Gas prices are always a hot button political issues, in the most cynical of ways.
When gas prices go up it’s always (the politicians tell us) because of some evil price-fixing “windfall profits” conspiracy in the oil industry, and it’s never because of the realities of supply and demand as exacerbated by a myriad of government taxes and regulations we could talk about.
But if there’s one thing the current international oil glut has proven it’s that gas prices are very much a product of supply and demand.
A revolution in American oil production, combined with OPEC keeping its tap open to protect market share and Iranian oil returning to the global marketplace, has driven oil prices to rock-bottom levels. Fuel prices have fallen, which is ironic given all the times President Barack Obama himself told us in previous years “we can’t just drill our way to lower gas prices” and that anyone saying otherwise “doesn’t know what they’re talking about”?
That was before the President pretty much took credit for lower fuel prices in his most recent State of the Union address.
Via GasBuddy.com, here’s the the three-year trend line on the average fuel price in America:
What’s interesting is that while, in years past, falling fuel prices have always been touted in the media as a positive in our economy. After all, lower fuel prices means a lower cost of living generally for most Americans. But the current drop in oil prices is largely perceived as being negative.
I think that’s likely because, ironically enough, much of the economic growth which has taken place under President Obama has happened in the energy industry. The shale oil and gas revolution has created a lot of jobs, and a lot of prosperity. For years it was the one truly positive area of growth in our economy.
But now it’s cooled, exposing some of the weaker areas of our economy.