If The President Doesn’t Control Oil Prices, Who Does?

If The President Doesn’t Control Oil Prices, Who Does?

Can Obama be blamed for people having to pay $4 a gallon to fill up their SUV’s?

Author : Jamila Akil

Author's Website | Articles from

Every election season, the incumbent president has to start praying to the God’s of Oil that the oil prices don’t go up. If oil prices do go up, then the incumbent knows that the public may very well blame him for the pain that they feel at the pump. This election cycle is no different. Americans are paying higher oil prices than they were just a few months ago and the President’s approval ratings have been taking the hit.

But really, can Obama be blamed for people having to pay $4 a gallon to fill up their SUV’s? The U.S. is producing about as much oil as the nation can, in part due to the former President George W. Bush opening up more land for drilling by oil companies. The progressive website Think Progress notes that the number of drilling rigs in U.S. oil fields has quadrupled under Obama and domestic oil production hit an 8-year high in 2011. For the first time in 60 years, the U.S. is now a net fuel exporter. The U.S. only has about two percent of the world’s proven oil reserves, thus there is no way that the nation can drill its way to lower oil prices–America just doesn’t have enough oil to flood or dry up the world oil market.

Unsurprisingly, the Republicans are trying to use the spike in oil prices to their advantage (just as Obama did while he was running for President). Newt Gingrich claims that if he were to become President oil prices would go down to $2.50 a gallon. Obama’s is getting in the game of using the price of oil to affect voters too: Obama’s campaign is trying to portray Mitt Romney as more of a friend to the bigwigs who work at oil companies than to the average citizen.

Consumers have to realize that oil prices are set on the world market, not in the Oval Office or on the floors of Congress. The Organization of Petroleum Exporting Countries (OPEC) controls 79% of world crude oil reserves and 44% of the world’s crude oil production, affording them considerable control over the global market. OPEC can greatly affect the supply of oil by deciding how much oil they will or won’t produce for the world market.

Oil speculators are driving up the price of oil too. According to Bloomberg BusinessWeek: “Tensions over Iran’s nuclear program have people spooked that a potential attack would disrupt the country’s 2.2 million barrels of daily oil exports. And so money has been pouring into oil futures contracts, driving up the price without any significant change in the underlying supply and demand fundamentals.”

South Sudan, another major oil producer, ceased oil production earlier this year after disputes with Sudan over oil revenues–South Sudan controls the oil production but Sudan has the oil refineries. The two nations have had frosty relations since South Sudan broke away from Sudan last year; border disputes between the two have yet to be fully resolved.

Clearly, there is much going on in the world today that is affecting oil prices–from the speculators driving the future cost of oil up, to the threat of open war between Sudan and South Sudan, to sanctions on Iran.

It is up the public to educate themselves about where the cost of oil comes from and how the cost of oil influences the price they see at the pump. Otherwise, gas prices will continue to be a wedge issue that is used to accumulate favor with voters instead of a good jumping off point to start a national discussion about how the U.S. can wean itself off the need to import oil.

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purplemoonflower123 354 pts

My friends in Canada tell me not to b&&&& to them about gas prices! LOL!! I spoke to one a few weeks ago when prices started going up and she said she didn't want to hear it. 

 

Also, people forget that a few years ago (Summer '08), gas spiked to about $5 a gallon here in Seattle, but then went back down.  I know my memory isn't that good, but I remember that HMS, as my husband goes WTH as he filled up the gas tank to drive out of town. Conservatives said that the Bush/Cheney Administration were not at fault for that rise, and that the president had no control over gas prices.  Now they have changed their tune? 

dani-BBW 1840 pts

Unless you live in a rural area and haven't had the chance to move for whatever reason (family ties, health issues, job commitments, etc), I really don't have much sympathy for people complaining about gas prices (not specific to anyone here). Gas prices went crazy in 2008 and several people I know made the decision to move closer to work, obtain more fuel efficient cars, find/arrange a car pool and so forth. However other people just refuse to exercise any frugality or change their consumption habits and perpetually whine every year when gas prices shoot up. I'm really sick of the lack of personal accountability by many Americans regarding oil prices.

