Random Commuter Observations - Northeast Division

Speaking of bumpah stickahs, I saw one recently in the parking lot where I work. It said "When Bush Took Office, Gas Was $1.49 Per Gallon".

Let's ponder this one, shall we?

The premise here is the Bush is responsible for the price of gas today (and by extension, Bubba was responsible for the lower price some six and half years ago). Whether it's meant to imply that the war in Iraq ("Bush's war") or that there is some sort of behind the scenes machinations at work in the administration to benefit the President's "oil buddies", I'm not completely sure. But either assumption simply understates the car owner's complete lack of understanding of basic economics.

Oil is a commodity, plain and simple. It is turned into various products - gasoline, diesel fuel, jet fuel, home-heating oil, etc. - by refineries and in turn sold as those products. Once it's refined, it can't be unrefined. How much gasoline is produced depends on the anticipated demand. If too much is refined, you have a surplus. If too little is refined, you have a shortage. The first lowers the price, the second raises the price.

Obviously the chief driver of the cost of gasoline is the price of the crude oil which is traded on the open market. It's usually purchased in large quantities and the price is driven by simple supply and demand.

Demand has increased worldwide for oil over the last six years. The supply is limited and is currently being exceeded by the demand, driving the price per barrel higher.

"Bush's War" is not responsible for the lower supply. Iraq today pumps out far more barrels of oil that it did under Saddam's regime because of the U.N. sanctions.

Because the price is set by the supply and demand principle, the only possible way to manipulate the price upward is to cut back on supply. Both the President and his "oil buddies" have no effect on the supply. In fact, they'd love to increase the supply by drilling places like ANWR. Unfortunately, any effort to drill there is thwarted in the Congress.

Sporting a bumper sticker that implies that the President of the United States is responsible for the average price of a gallon of gas doubling over six plus years is specious and demonstrates a profound level of ignorance.

But, hey, it looks good on a bumper sticker, right?