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Congressional Republicans claim magical powers over oil prices

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Once again, House Republicans are on Capitol Hill during the August recess, and once again, they are holding something of a sit-in, giving spirited speeches about coastal drilling for tourists and congressional staffers who happen to pass by the charade.

Today, however, there was a bit of a twist in the Republican rhetoric. Far-right lawmakers actually believe they’re affecting the market by talking to each other.

House Republicans on Tuesday said their protest of Speaker Nancy Pelosi’s (D-Calif.) decision not to allow a vote on expanded offshore oil drilling has helped lower gas prices.

Heading into a third day of speeches in the near-empty chamber, Republicans acknowledged that the average price of gas and oil has declined in recent weeks. But they claimed credit for part of that reduction.

“I think the market is responding to the fact that we are here talking,” said Rep. John Shadegg (R-Ariz.) at a joint press conference with other GOP lawmakers. “I think the market realizes this kind of pressure from Congress may, in fact, lead to a change in policy.”

The Republican members did not answer questions about whether they would take the blame if gas prices go up again.

Yes, House Republicans are hosting a very sad little photo-op on the Hill, and some of them are willing to argue, out loud, in public, that simply by talking to each other about drilling, they’re able to bring the price of fuel down.

If you told me that Speaker Pelosi’s office was paying these clowns money to make House Republicans look ridiculous, I’d be tempted to believe you.

Keep in mind, they’re not the only unhinged Republicans claiming magical rhetorical powers. There was also this item two weeks ago.

John McCain — whose campaign launched an ad this week blaming Barack Obama for high prices at the pump — said Wednesday President Bush’s new push for offshore oil drilling deserves the credit for the recent drop in crude oil prices.

“In case you missed it, soon as the President announced that we were going to end the moratorium on offshore drilling the price of a barrel of oil went down $10,” the presumptive Republican nominee said at a Wilkes-Barre, Pennsylvania town hall.

So, to hear McCain tell it, Bush was able to bring down the price of a barrel of oil simply by making a symbolic gesture.

I knew McCain and his GOP cohorts were slipping from reality, but this is just sad.

Talking to tourists and empty White House gestures do not, in our reality, lower the price of oil. It’s no wonder Republicans are so bad at governing — they’ve obviously flunked Economics 101.

Oil prices kept falling Tuesday, sinking as low as $118 a barrel on growing concerns that a U.S. economic slowdown and high energy costs are curbing consumer demand for gasoline and other petroleum products. […]

A day after plunging as much as $5 a barrel in a dramatic sell-off, crude continued its downward trend Tuesday as traders sold oil contracts on the belief that prices are still too high in relation to demand and have further room to fall. […]

“The market psychology has finally shifted,” said Stephen Schork, an analyst and trader in Villanova, Pa., adding that “$4-a-gallon gasoline has clearly killed demand.”

On Monday, the Commerce Department said consumer spending after adjusting for inflation fell 0.2 percent in June — the biggest drop since February — as shoppers dealt with higher prices for gasoline, food and other items. Oil prices also fell after Tropical Storm Edouard did not severely disrupt oil and natural gas output in the Gulf of Mexico.

The dollar’s gains against the euro also contributed to oil’s decline Tuesday. The euro fell to $1.5467 from the $1.5587 it bought late in New York trading Monday, making oil and other commodities less attractive to investors seeking a hedge against inflation and dollar weakness.

It’s called supply and demand. Maybe Republicans have heard of it.

Digg it!

Comments

  • Dee Loralei

    says:

    Republican magical thinking? Let me help. ” Dear Flying Spaghetti Monster, or deity of your choice, please help the Republicans lose even more seats in November, so they can pull ever more sillier stunts like this as a very small and ineffectual minority, and lower my pump prices also. Ramen.

  • BuzzMon

    says:

    “It’s called supply and demand. Maybe Republicans have heard of it.”

    Yes, they have intimate knowledge of supply & demand:

    The Oil companies SUPPLY them with campaign contributions & talking points.

    The Republicans DEMAND that the USA gives them everything they want (more leases, tax breaks etc.)

    Too bad the Republicans don’t serve the people in their districts as well as they serve Big Oil.