Toni_M 20097 pts

While it's good to know I qualify for your sympathy, you really need to realize that American consumers aren't the only people who drive. Those groceries don't find their way to your store counters by magic: They're driven by trucks. We aren't the only people paying at the pumps. Smaller shipping companies have been put out of business because they cannot afford the cost of fuel which gets especially pricy since there is apparently "regulations" regarding what pumps truckers can use in certain cases. 

 

If it were just as simple as being green and arranging a car pool, you wouldn't hear as much grumbling. Yes, Americans have tightened their belt. But one can only tighten so much. Let's not pretend that the cost of living isn't going up while wages have not generally followed suit. 

 

Those suggestions would be wonderful if a person could afford to go out by a car on a whim or knew enough people to carpool, but as I've been driving home: The situation is not as one-dimensional as: "Americans are whiney losers who need to pull up their bootstraps and SUCK IT UP because that's how life works and I don't care if my generalizations come without intricate consideration for individual circumstances or varying areas being affected by corporate greed." 

 

Not everyone lives in the city. As I stated. Not everyone has reliable public transit. 

 

This article isn't news to me as I've always been aware of just who pulls the strings when it comes to gas prices. But that doesn't stop it from being annoying that EVERY time the subject comes up, people pretend that the problem is with Americans being lazy, stupid, and greedy. I just think this "let them eat cake" attitude is a wee bit much at times is all. 

dani-BBW 1840 pts

 Toni_M Sorry but I live in a metropolitan city where people are CHOOSING to drive 30 or 40 or 60miles (one way) every day to work. They switch apartments and fail to consider gas prices in the determination of where to live. Or buy a house in a cool suburb that will give them a longer commute. Or they buy a new SUV that gets 12 miles to the gallon. Or vote against better public transportation options. Or not demand their politicians support responsible energy policies. They may not be able to set the price of gas, but they CAN control their consumption.

 

So as I stated, I don't feel badly for THOSE people who make poor choices and then whine about gas prices. I do however applaud companies who consume lots of gas and decide to make good choices regarding their consumption/ management of that expenditure. Southwest Airlines is one - they hedged on gas several years ago, realizing it was a commodity they couldn't control the price of but was highly dependent on; Delta is another - looking to buy it's own refinery. 

Jamila 7696 pts moderator

 Toni_M You're right that America is a very car dependent nation. European cities were built decades ( if not hundreds) of years before many American cities, and thus their cities were built more compactly--narrow streets and walkways--and with smaller living quarters. America was built up when the nation was booming and cars were coming onto the scene, plus the highway system was built moreso for military purposes rather than for public transportation; thus, America went big with everything--big cars, big houses--and we became addicted to driving because we could afford to do so. 

 

We are slowly becoming less and less able to afford the society we created. 

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Maxine 1006 pts

 Pearl Was it Who Killed the Electric Car?  Haven't seen it, but that's the only title related to this I can think of.

Blackberry 1228 pts

I agree...the problem is threefold: 1) the public doesn't seem to know what the(any) president has control over...so misinformation 2) each party seeks the capitlize on their position....the problem is the respective parties cannot take credit for low gas prices without taking the blame for high gas. This only perpetuates the public's misundertstanding. 3) this country doesn't have an energy policy. We "protect the environment" sometimes.....we think about oil reserves, for the specific purpose only lowering prices and only when it's summer because that's when people fly or go on road trips (anachronistic sentiment)...... Energy, power....that which makes the world light up, turn on or go faster......there is no on going policy for that. Until that changes the adjustments made by presidents will always be a maintenance of a status quo, a bandaid on a seeping wound if you will. ------soap boxes aren't my thing so I'll be stepping down now.

