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Tuesday, December 28, 2010

Presidential Speeches / Price of Gas

End of the year push.

Hey folks,

Happy Holidays to you all. I hope everyone had a GREAT Chanukah and Christmas Season, and here is wishing you all a VERY Happy and Healthy New Year. 2010 is almost gone, 2011 is yet to come. We are in the Lame Duck, if you will, of this past year. Most, only have a three day work week this week. Glad you took some time out to spend it here with me.

Since it is Tuesday, it's time to check in at the Energy Front. Did you notice gas is over $3.00 a gallon. I bet you did. I just got gas at $3.10. I got this a week or so ago.

"Hey Pete, I noticed how you alluded to the fact that President Bush merely commented on the fact that we would be lifting the Ban, and starting to Drill more off our coasts. He just said that we may start increasing our use of our own resources back when the price at the pump was $4.00, and the price of Oil plummeted. Then take that in contrast to Obama saying no we won't. No new drilling for at lease 7 years, and the price jumped to over $90 a barrel. Seems pretty simplistic to me. Supply is what it is, and demand is what it is, so no new supply, higher prices. Just the mere mention of using our own resources scared the regulators, and those in control of the production, who we know control, or don't, the majority of all the natural resources, thought we would flood the market with new product, lowed the prices to stave off public support to drill. Now, with the idiot, as you call him, in the White House saying 'no screw that, it doesn't fit with our green agenda,' and they knowing he is not willing to budge on it, the prices skyrocket to where they are now with no reason to increase their supply. No threat of competition means no need to worry how high the price goes. What do your friends in the energy industry think about this, and how do you think they would explain this?"

Well, good question, and a Logical one. Look at the evidence, and one has to draw similar conclusion without any other information added. So? What would my "friends in the Energy Industry think about this, and how do I think they would explain this?" I asked them. I do not have permission to use names, well, because I didn't ask, but my Friend asked one of the best Economists in the Industry this question posed to me and this is basically how the Economist responded. Just remember, even though I am not using the Names, of the Economist nor the Organization, they still must be a bit more PC than I. {Smile}

First, there are a lot of factors that can affect the price of oil on the global markets – weather, news, the value of the dollar against other currencies, war, etc. It’s also very difficult to pinpoint any one reason for a price fluctuation.
Which I do not believe anyone argues. Quite frankly, I could have answered this way myself. The price of a barrel of Oil fluctuates daily for all these factors. But the two instances that BG was asking about, are DRASTIC in nature. We're talking DOLLARS not a few cents here and there.
Second, XXXXXXX {The Economist} compiled some information showing what happened after President Bush announced in 2008 that he would open more US areas to oil production. The price, which was at the near record high of $145.18, fell over the next four days to $128.88. As {The Economist} pointed out, without going back to read all of the other news items that appeared during those days, it’s hard to know whether the president’s statement was the cause of the price decline.
Again, using these numbers from the Experts, we are talking about a $16.30 drop in FOUR DAYS. Just following the mere mention of a President, of who they KNOW he meant it, of using our own resources. Now do not get me wrong here. I'm not disagreeing with our friends in the Energy Field. We are talking to one of the best and well know Economist in the business that knows far more than I about the business. I deal in Logic and reason. They deal in hard numbers and all factors. It just seems that the numbers, Logic, and reason are coinciding here. But I have no hindrances in calling a spade a spade. I have no conflicts of interests in telling the truth. They have to walk a more Political Line being that they work with ANY Administration in Office at any given time. Now what about Obama? When he gave his no new drilling speech?

Third, President Obama announced on March 31, 2010 that he would open new areas to oil production. That day the price rose by $2.50 – which would seem to counter the idea that presidential announcements that appear to promise new supplies tend to push down the price of oil. However, it should be noted that the news media did not pick up on the fact that he also closed Pacific areas to production, so it’s possible that the markets were aware of the full impact of the President’s announcement and acted accordingly.
You see? Knowing the FACTS leads to you a better understanding. Continuing...

Fourth, when President Obama announced the new seven-year ban on offshore drilling in certain areas, the global price of oil climbed about $4.50. At the same time, however, the value of the dollar fell and other announcements occurred that also could have had an impact.

And finally, the Energy Information Administration recently issued its price forecast for 2011, saying that the price of oil is expected to average about $90 a barrel. One of the primary reasons is the increase in demand from China. That announcement also could have affected the markets.
Now of course you would have to understand that when the EIA issues a Forecast, it takes ALL things into consideration. One of which, I would assume, is the Fact that we have a President that everyone KNOWS was never serious about new Drilling, and would and IS doing everything he can to block it.Of course they wrap it up, with the PC disclaimer...
The bottom line: Markets respond to a variety of factors, but the key factor is supply and demand. And it’s important to remember that oil is traded on the global marketplace, making it even more difficult to determine the impact of any president’s remarks on the price.
So there you go BG, and all others that might have been interested in this trend. Of course it is Supply and Demand oriented. As we in this country are in as constant fight, and War if you will for our own Energy Independence, hence the "From the Energy Front" title of this weekly segment, the World moves on. As we continue to oppressively regulate the Energy Industry, Business, and Personal Private lives of our Citizens, the World continues to grow and advance. When you have the most Powerful Person, in complete control of the most Vast Resource of Natural Resources in the World, with the sole authority of Ya or Nay of usage, you HAVE to apply that into the formula.

Now that 2010 is just about over, and the new House is about to take effect, Maybe we can get back to a somewhat resemblance of reality and perhaps start down the road of Sanity, Logic, and Reason. We have to awake from this insane "Green Dream," which ensures that Oil Prices will continue to Rise, and start to wake up to the reality, that not only America, but the World, runs on Oil and Natural Gas. Perhaps we will start to ensure the World that we WILL start using our own resources, adding to the Supply end, that WILL effect the Demand. With this revelation, I have little to no doubt, that the Price at the Pump will decrease to a price that is affordable for all.
Peter

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