  • Steve

    says:

    The Good Ship GOP is sinking, so what do GOPers do? They drill a hole in the bottom of the boat, to let the water out. The faster they sink, the more holes they drill.

    For once, I agree with the GOPers. Drill baby, drill like you’ve never drilled before!

    And then in November, we can watch the bastards drown….

  • SteveT

    says:

    Yes, House Republicans are hosting a very sad little photo-op on the Hill, and some of them are willing to argue, out loud, in public, that simply by talking to each other about drilling, they’re able to bring the price of fuel down.

    So why did the Republicans wait so long? Why didn’t they do this when gas went up to $3.00 per gallon?

  • SpotWeld

    says:

    Someone check me on this.
    The summer vacation dirving season is tapering off. There’ll be another short spike in the fall when the have the students returning to college (or snowbirds moving to summer residences). And there may be another small bumpb upwards.

    Then things will creep down and level off for the winter, and then we’ll see the ramp up in the price of home heating fuels (which will be rather dependant on the seasonal temperatures.)

    My question. Where are gas/oil prices in comparison to this time last year?

  • JoeW

    says:

    I’ll be damned. Why don’t we just take the republicans and their most awesome powers at their word? If merely talking has this result, just think of what chanting, or singing might achieve! And if they held hands while doing it? I bet gas would quickly plunge under $2/gal. So c’mon repubs! Form a big circle, hold each other’s hands and belt it out for lower gas prices!
    It would work as well as any of their other schemes.

  • lou

    says:

    NANCY PFOTENHAUER, Adviser to McCain on the Newshour yesterday:

    “We need to increase domestic production, and we need to do it now. The American people are aware of this. We’ve already seen the futures market and the signaling that’s occurred that has helped lower prices because President Bush and Sen. McCain have actively called for it.”

    So, its Bush and McCain who have helped lower the price of gas.

    And tell me, who among you would enjoy seeing this Nancy Pfotenhauer regularly on the TV screens for the next 4 years? ….

  • The Answer is Orange

    says:

    Then it is up to the Repukelicans to help Americans by talking. Non-stop. For days and days and days, without breaks to eat, drink or sleep. In my area it only took a few hours of talking to nudge the price down 10 cents. If the Repukes really care about Americans they’ll sit down and not shut up until gas is back down to a dollar.

  • Racer X

    says:

    Steve, you’re obviously missing the point… The Republicans, by talking about oil prices, have caused the consumers to buy less oil, and thereby they actually lowered the price of oil!

    /snark

    I wonder if the Republicans will use their magical powers of suggestion to help them in the fall, too?

    BWAHAHAHA

  • Stevio

    says:

    This is all good news. I say let them stay in the chambers and squeal. But let’s not let them stop there. How about some screaming for a drop in food prices, natural gas prices, and the prices we have to pay for their stupidity in backing a neocon government hell bent on destroying our constitution.

    This bogus protest will end when some well wishing and kind tourists reminds one or two of them that all of this indoor crap is ruining their tans. Watch them run for the doors when that tidbit gets illuminated…

  • Mark D

    says:

    If they have such control, then how the hell come gas prices have risen nearly 40 cents in my neck of the woods since they started this stunt?

    Idiots.

  • hark

    says:

    World demand has suddenly fallen precipitously? I doubt that. Just as I doubt that market fundamentals drove the price up to begin with. The fact is, we don’t know what’s going on in the oil market. I’m betting on speculation as the driving force for these wild gyrations. This has all the characteristics of a bubble – nobody can predict which way the oil market is going. All the explanations are ex post facto. This is an unregulated market to a great extent, and it has its own dynamics, that have nothing to do with the underlying commodity. Why have commodities in general been surging?

    For some reason, we don’t like to admit that speculative bubbles can dominate the marketplace. I’m not sure why. Maybe because it implies capitalism, free markets aren’t the be-all and end-all we’re taught to believe? Or maybe they just embarrass us, because they make fools of us? Look how long we resisted the Enron bubble explanation. The dot.com bubble. The recent housing bubble.

    Hopefully, this bubble has burst. But nobody knows whether prices will go up, down or fiddle around where they are now, and that tells me nobody knows what’s going on in there. But there haven’t been any titanic shifts in supply or demand in all this time. That’s for sure.