SirLoinDeBeef 2660 pts

Supply & demand, complicated by speculation, war and greed.

TJD 373 pts

Jamila, 

 

Thanks for a most informative article.  All the more reason why I will go to school tomorrow and lean on my students.  One or more of them is sitting on the solution for clean energy and I plan to squeeze it out of them.  

 

When I began teaching in 1998, gas was $.97 per gallon.

SirLoinDeBeef 2660 pts

 TJD When I began driving at 17, back in the late 50s, gas was 25 cents a gallon - sigh! - when it went up to 35 cents, I thought the sky had fallen.

Blackberry 1228 pts

@TJD Don't reminisce ....it's hurts my wallet.

Jamila 7696 pts moderator

 TJD You started teaching when I started driving. My friends and I started driving when gas like $0.99 to a buck and some change. Now gas is just going higher and higher. 

Patricia Kayden 1710 pts

Did Bush control the oil prices when they skyrocketed in 2008?  Presidents don't control the oil prices. Not sure why this is such a complicated issue.  I understand why it's a political issue though.  The good thing for President Obama is that it appears oil prices are inching downwards.  Will the Republicans praise him when they go back down?

Shulamit 1986 pts

 Patricia Kayden God forbid no. What I am referring to is the blatant lobbying and blocking of legislation in the 80s that would have prepared this nation for high oil prices, like public transportation infrastructure funding and high speed rail ways as well as the blocking of funding of alternative energy sources outside of oil. these are not new ideas that were being talked about in the late 70s and 80s to avoid our being addicted to oil in present day.

Jamila 7696 pts moderator

 Shulamit  Patricia Kayden Obama funded Solyndra but when that company went under the Republicans used it to put a bad name on government funding of alternative/green energies. The problem with that the Republicans were doing is this: sometimes businesses fail. Just because 90 percent of restaurants fail doesn't mean that no one should ever again attempt to open up a restaurant. Meanwhile, the Chinese saw what we did with Solyndra and then they turned around and put 30 billion into R&D for alternative/green energies. 

 

One failure and the US ran; the Chinese are just going to keep going until they get it right. 

FriendsofJay 1973 pts

Republican conservatives are of two minds on the subject of presidents being responsible for gasoline prices.  President Obama should absolutely get the blame for high prices; but while George W. Bush was in office, neocons proclaimed that presidents have nothing to do with oil prices. This is an especially good argument for the voting public which has a memory of about 5 minutes.  The good thing about making your own rules is that you can break them whenever you wish.  I don't think lobbyist in this country would permit a high speed rail system because this would be bad for car manufacturers and big oil.  Most European lobbying is tightly controlled, but in the U. S. regulations are somewhat lax and not vigorously enforced.  American oil companies, envious of what Europeans have been paying for years have been trying for decades to raise prices.  So they employ every subterfuge to raise prices: political turmoil in Iran is just a pretext, so was the Exxon Valdez oil spill and the purposeful lack of refineries in the U. S.  If all of these "problems" were real, big oil wouldn't be making the huge profits they do and oil executives wouldn't be making salaries of $25 million dollars a year.  They're not likely to give that up gracefully.  In modern American history it's no longer divide and conquer; its confuse and conquer.

Jamila 7696 pts moderator

 FriendsofJay "...President Obama should absolutely get the blame for high prices"

 

Why? Especially since oil prices have generally been rising since the 1970's, with some periods where the price declined despite the fact that the long term trend in oil prices has been upwards for decades. 

Shulamit 1986 pts

Thank you for this post because having this discussion with ignorant Americans kill me. Also, 1) Europeans have been paying these prices for the last 30 years and they were smart enough to build public transportation so that their people did not have to be overly dependent on oil 2) we will never be able to not be dependent on foreign oil because a) the oil we drill in this country is too crude and it takes a much longer (3x longer) process to refine for use and consumption b) EVERYTHING we do requires the use of oil, from running our electricity in our homes, to building buildings, to making clothes and accessories and beauty products, and growing crops and making food. IN fact many products that we buy today require oil be placed IN them for them to function. It would take a few centuries to ween the WORLD off oil..

