mediacrit

a blog of news and journalism criticism

mediacrit header image 2

October Surprise?

October 22nd, 2006 · No Comments

gas station sm
It’s nearing the end of October as I write, on the eve of a very important mid-term election, and I find myself suspicious of any new developments that might have an influence on the election.

So, I was just a bit wary of politics at play when gasoline prices topped out over $3 a gallon during the summer, then dropped more than $1 this fall.

I find that I’m not alone in my mistrust. A nationwide USA Today/Gallup Poll conducted in late September found that 42 percent of Americans think “the Bush Administration has deliberately manipulated the price of gasoline so that it would decrease before this fall’s elections.”

Now that’s not a majority (53 percent said the price decrease was not due to manipulation, and five percent was unsure), but 42 percent represents a pretty significant credibility gap.

White House spokesperson Tony Snow joked at the results, saying if the president could manipulate the price of gas, it “would give him the kind of magisterial clout unknown to any other human being.”

Snow’s response might be expected, but the news media have tended to not take this issue seriously either. For example, CNNMoney.com called the possibility of politics in gasoline price manipulation an “Oliver Stone-worthy scenario involving the Commander-in-Chief, the House of Saud and Secretary of Treasury Hank Paulson cajoling his cronies at Goldman Sachs to sink the crude market.” But, in a White House where the vice president is the former CEO of Halliburton, and Halliburton has subsequently received billions in unbid defense contracts, it doesn’t take paranoia to imagine such collusion.

Yet, CNNMoney’s casual dismissal only raises more questions. The political and oil-based links between the Bush family and the Saudi regime have been made unassailably clear by several well researched books like Craig Unger’s House of Bush, House of Saud, Kevin Phillips’ American Dynasty and Bob Woodward’s Plan of Attack.

To be fair, CNNMoney said that the fall in gasoline prices was really due to meteorologists predicting a less damaging hurricane season, the end of the summer driving season, commodity traders selling off energy investments, and a “recalibration of the Goldman Sachs commodity index that reduced the weighting of gasoline.”

Of course, it seems absurd to think that the commodity market could play havoc with the price of energy, right? How quickly we forget the case of Enron, where traders quadrupled California’s electricity costs between 1999-2001 and laughed as the state was forced to resort to rolling blackouts. Manipulative energy trading also socked Iowa and the rest of the Midwest with higher natural gas prices.

In the case of gasoline, the most influential trading company is Goldman Sachs, which invests billions in its commodity index that trades in futures for metals and agricultural products, but ranks oil products as its foremost commodities.

A prescient article in the New York Times on April 29 titled “Trading Frenzy Adds to Jump in Price of Oil” noted “with gasoline in the United States now costing more than $3 a gallon, high energy prices may be a political liability for the Bush administration. But for outside investors–hedge funds, investment banks, mutual funds and pension funds and the like–the resurgence in the oil market has been a golden opportunity.”

A month later–in late May–the White House was able to convince an initially reluctant Hank Paulson to leave his CEO position at Goldman Sachs–where he was the top stockholder–and become the Treasury Secretary.

The retail price of unleaded gas peaked in the first week of August, at $3.04 a gallon, then dropped quickly. A September 30 New York Times report titled “Change in Goldman Sachs Index Was Factor in Gas Price Drop” revealed Goldman Sachs’ role in leading the commodity trading of unleaded gasoline futures. The article reported that investors reacted to the Goldman announcement on August 9 that it was dropping the weight of gasoline futures in its commodity index. As the article explained, “unleaded gasoline made up 8.72 percent of Goldman’s commodity index as of June 30, but it is just 2.3 percent now, representing a sell-off of more than $6 billion in futures contract weighting.”

By October 20, 2006, Goldman Sachs completely dropped unleaded gas from its commodity index.

The Department of Energy reported that average retail gasoline price experienced the second largest average monthly decline ever, falling by 40 cents per gallon from August to September. Only the record 46-cents-per-gallon drop coming off the hurricane season price spike in November 2005 was greater.

So the biggest monthly drop in gasoline prices ever came after an act of God. And the second biggest monthly drop? Maybe it was the work of someone with the kind of magisterial clout unknown to any other human being.

Still, polls are indicating that the debacle in Iraq is still the most salient issue in this election.

So here’s one last try for a surprise: According to Tom Engelhardt in The Nation online, Saddam Hussein is scheduled to be sentenced on a date that seems far from coincidental–November 5, two days before Election Day.

PHOTO CREDIT: http://www.flickr.com/photos/automatt/132078688/

Tags: Elections · Internet · Journalism Ethics

0 responses so far ↓

  • There are no comments yet...Kick things off by filling out the form below.

You must log in to post a comment.