollar will fall further, and the cost of oil will rise.

Interest rates affect the dollar; many analysts believe the Fed's rate cutting campaign, which began last September, had much to do with weakening the dollar against the euro and sending oil prices skyrocketing. Investors buy commodities such as oil when the greenback is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies.

The dollar slid against the euro after the Fed's comments Wednesday, and was down again on Thursday.

"Breaking through $140 now ... seems hard to avoid," Cordier said.

We've seen this time and time again. Republicans do not care about average Americans.

The sooner we all rise up and denounce the Republicans the sooner we can put this nation back on track. Americans need to speak up and speak out against the factions in our government that are causing these problems - the Republicans, and their Rovian approach to manipulating our lives for their benefit and the benefit of their oil and defense industry benefactors.

Money is being driven out of the equity market and into commodities like gold, and like oil and food - which are highly inflationary. There will be cutbacks, there will be a loss of jobs, and the Republicans just don't care - it's an election year, which means it's time for the Grand Oil Party to screw America again.


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Comments (13)

Peter F.:

Seriously, go back to school and take a course--no, make that several courses--in economics. And no, I'm not going to even bother pointing out your numerous, prodigious and economically challenged errors, not to mention your simplistic premise that the B.A. is somehow the sole cause of higher oil prices, because I might as well be talking to wall.

And it's "Bush", not "Bus". Proofread.

Lee Ward[TypeKey Profile Page]:

The Bush administration's agenda is to re-elect Republicans, which is something you did not deny...

and you acknowledge that the Republican agenda includes manipulating oil prices -- you just don't think they should be judged as the 'sole" cause...

Well, I agree Peter, they aren't the sole cause - they are just the cause that we can eliminate this November.

Oil prices are going higher today, and the Bush administration is the cause of today's higher oil prices. That's what this post says, and I've included quotes to back it up. I didn't blame the Bush Admin for the price of oil, I blamed them for the higher prices we're seeing today.

You should go back to school and study reading comprehension, because a third grader could have done better, Peter - and the third-grader wouldn't have made the mistakes you made.

JLawson:

Yeah, damn that Bush anyway - forcing China and India to suck up more and more oil, while keeping our own oil companies locked into leases that aren't worth drilling and preventing them from drilling off the coastlines. How DARE they suck up the supply of oil!

Damn that Bush anyway, for not pushing alternative energy! Oh, wait...

http://www.msnbc.msn.com/id/11465801/

And damn PELOSI also - where's her 'common-sense energy strategy' she was touting before the '06 election? Or is "Tax the hell out of oil producers, that'll show 'em!" it? Or was there even one in the first place, could it be she was taking advantage of the gullibility of her constituency and not only never had a plan, but never intended to come up with one?

You know, the more I'm seeing, the more I think if Obama gets into office we're gonna wish things were only as bad as they were during the Carter years.

What we're seeing is the result of a whole lot of short-sighted "we can't change anything or drill because it'll take 5 years to make any difference" types stopping exploration and expansion - for about the last two, three decades. Oil prices started zooming after Katrina trashed the Gulf oil platforms - did anyone suggest more drilling then? What happened to those proposals? Oh, wait - it'll take years to develop anything - let's not do anything until it's necessary!

Low oil prices have slowed developement of alternatives and discouraged domestic drilling - are you going to blame the Saudis too for trying to maintain their market? Price oil to where it's just a little bit under a point which would trigger massive alternatives development or domestic production - and they've done that since the late '70s. And we've cooperated fully - not caring where the oil came from as long as it was cheap. There were other things to worry about worldwide, weren't there? Oil costs were a low priority.

Now you want instant results and lower prices, and you blame the oil companies because you can't have 'em NOW. Well, the folks who've gotten us into this mess are the same ones fighting tooth and nail to KEEP us in it. If there's not enough oil, taxing the producers isn't going to create more.