 

My suggestion to the U.S. which is something I have been suggesting since my first tour in Europe in 1995--I saw the writing on the wall at 19 when I knew nothing-- is to strengthen public transportation. ALL major cities in America should have a rail system like D.C. Chicago and NYC. I live in Houston, the fourth largest city in the U.S. and home of oil execs everywhere and our public trans is atrocious and embarrassing to say the least. We need to down size our cars. Stop driving SUV if you are a family of one or two. Sh*t stop driving SUVs full stop. They are dangerous and unnecessary polluters and gas guzzlers to say the least.

 

We also need to build a cross-country high-speed rail infrastructure which the Obama campaign contribute a road map for using old rail lines but the initiative was shot down by Congress in 2010 because of course 70% of Congress are in the pockets of the oil execs. We need to stop this fear of being like Europe--because lets face it WE ARE EUROPE-- and do what is best for ALL of our people in this nation. Speak up lets talk and discuss. I plan to start doing a vlog on politics and things around the world this year because of this nonsense.

 

Jamila 7696 pts moderator

 Shulamit I can't recall the guy's name, but Obama hired some energy adviser who once suggested that allowing oil prices to rise would encourage Americans to switch over to cleaner fuels and invest more in alternative energies--when Americans got angry instead of getting more creative, the adviser was forced to admit (before Congress, I think) that  his policy suggestion had not worked out as planned. 

 

Can someone think of the name of this energy adviser guy?

 

Obama hasn't done EVERYTHING he could do, but he's done a lot. And even if he did do everything in his power--allow the Keystone pipeline, open up as much federal land to drilling as he can---the long-term trend of rising oil prices will continue because oil is non-renewable. Oil has to run out at some point and the closer we get the point where all of the oil is gone, the more expensive it will be to harvest and process the oil until we have used every last drop.

SheThrives11 315 pts

As a woman very passionate about ending America's oil addiction, this is by far my favorite article since I started reading this blog. THANK YOU!

dasdbobb 1413 pts

Jamila Finally, someone has the intelligence to tell people the Oil speculators are the ones driving up the proce at the pump. I've said it for years and everybody poo-poo's it like I don't know what I'm takling about. Thank You! If people would realize the Oil speculators bids and purchases of oil FUTURES has an immeadate effect on the proce we pay. This is the main reason you see daily price increases. Speculators bid higher, gas goes up sometimes as soon as 8 hours. BUT, when bids and futures cost go down, the changes trickle into the price in a days, weeks or longer. Another thing I don't agree with is the sale of oil overseas. We have increased production, and the oil companies could make the same amout of money domesticly, so why ship it out? Keep it here, that way We control the price of our own gas, like Argentina does. They pay less than a dollar a gallon from what I understand. These oil guys are the 1% of the 1%. The amount of money they make is in salaries ludicrus. I can barely fill up my 20 year old mini-van, I drive less than 65 miles a week, and still srtruggle to put gas in it. Even If I had to buy a new or newer car, I can't afford it. Car prices are out of reach for mr even the one's that are less than 10,000.00. OH for the good old days when a new car was 3000.00 and gas was 35 cents a gallon. Nuff said. Comments welcome.

dasdbobb 1413 pts

Please pardon the typos, thos laptop keyboard is going away.

ddjs69 5 pts

Proven oil reserves are at least 20% in the U.S., and much of it is on OUR federal lands. Oil exploration has increased ONLY on state and private land. This administration has regulated refineries out of business in the NE, and further regulations have increased the cost of cars out of reach for many of OUR consumers.

