Here around Chicago something seemingly extraordinary is happening. Gas prices have been coming down steadily and even dramatically. I paid $2.65 today, a price I cannot even remember seeing for a long time. Maybe 2-3 weeks ago it was still over $3 per gallon.
I have to wonder about this. Yes, it is post-Labor Day, but demand has not fallen that much. Worldwide demand certainly is only increasing. The violence in the Middle East, at least in Iraq, has gotten worse, and tensions with Iran have increased, not improved. Al Qaeda just today warned of attacks in the Mid-East and against Israel. The price of a barrel of crude is still in the high $60s. These are all the reasons big oil uses time and time again to justify the rise of oil prices over the past two years. So why the significant drops in price? Is Big Oil simply so satisified with their record and mind-numbing profits that they are being nice to us?
Oh, wait, there may be another reason. Who is Big Oil's best friend, outside of the administration? A Republican in the House of Representatives. And I almost forgot, the Labor Day weekend is the unofficial start of the election season's final push, where voters begin to actually pay attention to all the rhetoric and character assassination that is modern American politics. With the GOP in legitimate trouble, with a real possibility of losing the House, I wonder if Big Oil is making the assist...I predict that oil prices will drop to about the $2.50 range on average, several weeks before the election, and remain there. Voters will notice the positive effect on their pocketbooks. The GOP desperately needs a pocketbook issue boost to offset the Iraq mess, and gain some distance from the president's dismal approval rating. So, let's just keep track of oil prices. Let's see if I am wrong. Let's see if there is a stabilizing and extended time interval for lower prices. And then let's see what happens a week or two after the election. Will prices begin a steady ascent back up to the $3 level before or after the election? Time will tell, but these will, in my mind, be interesting and important questions to note and keep track of.