  • Hannah

    says:

    As Jack McCafferty said yesterday, the Rs had the majority from 2000-2006 to legislation on energy and they did NOTHING. The only reason they’re pulling this stunt is because they’re up for re-election and are getting angry letters from constituents.

    These clowns are truly laughable.

  • The Answer is Orange

    says:

    World demand has suddenly fallen precipitously?

    I’d guess China’s demand has as they try to get the air in Bejing to approach something that won’t kill the Swedish swim team. Look for the spell to be broken once the Olympics end.

  • Wayne

    says:

    Children..
    It’s kind of like the Korean (?) legislators getting into their fights.
    Just children.

  • petorado

    says:

    Rather than the magic of Republican speech making driving down the oil markets, a much more plausible answer is the magic of hedging strategies on oil futures. From the WSJ …

    Hedging Tactics
    Coincide With Ebb
    In Price of Crude
    By BRIAN BASKIN
    July 24, 2008; Page C14

    The collapse this week of SemGroup LP, a little known private oil-marketing firm, may have played a role in crude oil’s 14% drop over the past 10 days.

    The Tulsa, Okla., company filed for Chapter 11 bankruptcy protection Tuesday, citing among other financial woes a loss of at least $2.4 billion in crude-oil futures. Changes in its hedging strategies coincided with big moves in oil recently.

    The company had taken out short positions, or bets that crude prices would fall, as a hedging strategy for oil it intended to move through a subsidiary’s pipelines and sell to refiners, according to an affidavit filed in Delaware bankruptcy court by Terrence Ronan, SemGroup’s senior vice president, finance.

    Then, when oil prices rose, SemGroup moved to “cover” its short positions by taking out equivalent long positions, or bets that oil prices would rise.

    Eventually, SemGroup was unable to put up collateral for its swelling bets and sold its futures account to Barclays Capital on July 16, according to the affidavit.

    SemGroup officials couldn’t be reached for comment. A spokesman for Barclays declined to comment.

    The firm had $14.7 billion in revenue as of 2006, the last year for which there are public records.

    Its publicly traded subsidiary, SemGroup Energy Partners LP, operates about 1,200 miles of oil pipelines and controls 15 million barrels of oil storage capacity, including seven million barrels at Cushing, Okla., a storage hub closely tracked by the oil market.

    One theory making the rounds in the market is that as SemGroup’s long positions snowballed, so did the oil rally. SemGroup’s rapid exit from the market removed a force for upward momentum when the market, under siege from negative U.S. economic indicators, needed it most.

    “In the three days surrounding that transfer” to Barclays, crude futures “plunged $15.89…thus, with SemGroup removed from the market, crude oil has been free to fall,” wrote Stephen Schork, editor of the Schork Report, a newsletter tracking the oil market.

    The linkage isn’t entirely clear. Some traders note that SemGroup’s activity dried up well before July 16, and there is no indication of what Barclays did with SemGroup’s positions once it took control.

    Oil prices have also continued to drop since last week, falling an additional 3.8% from the settlement price on July 17.

    SemGroup likely played a supporting role in oil’s fall, said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.

    “They certainly contributed to it, but other factors were already in play,” Mr. Barakat said.

    The initial plunge came on July 15, as Federal Reserve Chairman Ben Bernanke told Congress that the U.S. economic downturn would prove more persistent, and potentially more severe, than initially thought.

    Oil prices fell again the following day, immediately after the Energy Department reported a surprise build in U.S. crude stocks, underscoring that demand is weakening.

    SemGroup’s contribution would have been to remove a steady source of upward momentum, wrote Edward Meir, with MF Global.

    “SemGroup is not helping the bullish cause, as with the firm now bankrupt, whatever short-covering that was done…is now behind us,” Mr. Meir wrote.

    The next question for the market is whether SemGroup’s failure was an isolated incident, said Mr. Schork in an interview.

    “We know SemGroup was in trouble, the only question is when another shoe drops,” he said.

    Separately, Reuters reported that a group of SemGroup LP creditors on Wednesday raised the prospect that unauthorized energy trading may have caused the $3.2 billion loss that sank the firm.

