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Why Didn't Gas Prices Skyrocket?

BEGIN TRANSCRIPT

RUSH: Here is Scott in Jacksonville, Florida, as we kick off our round on the phones today. Great to have you with us. Hello, sir.

CALLER: Hello, Rush. Sleep Number mega dittos.

RUSH: Thank you very much.

CALLER: And just wanted to ask you a question. It seems like when the Nigerian oil minister wakes up in the morning and sneezes, oil goes to $200 a barrel. But we have over, what, a million gallons of oil spewing out from the Deepwater Horizon every day, and oil and gas is staying about the same. What's up with that?

RUSH: Well, now, what do you think, Scott? You sound like a reasonably intelligent guy with just a tinge of conspiratorial attitude in you. What do you think's going on here? What do you think explains it?

CALLER: Well, you know, I guess Heritage Foundation could help us with it but I think it's the speculators. I think the speculators have worked over the years to drive up the price of oil, but as a consumer, I mean I... I mean, Rush, what do they always say? "It's the summer driving season. The new fuel blend is coming out." Give me a break. I want to know the truth. What's going on and why isn't gas, you know, four bucks a gallon?

RUSH: Well, the gasoline prices are inching up. There's not a dramatic increase, but they are inching up in certain parts of the country. At some point, this is going to have an effect on supply and demand. But I think there's also another interesting aspect of this. You know, markets are what they are, and Obama does not yet control the oil market. Now, you would think with the moratorium on US offshore drilling -- meaning oil that is not going to be brought to the surface, oil that's not going to be brought to market, therefore oil not going to be sold and refined; plus the oil being lost every day from this rig disaster -- something has to be going on here. Supply has to be affected. Why isn't the price going up because the supply is going down?

I think the dirty little secret here, ladies and gentlemen, is that the supply of oil in the world is so massive that a six-month moratorium on US drilling or the regurgitation of this leak doesn't really affect it that much. The speculators do have quite a lot of impact on the price of oil, on the futures market, and you don't see them bidding the price up. You really don't see the price being bid up in massive amounts like it miraculously got to $150 a barrel, what was it, a couple of summers ago. So it's an interesting question, but I think overall I still believe supply and demand ultimately is the arbiter in these kind of things. And all this talk about how we got a finite supply of oil? It may be finite, but it's 300-years-plus finite.

You know what I heard about this well? If they're not able to cap it, if every effort to plug this doesn't work, guess how long it's going to go on? Decades. There's that much oil in this one well that it could spew oil for decades if they don't stop it -- and look at the pressure that that oil's coming out at. So there's a lot of crude out there. Now, the conspiracy people. Those of you who think that there is a Wizard of Oz behind a curtain who sets gasoline prices, don't you think if that person existed you'd be up to five dollars a gallon right now and who could complain? I mean, the president's just shut down American offshore drilling, indefinitely. They say it'll take six months but heh-heh-heh-heh! They say they're only going to have the toll on the bridge 'til we pay for the bridge. You know, the bridge has been paid for for a hundred years and we still pay the toll.

So I don't know how long this moratorium is going to go on. We have all this crude leaked into the Gulf. You'd have to think that this wizard back there behind the curtain would say, "Oh, man! I got the best evidence yet, the best justification to jack up the price of oil so I can get gasoline back up to four bucks a gallon, maybe $4.50." Why isn't that happening? Why isn't it happening? It's an interesting question. The answers will be found in the laws of supply and demand. Do you know oil prices actually went down in May, and this leak happened on April 20th, I think, or April 21st? The prices went down in May. What the oil speculators know, what they know is that the moratorium in the United States is not gonna impact the supply.

These 33 rig operators in the Gulf are just go to Brazil, or they'll go to Nigeria, or they'll go to the North Sea or they'll go wherever they have to go and they'll just bring more oil out there. The overall supply on the market's not going to be affected by this. The speculators know this. Now, also if you want to get into conspiracies -- and I, you know, looove tweaking people's conspiracies. Since we acknowledge the fact that there might be a Wizard of Oz... Ted Baxter thinks there is. Ted Baxter thinks there's a Wizard of Oz out there that's got his hands on a little gearshift that turns the oil price and the gas price up and down. Okay, so this guy's out there. Well, maybe this guy is in charge of getting Democrats elected in November. Maybe this guy's keeping gasoline and oil prices down so that Democrats, the party in power, don't get hurt by it.

I mean, if we're going to start doing conspiracy theories, let's throw 'em all up against a well and see which ones of them stick. Now, the oil pressure coming out of there is determined by methane gas. Now, can I put this in perspective for you? Methane is what cows...uhhhh...expel. Methane. And remember they say we gotta stop eating McDonald's and beef because all that methane is going to destroy the environment, global warming. You look at the amount of methane that is forcing the oil out of that leak, out of the hole in the ocean floor. Remember, when did gasoline prices skyrocket? Since we want to play conspiratorial games here, when did gasoline prices hit that magical $4-a-gallon? Happened to be during the campaign of 2008, didn't it? When did the economic so-called disaster and crisis happen? Why, that happened around August or September of 2008 campaign. The 2006 campaign is when the gas price went to four bucks, the campaign of 2006 when the Democrats took the House back. The economic crisis, 2008.

