• Jun 7, 2012
It has always been the habit of the party that doesn't occupy the White House to blame various ills on the party that does. Especially in the past few years when it has come to gas prices, the party-in-waiting has blamed the POTUS for "pain at the pump." We're not taking sides here – Republicans are doing it to Obama now, just like Democrats did it to Bush. Unfortunately for their arguments, the President has about as much control over the price of oil as he does over the price of bread; if you saw what it took to get either to the retail outlet, the enormity of intricacies would make it plain.

Case in point: In 2008, the U.S. began exporting oil products like gas and diesel for the first time in decades and, according to a report in Fortune, even though the U.S. is producing more oil than any time in the past eight years, the price of gas is still high. Part of the issue is the bottleneck in transportation: Two pipelines carry the black gold to the nation's major clearinghouse for oil in Cushing, Oklahoma, where the president can be seen in the image above, and there aren't enough pipelines to get it from there to refiners. One analyst called Cushing "the 'Roach Motel' for crude" because it could get in but not really get out.

On top of this, domestic gas demand has dropped. That has added to the glut of oil awaiting shipment, which drove down the price of our own benchmark oil, West Texas Intermediate (WTI), by double digits compared to its European counterpart, Brent crude. Obviously, oil-market traders – whose contracts set the price for oil – couldn't let that continue, so they essentially walked away from WTI, a move that had the effect of setting the benchmark price at the higher Brent crude price. Put simply, they asked "Why sell a cheap commodity when I can sell the same commodity for more money?" And as we know, more expensive oil means more expensive gasoline.

That's the gist, but naturally this is a huge simplification. For instance, there are more than 100 kinds of oil traded on the markets and we've only mentioned two, and middlemen between drillers and the gas station can number in the dozens. But the point is that when you want to know what's up with gas prices, don't look at toward the White House – no matter who is in office – look at traders who will work to get the best prices they can, at refiners who can idle facilities to support prices and at the minutiae of production. The U.S. doesn't even own the oil drilled here – companies purchase drilling rights from the government and the oil they find belongs to them; they can sell it to anyone anywhere. Once they get it out of Cushing, that is. And if you think the much disputed Keystone Pipeline might help, some analysts believe it will make the price of oil rise.


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    • 1 Second Ago
  • 117 Comments
      Tom Biddlecombe
      • 2 Years Ago
      The simple answer is... Because oil is a world commodity.
      Jaybird248
      • 2 Years Ago
      I cannot understand why oil pricing is left in the hands of Wall Street. They add no value to the equation. All they add is price as contracts go from one greater fool to the next. We should ban trading in vital commodities such as oil and food except between producers and end users. Let Wall Street play its games with gold, artwork, diamonds, whatever, but we cannot let them control the substances we need to live.
      razrrick13
      • 2 Years Ago
      Because they can. With cars with better mileage on the road, it mildly compensates (kind of, a bit) for the price of gas. Back when cars avg'd way less than ten, a gallon of gas was a couple of dimes. Now look where we are at with new cars, even some cars and SUVs with huge powerful engines averaging 15 to 20 mpg. Makes sense.
      • 2 Years Ago
      [blocked]
        SatinSheetMetal
        • 2 Years Ago
        You heard it here first folks, oil prices will drop in a mere 18,901 years when Romney takes office. Not a moment too soon!
      anonymous guy
      • 2 Years Ago
      ... because the US can get even more money elsewhere. Duh!
      Mark_H
      • 2 Years Ago
      Keystone XL is just a cloaca for bitumin; take it in in Alberta and crap it out on the gulf coast for export. Oil is actually probably worth at least a good $80 per barrel anymore. Aside from the production costs, it's a very valuable commodity that is in high demand around the world. We just happen to be addicted to it, as President Bush said, and in no way have the geology to support 100% of our daily use. My guess is most car buyers know this since we were recently told that fuel economy is the number one concern of shoppers.