  • tomj

    says:

    McCain’s economic advisor just now on MSNBC said that prices are dropping right now because we are talking about offshore drilling!

    Maybe Obama should ding McCain by pointing out that McCain’s plan is to talk down the price of oil by just talk.

  • zeitgeist

    says:

    maybe the prices dropped because Democrats are talking about crackdowns on speculators? about windfall profits taxes?

    and heck if the R’s think talking does such wonders, maybe they’d agree to go back to real live filibusters instead of this sad agreement to make any bill require 60 votes with no effort at all?

  • chrenson

    says:

    TOMJ #17: Dynamite idea!!!

    Meanwhile, is it at all possible that Big Oil is rewarding congressional Republicans and McCain for the ridiculous offshore drilling stunt by exerting what influence they have over the price of oil? I recognize supply-and-demand arguments [and make them myself often, like: “Have you not been reading about how consumption has dropped precipitously over the past months, which means less demand and more supply?”]. But, in light of McCain’s campaign coffer windfall from his offshore-drilling flip-flop, is it not conceivable that we’re seeing some market manipulation for the benefit of Republicans?

    I know, I know. Try proving it…

  • inthewoods

    says:

    There’s certainly a lot of factors at work, but someone should mention the dollar. Traders were selling the dollar and pushing it into commodities. Now that the US is on a path to potentially raise rates, and Europe and the UK are on a path to cut rates, this will cause the dollar to rise. The reason oil has kept rising while the dollar stopped falling is because the general public got in on the speculation (they were in it before as well). So, now that traders are taking off their positions by selling oil, we’re seeing it fall.

    This is, of course, a gross simplification – new long-only market participants have certainly been a factor in the rising price, as have hedging strategies like Semgroup. But I like to keep it simple:

    http://dl.getdropbox.com/u/17693/oil-dollar.png

    Here’s an interesting analysis of what might be in store for us:
    http://randomroger.blogspot.com/2008/08/blogger-comes-back.html

    Whatever the answer, a President making an announcement that Congress and individual States have yet to affirm has had no effect on prices. To a Wall Street trader, thinking 10 years out is like thinking of going to the moon. The only time they think about anything 10 years out is when they consider the compound interest on their own money.

    To the energy trader (meaning a trader that specializes in energy trading rather than a general trader), he or she would be able to instantly see that the impact of such drilling would be a long time out (there is no futures contract for 10 years out), and would have a minimum impact because the oil would be moved back onto the global marketplace.

  • William

    says:

    Self absorbed dicks proclaim they’re also saving the planet and ending birth defects by simply talking about it loudly (so the magic goes further).

  • True Dem

    says:

    House Republicans on Tuesday said their protest of Speaker Nancy Pelosi’s (D-Calif.) decision not to allow a vote on expanded offshore oil drilling has helped lower gas prices.
    ************************
    OKay. So,…I guess we ultimately have Nancy to thank for lower gas prices, not the Greedy, Oil-soaked, Phascists (GOP). Hey, thanks Speaker Pelosi!!
    And as the Speaker has said on TV many times, if you want to drill more, have at it. The poor oil companies only have roughly 100 million acres of unused, untapped leased land upon wh/ to drill, including 33 million acres of unused coastal area. Use what you have before demanding more, you greedy bastards.

  • Capt Kirk

    says:

    Someone called c-span this morning with a great analogy: What we have is as if Ronald McDonald were president and the Burger King were vice president. The price of a big mac shoots up to $7 and President McDonald says we need more cows.

    The really sad part is that if you look at the 24 hour news shows, they paint the Republican stunt as some marvelous phenomenon.

  • Lance

    says:

    hark wrote: “For some reason, we don’t like to admit that speculative bubbles can dominate the marketplace. I’m not sure why. Maybe because it implies capitalism, free markets aren’t the be-all and end-all we’re taught to believe?”

    Zeitgeist wrote “maybe the prices dropped because Democrats are talking about crackdowns on speculators? about windfall profits taxes?”

    I actually thought claiming that speculators drove the price up and the Democrats holding hearings and proposing punishing speculators is a much better rationale.

