Do the Democrats lose 50,000 votes every time the price of gasoline drops a penny? We’ll have the answer to that question in a few weeks, but in the meantime cheaper gasoline raises some interesting questions.
The first of which is whether or not the Republicans have arranged to lower them to prevent what had seemed to be defeat in November. Certainly, the timing of the price drop might cause even the credulous to entertain a suspicion or two.
You may be sure that the Republicans are delighted to see gasoline fade from the list of voter irritations. You may also be sure that the Republicans would have arranged for prices at the pump to swoon if they could, but can they?
Not likely. To make the price of gasoline come down in Ohio, where the GOP is in big trouble, the prices have to drop everywhere. No special walled-off Ohio oil market, or even an American oil market, exists. If the price of oil is going to go down in Cincinnati, it is going to have to go down in Shanghai. Oil, as the economists say, is fungible.
There are times when energy prices are manipulated, California’s electricity cost being an example. A few years ago, by closing certain generating plants and refusing to sell electricity from certain other plants, an artificial shortage was created, which drove up the price of electricity and drove ordinary Californians to the poorhouse.
But California is not part of a world electricity market. As opposed to oil prices, those electricity prices could be forced upward without worrying about how would-be suppliers in Canada or elsewhere would react. If California had been part of a world market, when the prices went up outside suppliers of electricity would have rushed in to sell and the prices would have been forced down again.
Because oil must be refined, it is possible to play some games with gasoline prices. Refineries can be pulled off line for no good reason except to drive the price of the products up. The operative word here is “up.”
Driving prices down is another matter. Manipulators make money when the price goes up. Manipulators do not make money when the price goes down.
Down is going to cost somebody a lot of money. For practical purposes, the only way to make prices go down is to sell gasoline at a loss because you must sell it under the going price. Not quite the same as giving it away, but it’s close.
And you have to sell a lot of it under the going rate. Last winter, for example, we saw President Bush’s good friend the devil-defying Hugo Chávez, sell heating oil to poor Americans at lower-than-market prices, and guess what effect that had on the price of heating oil generally? None.