Keith Olbermann added fuel to the conspiracy fire recently with comments on ABC’s This Week program. The freshly-fired Current TV anchor suggested speculators were driving up oil prices just to harm President Obama. Is this all part of that famous “vast right-wing conspiracy” Hillary Clinton was telling us about so long ago?
In order to analyze the gas price issue one has to put everything into perspective. It’s true that the average gas price on Obama’s Inauguration Day was $1.80 a gallon. It’s also true that it’s double that right now. What’s not true is that it’s all Obama’s fault. And what’s equally untrue is that it’s none of Obama’s fault.
When Barack Obama took the oath of office the economy was in a free fall. Gas prices, which had been above $4-per-gallon, were bottoming out. A lot of this had to do with the fact that speculators, who had speculated prices artificially high, had speculated prices artificially low.
The price of oil is basically determined by supply and demand and speculation. Some would argue that the value of the dollar is the third determinant but there is argument over whether the dollar’s value affects the price of oil or the other way around.
Currently supply and demand, at least in the United States, is pretty stable. What’s driving oil prices up is speculation. Now, you may argue that it’s the unrest in the Middle East. That’s true but it’s not the unrest itself that affects oil prices. It’s how speculators react to the unrest that determines whether prices go up or down.
So we can argue all day whether or not speculation should be allowed. The fact is that’s how the system works right now and we must work within its parameters. The answer to the question of what to do about the high price of gas is pretty simple. Give the speculators a reason to speculate down rather than up.
That’s where assessing blame comes in. Certainly the Middle East unrest has had much to do with the so-called Arab Spring. And certainly the Obama administration has been at the forefront of giving moral support to that movement. We’re now beginning to see exactly what many of us warned about when this all started. What we’re getting is worse than what we had.
The Muslim Brotherhood and some of its even more radical kinfolk are dividing up the power in the newly aligned Middle East. That has a lot of people in the oil business concerned. Ironically, the only place in the Middle East that truly needed a regime change, Iran, was left alone. When the uprisings in Egypt and Libya began the Obama administration called for leadership change in those countries. When the same uprisings began in Iran and were violently put down Obama said nothing. Now Iran threatens to destabilize the entire region. His response to the whole mess could not have been worse.
On the domestic front, the deciding factor when it comes to speculators is supply. Obama brags that he’s opened up a record number of oil leases during his term. Much of that increase is because he closed so many leases after the Gulf oil spill. But leases are no good without permits to drill on those leased areas. Under Clinton permits rose 58 percent. Under George W permits rose 116 percent. Under Obama oil permits have dropped 36 percent.
Olbermann and others can point to a speculators’ conspiracy if they like, but the simple fact is Obama has contributed greatly to the problem. The question is will this problem derail his presidency?