The Politics of Gas

As gas prices have become more tolerable, most motorists are still holding back on travel due to a poor economy. Some folks are still clinging to their beliefs of a conspiracy by middleast oil moguls and Texas oilmen. A recent poll of Americans showed that a staggering 42 percent of respondents believe that prior to the November 2008 election, George W. Bush and the ruling Republican administration in Washington lowered gas prices in an attempt to benefit the Republican ticket. While this may or may not be the case, the real time impact on the price of oil was caused by various stock markets around the world and how it ultimately affected the price of gasoline.

However, the most logical reason for the lowering of gas prices might actually have been Mother Nature. Many investors on Wall Street and around the world invested heavily in gas and oil futures, anticipating that another direct hit by a Katrina-like storm directly on gas and oil pipelines in the Gulf of Mexico would send prices through the roof. But hurricane forecasters around the world downgraded the threat of the recent hurricane season and caused the price of oil to plummet. This caused hundreds of investors who bought futures to lose a ton of money on their investments. This also caused consumers to smile at the gas pump.

But it wasn’t just the hurricanes that did it. The announcement coincided with the end of the summer season for drivers. As demand for oil shrank, so did the price of oil. It doesn’t take long for a drop in oil prices to be felt at the pump.

This huge shift in oil and gas prices over such a short amount of time left many investors in deep financial trouble. At least one mutual fund that invested heavily in oil and gas futures went belly up due to the dramatic drop in prices. At the same time, there were other funds that did quite well despite the huge drop in oil prices.

While it may seem logical to think that global politics do play a part in the world’s commodity markets, it is naïve to think that the sole reason for the massive drop in oil prices was due to who would be the next president. The number of variables that play on the world’s stocks, bonds and commodities are too incalculable to even think that prices were solely influenced by on one country’s election.