Look at Washington, Lee - look to see who wants to keep the status quo and the oil short - and you'll see clearly who's to blame.

ke_future:

you're being dishonest again, lee. not denying something is not the same as acknowleding it.

peter never said anything about the bush administration being any part of the cause of high oil prices. all he said was was that you were saying they are the sole cause.

from the article you linked to:
Oil prices have more than doubled over the past year on concerns about rising demand in fast-growing economies such as China and India, and supply disruptions in the Middle East and Nigeria. The dollar's protracted decline against the euro has also been a major factor behind oil's rise, as many investors buy commodities such as oil as a hedge against inflation when the dollar falls. Analysts have also attributed oil's rapid climb to speculative buying, with traders jumping into the market purely on the expectation that futures will continue to rise

how is bush responsible for demand in china or india? or supply disruptions? is the monetary policy having an impact? probably. but in my opinion it is less than impact of supply and demand

and speaking of supply, democrats in congress are behind limiting supply increases in the US, which raises futures prices for oil as well. shall we eliminate them this november as well?

Lee Ward:

"peter never said anything about the bush administration being any part of the cause of high oil prices. all he said was was that you were saying they are the sole cause."

He didn't disagree.

"Analysts have also attributed oil's rapid climb to speculative buying, with traders jumping into the market purely on the expectation that futures will continue to rise"

The expectation is that oil will continue to rise because the expectation is that the dollar will continue to fall.

This price spike is waaaay beyond supply and demand. There is speculation that the Bush administration will do nothing to stop the fall of the dollar because it's an election year.

That's the basis of this post. It's right there, blocked and in bold:

Oil futures were also rising as investors reassessed comments the Federal Reserve made Wednesday when it held a key interest rate unchanged. Many investors who had expected the Fed to raise interest rates in August now think a rate hike is unlikely until after the November election or next year, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

The Bush administration, by not raising interest rates, is tanking the dollar, which in turn is causing the latest spike in oil - a spike that is beyond supply and demand, and based purely on speculation that the Bush Administration will let the dollar and the economy tank.

ke_future:

so are in favor of turning out the congressional democrats in november? after all, you didn't disagree, did you?

and in case you didn't know it, the Fed, which sets monetary policy is an independent agency.

http://en.wikipedia.org/wiki/Federal_Reserve_Board#Independent_within_government

Steve Crickmore:

It is very hard to quantify what percentage of the high oil prices the Bush administration with the promulgation of the`the three trillion dollar war` or invasion in Iraq is responsible for but Linda Bilmes and Joseph Stiglitz, the Nobel prize winning economist, attempt to do so in their book and on their question and answer booktour.

QUESTION: The price of crude oil has increased dramatically since the Iraq invasion. How much of this price increase can be attributed to the Iraq operation and is it due primarily to speculation in commodities ("the terror premium"), demand for fuel by the US military, or inflationary effects of war spending?

Submitted by Mitch Friend from Springfield, MO

ANSWER : Before the war, the price of oil was around $25 a barrel. Now (April,2008) it is $100 to $110 a barrel. In our book, we attribute a mere $5 to $10 to the war. We believe that number is very conservative--and so our total number is very conservative. Futures markets predicted that the price would remain around $25 for at least the next decade. The realized that there would be increased demand from China and other emerging mrkets. But they expected supply to increase in tandem with demand--mainly increased supplies from the low cost providers, those in the middle east. The war changed that equation. Thus, the war can be given "credit" for most of the price increase. It set forth an adverse price dynamic. At the high prices, oil exporting countries didn't need to sell as much oil to meet their budgetary needs. Indeed, with prices quadrupling, they face a big problem of knowing what to do with the money that is literally pouring in. To many, it seems the best strategy is to keep more of the oil below the ground. The US military does use up huge amounts of fuel--it is a big factor in the cost of the war. But from a global perspective, the demand is relatively small....( by Joseph Stiglitz).

Lee Ward[TypeKey Profile Page]:

The Iraq War is putting us billions and billions into debt, and we borrowing from China and others - which is weakening the dollar further. And we have record trade deficits, which has weakened the dollar further.

The Bush administration has signaled "status quo" on energy. In other words, the Bush administration has signaled that they will do nothing to change and move us away from our dependency on oil - which is only driving the dollar down further and also increasing speculation in oil futures.

"Sell GM, buy Oil and other commodities - that's what happened today in the stock market.

Baby boomers watching their 401ks wither and shrivel have George Bush's election-year shenanigans to thank....

