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Tuesday, September 26, 2006

USATODAY.com - Many Americans look for political manipulation as gasoline prices plunge

By Brad Foss, Associated Press
WASHINGTON — There is no mystery or manipulation behind the recent fall in gasoline prices, analysts say. Try telling that to many. motorists.

Almost half of Americans believe the plunge at the pump has more to do with politics and the November elections, than economics.

Retired farmer Jim Mohr of Lexington, Ill., rattled off a tankful of reasons why pump prices may be falling, including the end of the summer travel season and the fact that no major hurricanes have disrupted Gulf of Mexico output.

"But I think the big important reason is Republicans want to get elected," Mohr, 66, said while filling up for $2.17 a gallon. "They think getting the prices down is going to help get some more incumbents re-elected."

Continued ...click on "Print Article and/or Read More" below >>>
CONTINUED
According to a new Gallup poll, 42% of respondents agreed with the statement that the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections." Fifty-three percent of those surveyed did not believe the conspiracy theory; 5% said they had no opinion.

Not surprising, almost two-thirds of those who suspect President Bush intervened to bring down energy prices before Election Day are registered Democrats, according to Gallup.

White House spokesman Tony Snow addressed the issue Monday, telling reporters that "the one thing I have been amused by is the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being."

"It also raises the question, if we're dropping gas prices now, why on earth did we raise them to $3.50 before?" Snow said.

>>>Uh, Tony, maybe you should look at the record profits for the Pretzlenit's friends in the oil industry since oil went ot 70 bucks a bbl.--pseudolus <<

The excitement — and suspicion — among U.S. motorists follows a post-summer decline in gasoline prices that even veteran analysts and gas station owners concede has been steeper than usual.

The retail price of gasoline has plunged 50 cents, or 17%, the past month to an average $2.38 a gallon nationwide, according to Energy Department statistics. That is 42.5 cents lower than a year ago, when the energy industry was still reeling from the aftermath of hurricanes Katrina and Rita, which damaged petroleum platforms, pipelines and refineries across the Gulf Coast.

Industry officials say the competition among gas station owners to sell the cheapest gas on the block is fierce.

"They want to gain market share," says John Eichberger, director of motor fuels at the National Association of Convenience Stores.

Jay Ricker, president of Ricker Oil Co. in Anderson, Ind., which owns about 30 gas stations and supplies fuel to 30 more, says he's thrilled to see pump prices sinking as fast as they are.

With prices falling, more customers are buying mid-grade and premium gasoline, Ricker said, and they're spending more inside his convenience stores, where profit margins are higher.

"I'd much rather sell them a donut or a fountain drink," says Ricker, whose stations are selling regular unleaded for a few pennies above $2.

Fimat USA oil analyst Antoine Halff says there is no doubt "the downturn in prices is welcome news from an electoral standpoint for the ruling party." But he scoffed at the notion that the president has the power to muscle a global market.

The plunge in prices, Halff says, is the result of growing U.S. inventories of fuel, slowing economic growth and toned-down rhetoric between Iran and the United States, which has been critical of Tehran's uranium enrichment program.

The sell-off has been magnified, Halff says, by the recent retreat from the market of many speculative investors who got burned by the late-summer volatility in commodities prices. Just last week, a prominent hedge fund told investors it lost some $6 billion due to bad bets on natural gas prices.

That said, "the sky is not falling," says Halff, who believes oil prices will likely head higher again this winter and average more than $65 a barrel throughout 2007.

>>>Yeah, especially if we attack Iran, expect >$100/bbl in no time. --pseudolus <<<

At the start of summer, oil analysts were worried about rising demand, the threat of hurricanes and the nuclear standoff between the West and Iran, OPEC's second-largest producer. As a result, crude-oil futures soared to more than $78 a barrel in mid-July.

By summer's end, these fears had largely dissipated. On Monday, November crude futures settled at $61.45 a barrel.

"We have lots of gasoline supply," said Joanne Shore, an Energy Department analyst. Her agency shows U.S. inventories of gasoline at 207.6 million barrels, 6% more than last year and slightly above the five-year average for this time of year.

Asked if it was possible that oil companies would reduce prices to help Republicans, Shore responded: "What company in their right mind would step forward to kill their profit?"

>>>Big DUH! It's smart business if you can look forward to even higher prices driven by mid-east instabilty of this war-mad republican administration. Take a hit now (in the flush of record profits and bask in the shower of dollars from a later boom in oil prices. --pseudolus<<<

At a suburban Miami Mobil station, where regular was selling for $2.66 a gallon, no one was buying the conspiracy theory.

"The decrease of gas prices is simply due to a seasonal adjustment of price," said Javier Gudayal, a 48-year-old attorney. "And that the Bush administration does not have the power to manipulate."

But in Los Angeles, which has some of the highest gasoline prices in the country, motorists wouldn't rule out the possibility of politicians eager to sway the electorate.

Twenty-eight-year-old attorney Amnon Siegel sensed more than market forces at work.

"I'm sure there's some sort of string-pulling going on," Siegel said.c

Contributing: Associated Press Writers Jan Dennis in Peoria, Ill., Alex Veiga in Los Angeles, Will Lester in Greenwich, Conn., and Damian Grass in Miami
Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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source:
USATODAY.com - Many Americans look for political manipulation as gasoline prices plunge

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