    But let’s not forget that Boy George II campaigned in 2000 with the claim that if oil prices rose he could jawbone the Saudis into increasing production and get the price down again. Seems he’s been too busy to do that for six years but now he (amazingly) is getting the price down again.

    What a joke.

    But on the other hand, BGII walks hand-in-hand with Saudi Kings and Princes. He ought to be able to jawbone them (or is it kiss their ass?).

  • Deb

    says:

    Hello!
    “Edouard did prompt offshore oil and gas companies to evacuate a few of the 717 manned platforms and 125 operating rigs in the Gulf.”{ from, My way News} So they are staging a sit in for OFF Shore drilling……Well auh….Desparate People do desparate things….why are they not staying their to get our troups home or the hungry fed…I guess they are desparate to get some legislation passed before the torch is passed…..

  • zeitgeist

    says:

    hey, i know – i bet McCain called all of the members of the secret world economic cabal that Paulites told us about into one room, shut the door and said “cut that shit out!” and just like that oil prices fell!

  • ArkyTex

    says:

    hark said:
    “World demand has suddenly fallen precipitously? I doubt that. Just as I doubt that market fundamentals drove the price up to begin with. The fact is, we don’t know what’s going on in the oil market.”

    I agree with this for the most part and I fear the oil marketeers can manipulate the price in the short term about any time they choose, like when they want to influence an election. I’m guessing that fear is what is keeping the Obama campaign from saying, “See, we’re right to talk policy that lowers demand because as the last few days have shown us, that is what will bring down prices, not puffing about drilling and gas tax holidays.” And on the other hand, I beleive that the realization by those in the oil markets, whoever they are who affect prices, that we are finally going to do something, even if not nearly enough, to move our demand in the right direction or at least slow the disastrous trajectory we’ve been following for all these years will bring prices back down in the short run and maybe even the long run.

  • 2Manchu

    says:

    “‘In case you missed it, soon as the President announced that we were going to end the moratorium on offshore drilling the price of a barrel of oil went down $10,’ the presumptive Republican nominee said at a Wilkes-Barre, Pennsylvania town hall.”

    So in other words, rhetoric can drive down gas prices.

    But encouraging Americans to take a few solid, well-proven steps to help save their hard-earned money at the pump, well that’s just plain silly.

  • Steve

    says:

    The GOP House caucus is playing at magic? Has anyone told the denizens of the Xenophobic Knuckle Dragging Theocracy of WingNuttia that their Congressmen are doing a bunch of ooh-gah-dee-boo-gah-dee on the taxpayers’ collective dime?

  • CJ

    says:

    It’s called supply and demand. Maybe Republicans have heard of it.

    Actually, Republicans (aka: supply-siders) do not acknowledge the law of demand ever (kind of like their position on evolution).

    They’re all about the supply curve (i.e Lower taxes for business, they claim, increases supply and we’re all better off because of it. What’s good for ExxonMobile is good for America. To hell with that law of demand mumbo jumbo.)

  • Paul

    says:

    to be a liberal you must have a , you morons of course it is supply and demand, btw when was the last time liberals used supply and demand in a real world situation, wasn’t it in Carter’s years the last liberal to run on “let change everything” and almost destroyed the USA. This supply and demand is about the future morons, not today or tomorrow, so if we the USA are going to compet again in the oil biz, which we haven’t for 30 years, thank you liberal morons the oil price will come down as it is now. The oil price is coming down because President Bush and the republicans are going to get the USA back into competing in the oil biz. And that my liberal morons friends is supply and demand. There is NO shortage of oil today nor will there be next year….it was all future tense shortages supported by the democratic liberals that gave us 4.00 a gal gas which you liberal democrats in Washington think is good for America. That is the reason NO bama and a lot of democrats are going to be looking for new jobs in nov.

  • W.B.N.

    says:

    Oil prices kept falling Tuesday, sinking as low as $118 a barrel on growing concerns that a U.S. economic slowdown and high energy costs are curbing consumer demand for gasoline and other petroleum products. […]

    Just like 2006 before the mid-term elections the price of crude will continue to fall before the November elections to make the “little people” feel good about driving. Then Feb 2009 the oil co’s . will jack the crude oil prices back to what we have been paying the last few months just like they did in 2007..