        BranMM
        • 2 Years Ago
        @Mark_H
        Bush was wrong. It's not "American's addiction to oil" that is the problem, it's America's politician's addiction to oil company money that is the problem.
        Judoka
        • 2 Years Ago
        @Mark_H
        And the pipeline will create millions of dollars of new wealth for Americans. Which helps everyone. Its better to go through us, than to the Pacific then off to China.
      Judoka
      • 2 Years Ago
      Its simple. The fact that demand is low and supply is fine at the moment and prices still aren't dropping points to the other major cause of price. The value of the dollar. Artificially low interest rates and printing of trillions of new dollars causes inflation even if government metrics are designed to hide it. Just look at gas and food. If items prices haven't gone up, most likely the quality has gone down, or they have been outsourced. The price of gas, has nothing to do with gas. Monetary policy at its finest.
        Tommy
        • 2 Years Ago
        @Judoka
        I'm glad there are more people on here that have learned about monetary policy, I was beginning to think autoblog was full of paper money lovers
      Jason Krumvieda
      • 2 Years Ago
      "it wasn't my fault, it was the guy that gave me this economy" It has been 3 years dude! grow a pair and own up already.
        Sir Duke
        • 2 Years Ago
        @Jason Krumvieda
        Try fixing eight years of damage in three while fighting obstruction from the very people that RUINED the damned economy.
          Hampton
          • 2 Years Ago
          @Sir Duke
          The housing crisis was conceived by Clinton and perpetuated by the Dems.It was a runaway train.Stop whining/blaming
        OptimusPrimeRib
        • 2 Years Ago
        @Jason Krumvieda
        And it took 8 years for the prior POTUS to destroy our it. We had a surplus of money for crying out loud!
          FightinBluHen51
          • 2 Years Ago
          @OptimusPrimeRib
          Please realize that any "surplus" by "any" politician is mere numbers manipulation. If you accounted for all the promises that have been made, yet not funded, there would never be any surplus. If the Federal government (or a lot of state governments) had to act under private industry accounting rules (Generally Accepted Accounting Principals) and they were made to put all the liabilities (promises) on their financial statements, we'd be instantaneously insolvent (not much like we already aren't). The point is...Left, Right, Middle, those in DC have been cooking the books and playing with our future for a very, very long time.
        • 2 Years Ago
        @Jason Krumvieda
        [blocked]
      Car Guy
      • 2 Years Ago
      Obama said he "wouldn't mind" $5/gal gas. All so his campaign supporters can keep pushing their "green" products and better make profit. It's cronyism at its worst.
        axiomatik
        • 2 Years Ago
        @Car Guy
        Every president since the Oil Embargo in the 70s has been trying to reduce our dependence on Foreign Oil It is a National Security issue. Our entire economy is completely reliant on a non-stop flow of affordable oil. If something disrupts that flow, or the price spikes, our entire economy is held hostage. We need to diversify our energy sources to immunize ourselves from the volatility of the global oil market.
          karlInSanDiego
          • 2 Years Ago
          @axiomatik
          FALSE. Reagan, Bush, Clinton, Bush2 did NOTHING to reduce our dependence on foreign oil. FALSE FALSE FALSE. Why say some something that has no basis in truth? I think you mistook their State of the Union BS about we should do better as an indication that they've been trying. They haven't been trying. Look at loophole for SUVs as truck to snake past all that CAFE tried to do. There was even a tax credit that applied to trucks weighing 6k lbs. loaded under Bush2, so businesses "invested" in Excursions and Hummers. DUH! Finally in the waning hours of Bush2, Democratic congress passed EI&S Act which was the first adjustment to CAFE since Carter. Presidents have no other effective tool to diminish our dependence on oil (foreign or domestic) as the strategic reserve is only useful in calling OPEC's price fixing short term and is largely symbolic. Increased domestic drilling would have ZERO effect on fuel prices or availability for many years. The Obama administration DID work to improve CAFE, and for that the administration deserves credit as the first to do so since Carter. As always, it's too little too late, and the car manufacturers decried an impossible mission, because Capitalism tells them to do so when faced with a challenge by govt. to improve. I agree that we should continue to get off ALL oil, for dozens of reason.
