Tuesday, December 16, 2014

Four Theories on Oil Prices


I've come across each of these theories in more than one place:


  • Saudi Arabia is keeping oil production high (and therefore oil prices low) in order to make US and Canadian exploitation of shale and tar sands oil unprofitable and keep it from becoming competitive.
  • Saudi Arabia is keeping oil production high (and therefore oil prices low) in order to damage Iran's economy.
  • Saudi Arabia  is keeping oil production high (and therefore oil prices low) at the behest of the Obama administration in order to damage Russia's economy and make Vladimir Putin bow to US/EU/NATO demands on Ukraine, etc.
All of those seem plausible to me, but here's a fourth possibility I haven't seen thrown out there:

  • Saudi Arabia is keeping oil production high (and therefore oil prices low) at the behest of the Obama administration for a limited time ... so that come next spring the Democrats can point out how cheap gas was getting until the Republicans took over and then started rising again.
Back in 2012, one of Newt Gingrich's presidential campaign tag lines was "remember $2 gas?" My understanding is that gasoline prices have fallen nearly that far in some parts of the country. Watch for Democrats to steal and use that line in 2016.

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