Bush and Cheney are doing their best to protect their pals in the oil industry, and they are succeeding. Meanwhile, GM is inching towards bankruptcy, and we are possibly facing a meltdown in the financial sector.

American jobs in the auto industry? Write them off. Not to worry - those were primarily blue-collar workers who vote Democratic, so the Republicans don't give a damn if they lose their jobs.

ke_future: I'm well aware that the Fed is "independent", but find one time when Bernacke has disagreed with Bush and I'll buy you a beer, or a gallon of gas if you prefer.

Bernacke and Bush are in lockstep, dragging the dollar down further because its an election year - and hoping (knowing) that inflation and the depression that will follow will hit hardest after November, and it;ll fall on Obama to dig America out of the economic hole dug by Republicans.

Prudence calls for raising interest rates now or soon. Bernacke has no intention of doing so because it's an election year.

The US dollar is on the verge of collapse... and you know what - trying to pin it on Jimmy Carter or Bill Clinton just ain't gonna work, Repubbies.

By the way, ke-future - Bush appointed Bernacke to his post. Bernacke is just another Republican hand-licker

DR. BERNANKE: Thank you. I'd like to express my deep appreciation to President Bush for the trust he has shown in me in asking me to lead the Federal Reserve System.

Trust that Bernacke would toe the Republican line, and he is doing exactly that.

Oil prices are going higher today, and the Bush administration is the cause of today's higher oil prices.

I didn't blame the Bush Admin for the price of oil, I blamed them for the higher prices we're seeing today.

Lee, you NEVER made that impossibly subtle and weak argument. And it is weak--very weak.

and you acknowledge that the Republican agenda includes manipulating oil prices....

I never acknowledged nor implied any such nonsense. This is the King of Strawmans.

In fact, the notion that ANY politician can manipulate world oil prices is the stuff of pure conspiratorial fantasy and hogwash, thereby blowing the gist of most of your post.

Oil prices are going higher today, and the Bush administration is the cause of today's higher oil prices.

No, again, you make that assertion and it is patently ignorant beyond ignorant and shows a profound lack of knowledge regarding world's commodities and futures' markets. There are a multitude of reasons for the high price of oil--a weak dollar is only one of them, and the degree of its significance does not take into account the myriad reasons that go into the present weak dollar.

That's what this post says, and I've included quotes to back it up. I didn't blame the Bush Admin for the price of oil, I blamed them for the higher prices we're seeing today.

Of course blame SOLELY for the price at the pump. Any simplistic reason is much easier to swallow than the far, far more complicated and economically complex truth. And how separate the price of a barrel of oil vs. the price at the pump is bizarre and is an Elasticman like stretch.

The Bush administration, by not raising interest rates, is tanking the dollar, which in turn is causing the latest spike in oil...

So which one do you want, Lee: A Fed IR increase that, among other things, will only serve, as an example, to deepen mortgage lending crunch where fewer and fewer people can afford a home; or, do you want the Fed to lower rate more thus weakening the dollar.

So Lee, you want the Fed to increase the IR that would possibly strengthen the dollar during an election year and that, if it were to happen and have a positive affect on the dollar's strength, would only serve to help the GOP? If I didn't know any better, I'd say you're wanting to help the GOP.

Secondly, why on earth would the Bush Admin. want to "make the economy tank" and negatively impact McCain's presidential bid. Just so they could give a potnetial Democratic president a bad economy? Are you serious?

...and based purely on speculation that the Bush Administration will let the dollar and the economy tank.

A thousand times NO. Speculative markets are NOT based purely on one factor....at all. Sheesh!

Steve -

Don't forget Nigeria - the output from there has dropped significantly, down to about 1.3 mil/bbls - and with more pipelines blown up, they just took a 300k/bbl/day hit.

It all has an effect.

Cleanup on Aisle 12 - looks like you've got a spammer...

Lee Ward[TypeKey Profile Page]:

[Comment spam deleted]

Thanks, JL, I've been cleaning up after this one since 10am.

You got the Blogjanitor plugin for MT 3.x installed? Between that and the SpamLookup plugin, I went from about 100 junk comments a day down to maybe one every three weeks. If you like, I can shoot you a copy of my keyword exclusion file for SpamLookup, also.

J.


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Publisher: Kevin Aylward

Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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