Shulamit 1986 pts

ddjs69

 I do not think the answer is DRILL BABY DRILLL, that is a short term answer to a long term problem. WE NEED to come up with alternative ways to use less crude oil and use alternative oil technologies which by the way was being shot down by Congress since the First Bush administration. IN fact the situation we are in is because of the Bushes and their friendship with Saudi, corrupt oil execs and Congressmen. However  the American people are just as much to blame for not keeping themselves informed. We need to STOP blaming the President for everything and start to take charge for our destiny in this country. because if we do not utilize our right to govern ourselves and not be governed by corporations--our going to sleep at the wheel since the 80s is the major issue- is what has TRULY cause the host of problems and wars that we are embroiled in.

 

Lets get'er done and stop pointing fingers.

 

Grace80 204 pts

pff. I pay 9 dollars a gallon over here.

Jamila 7696 pts moderator

 Grace80 Most places in Europe are in the $8 to $10 (in American dollars range). Americans have come to think cheap oil is some kind of right. 

Lili2009 1850 pts

 Jamila And no one's asked to cut their energy use or contribute in any way to reducing our dependence on oil. How on earth did they get people in the 30s and 40s to agree to ration materials and contribute to the war effort?  We're just going to have to get used to rising energy costs every year, every generation because there's not enough work being done to cut the addiction.

Toni_M 20097 pts

 Grace80 But the question is how often do you drive and over how long a distance? Also, is public transit readily available? Are most people able to walk most places such as to the market and to work?

 

The flippant attitude of people outside of the US annoys me, admittedly because they assume that their paying more overall for gas than American citizens. Many Americans are having to choose between filling up the gas tank to get to work, school, and who knows where else over how many groceries they can afford to buy.

 

Moreover, rising gas prices are affecting the transportation of food and goods to supermarkets, driving up the cost of food. 

 

What may not seem like a big deal to you is intricately connected to all manners of life and lifestyle here. It's not as simple as you'd think it would be all things considered.

Grace80 204 pts

 Toni_M I don't drive much, only to my mother in law and when I'm buying food. But I live in the third largest city in the country. Sure I ride my bike and take a train to get to work. But that is city life.

 

But if you get out of the city everyone drives. There's no bus stops near my in laws. My husband drives like 10 km to work everyday.

 

And food is not cheap here. Not at all. One thing Americans complain about is how expensive everything is. And it will get more expensive since we don't drive our food in wagons with horses if you thought hat.

Toni_M 20097 pts

 Grace80 I'm not interested in a pissing contest. My point remains: You don't live here, you don't know what prices are affecting people and how. I imagine prices didn't rise over night, and I don't necessarily think things are yippy-skippy in various European countries (especially with the Euro being a bit wobbly in the last few years), but I don't go into those threads commenting "Pfft, this is why I'm glad we only have to worry one currency and economy."

 

It doesn't affect you, you don't live here, and the backhanded comment is a predictable generalization without actually being here and being affected or bothering to understand or care what's happening. 

 

And if I recall, certain people living in Europe tend to get up in arms over generalizations about life abroad from American perspectives of people not living there, or not living there while ________. 

Grace80 204 pts

 Toni_M And you don't live here. Let's end it at that.

 

Just saying, that the rest of the world pays a lot more. Not only the rich world.

 

and my 'pff' comment was light hearted.

Toni_M 20097 pts

 Grace80 I should also mention that outside of major cities and highly populated areas, public transportation is less convenient and reliable, and in some places, you can be miles from the shopping and work and have to drive regularly.

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Grace80 204 pts

 Pearl bums? As in homeless people?

dasdbobb 1413 pts

@Grace80 @Pearl As in hobos, beggar, derelict, drifter, migrant worker, street person, tramp, transient, vagabond, vagrant, wanderer, and a few more I can't mention here.

Grace80 204 pts

 Pearl Why would we have more bums? lol

 

Most people are on their own at 18-19 either working or studying. Sure we got bums here, what country don't. Thought there's more of them in Italy for example with all the men who stay home untill they are 35.