        mapoftazifosho
        • 2 Years Ago
        @Car Guy
        Stop calling it green. There is nothing green about anything consumerism. Let's call it sustainable because like it or not, we don't have the oil we need. We're exporting because we have the refinery capacity to do so. Crude is shipped in from abroad, refined in the US and shipped out to markets where the price is higher. Welcome to the global economy kids...
          mapoftazifosho
          • 2 Years Ago
          @mapoftazifosho
          correction, more sustainable or "less bad" than our current model. Having one type of energy source for transportation is idiotic. Plug-in hybrids could help with this problem... Would any of you invest your retirement savings into ONE mutual fund? Having a transportation energy policy based on one fuel source is no different...
        Live Axle
        • 2 Years Ago
        @Car Guy
        Exactly... what was that solar company that burned through hundreds of millions of our dollars??? And then went bankrupt, destroying all those jobs?? What a joke that man is! Pure Charade!
        waetherman
        • 2 Years Ago
        @Car Guy
        Often misquoted, Obama did say that he would have preferred for prices to rise gradually to result in more responsible consumption levels; "I think that I would have preferred a gradual adjustment. The fact that this is such a shock to American pocketbooks is not a good thing. But if we take some steps right now to help people make the adjustment, first of all by putting more money into their pockets, but also by encouraging the market to adapt to these new circumstances more quickly, particularly US automakers, then I think ultimately, we can come out of this stronger and have a more efficient energy policy than we do right now." http://www.factcheck.org/2012/03/obama-wanted-higher-gasoline-prices/
      natron3030
      • 2 Years Ago
      DRILL BABY DRILL!!!!!!! LETS ELECT OUR NEXT PRESIDENT BASED ON GAS PRICES!!! WHO'S WITH ME?
        HollywoodF1
        • 2 Years Ago
        @natron3030
        I'm pretty sure he's being facetious. Right?
        Kumar
        • 2 Years Ago
        @natron3030
        Sorry, but I'm going to base my vote on 30 second mudslinging campaign commercials!
        donnieorama
        • 2 Years Ago
        @natron3030
        Judging from your ratings--negative two people so far. Good work.
      Andre Neves
      • 2 Years Ago
      When will people wake up and realize that the rise in food, oil, & medical prices has nothing to do with anything else other than the weakening dollar due to hyperinflation/increase in the money supply? Oh that's right. Because this country still considers the mainstream media & their government as the all-mighty source of truth.
        Andre Neves
        • 2 Years Ago
        @Andre Neves
        “A nation of sheep will beget a government of wolves.” ― Edward R. Murrow
      CarsInDepth.com
      • 2 Years Ago
      "We're not taking sides here... Unfortunately for their arguments, the President has about as much control over the price of oil as he does over the price of bread... But the point is that when you want to know what's up with gas prices, don't look at toward the White House ... And if you think the much disputed Keystone Pipeline might help, some analysts believe it will make the price of oil rise." Right, no side taking or water carrying going on at all. It's just a coincidence that the gist of the post is "don't blame Obama!".
        John
        • 2 Years Ago
        @CarsInDepth.com
        "Republicans are doing it to Obama now, just like Democrats did it to Bush" Conveniently left that out.
        HollywoodF1
        • 2 Years Ago
        @CarsInDepth.com
        Out of context much? He repeatedly said that the same arguements were made by Dems during the last administration, and that these statements hold regardless of who's in the White House.
        sstowes
        • 2 Years Ago
        @CarsInDepth.com
        I get what you're saying, but on the other hand, why should anyone blame Obama? Or whoever is in the White House? It's not exactly untrue that the blaming of the POTUS for high gas prices most likely originated on the right side of the field. Again, I see what you're saying, but the article itself is fair, for the most part in its argument. They do miss quite a few things in the oversimplification, though that is also somewhat noted.
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