So if there is a magical wizard behind the curtain controlling gasoline prices, maybe he's keeping them down. Summer driving season. It's already tough out there economically. People are outta work. But they still want to go try to have some leisure, take the kids on a vacation, maybe go to the lake rather than the beach. They still gotta have the money to be able to get there. If it gets tough economically worse than it is, who gonna get blamed? The party in power. Always happens. So you keep gasoline prices low through November and maybe you help your chances, as the party in power, to maintain your seats. But when the Democrats wanted to take over Congress in 2006 that's when we had $4-a-gallon gasoline. So there could be any number of explanations as to why oil prices and accompanying gasoline prices don't seem to be reacting at all to the moratorium and the leak. But again, just looking at laws of supply and demand, the speculators know that, okay, the US is gonna stop drilling, but nobody else is. Brazil's ramping up. The Mexicans are not going to stop drilling in the Gulf. Nobody else is going to stop drilling, only us. So the supply will really not be affected.

BREAK TRANSCRIPT

RUSH: Here it is, an April 24th, 2006, press release from Nancy Pelosi: "With skyrocketing gas prices, Americans can no longer afford a rubberstamp Congress," April 24th, 2006. The gas price spiked upwards to four dollars during that year, and of course the Republicans were the party in power. Now, the Democrats are the party in power and gasoline prices are falling in a lot of areas of the country. They're falling, not inching up. They are inching up in certain parts of the country, but they're overall falling.

BREAK TRANSCRIPT

RUSH: Here's Mike in The Woodlands, Texas, great to have you on the EIB Network. Hello, sir.

CALLER: Hi, Rush. It's a great honor to speak with you. I can officially cross one item off of my bucket list. I appreciate the time to get on and speak with you.

RUSH: Thank you much, sir. I appreciate that.

CALLER: I want to touch base, you had a caller last hour about why gas prices are not going up, or a question why they weren't, and the reason is a simple supply and demand principle. The well that was being drilled was not a productive well so the oil that was coming up from the test spot was not being included and did not go onto the commodity exchange board.

RUSH: Well, that's all well and good. So the supply of this well never existed, as far as speculators are concerned.

CALLER: That's correct.

RUSH: But Obama slapped on this moratorium. We're not producing a single barrel of oil in any of our 33 offshore rigs.

CALLER: Well, you believe anything he says anyway?

RUSH: Oh, you think we are producing?

CALLER: They didn't shut anything down yet. They haven't shut anything down yet. That doesn't mean they won't, but, you know, we're still producing. If they don't produce it here, like you say they'll just go to Venezuela or --

RUSH: I know they'll go somewhere else, but they haven't shut down those 33 rigs yet?

CALLER: No.

RUSH: Are you in the oil business?

CALLER: No, but I have a buddy of mine that is, so, you know, I'm just going on what I'm being told from there. You know, I'm not actually out on the well or the rig so I don't know for sure, but that's what my friend says, they're still pumping.
RUSH: Hmm. Hmm. Hmm. I wonder if the wacko left knows this. He-he-he-he. Appreciate that.

CALLER: Thank you, Rush.

RUSH: Mike, thank you, thanks very much. You know, at the end of the day, folks, all these show trials and these moratoriums are about Obama, the Democrats embargoing our own oil until we invent some alternative energy sources. That's really what this is about. It's a lot like holding your breath until you get what you want. The only people that do that are adolescents and of course that never works, right, because your will to live will make you breathe. The horrible way to commit suicide is to hold your breath, you can't do it. Have you ever tried? Try it now. No, don't. (laughing) But you can't do it. But that's what these children in the White House are doing, "We're going to hold our breath 'til we get what we want." That's in effect what's happening.

Livonia, Michigan. I always love people that call from Livonia, Michigan. We've never had a dud yet. This is Leonard, don't be the first, welcome to the EIB Network.

CALLER: Thank you, Rush, for taking my call. My question is everybody seems to be wanting to beat up on BP, but like you said on the third or fourth day the Netherlands offered help, and all Obama did was say no. This could have been put on at least, maybe not prevented but put off with the skimmers from the Netherlands, the booms out of Maine, the skimmers out of Texas. This could have been at least maybe half. They could have been picking up oil. Let's just say a million gallons a day are coming out of this well. And if the skimmers are picking up half of it, it's going to take twice as long to get to land.

RUSH: Well, the fact of the matter is that Obama wants the crisis. He doesn't want it cleaned up fast. It's obvious by his lack of attention to it. The second thing about the Netherlands and the foreign assistance that was offered is called the Jones Act. The Jones Act requires that everybody working on an American emergency of this kind -- I'm paraphrasing the act -- has to be a member of a union. And it's been routine that presidents have waived the Jones Act in its entirety in previous occasions to accept such help. Obama refused as a loyalty expression to members of his support group, the unions. So a lot of factors here. I know it sounds outrageous but it's not outrageous to say that they like the disaster. It furthers their agenda. There's no question about it.

END TRANSCRIPT

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