RUSH: Here’s Bob in Wheaton, Illinois, as we head back to the phones. Great to have you, Bob. Hi.
CALLER: Hey, thanks for taking my call, Rush. Longtime listener, first-time caller.
RUSH: Great to have you here.
CALLER: My question is about gas prices, two parts. First part is, there’s a lot of, you know, advertising right now from the Democrat Party, if you will, that says that the prices are gonna drop below $2 a gallon in about 30 or more states, and I wondered if that was really your opinion on whether or not it’s for the upcoming midterm elections.
RUSH: Now, I didn’t quite follow that. Are you saying the Democrats are running ads talking about gas prices falling?
CALLER: I’m saying there’s a lot of commercials out and newspapers et cetera, that talk about gas prices dropping in about 30-plus states below $3 a gallon.
RUSH: Oh, and you’re asking me if this is to benefit Democrats in the elections?
CALLER: Pardon me?
RUSH: I’m trying to figure what you’re asking me. It’s my hearing.
CALLER: I’m asking if the lowering of the gas prices is being publicized are due to the midterm elections by the Democrat Party.
RUSH: You are seeing or you think that is the media actually doing that?
CALLER: It’s in the newspapers and so forth, so that’s what I was bringing to your attention and wondered what your thoughts were.
RUSH: Okay. I’m still not clear here. Let me tackle it anyway. It’s my hearing, folks, I’m having trouble. Okay, by whom? Who’s advertising the gas prices? The Democrats advertising it or gas companies, I don’t know. But here’s — gasoline prices are coming down. If the Democrats are trying to capitalize on it, I would totally, totally understand it. But here’s the best I have on it.
This is an AP story today: “Prices at the pump have now, in much of the country, dipped below $3 a gallon.” Now, it is typical that in the autumn, in the fall, gasoline prices do decline as the summer vacation driving season tapers off, but one of the things driving a bigger drop in gasoline prices than what is statistically natural or normal is the falling of global oil prices.
“By the end of the year, up to 30 states could have an average gasoline price of less than $3 a gallon.” Now, that may be what he’s seeing. It may be what the caller is seeing.: Thirty states could have an average gasoline price of less than $3 a gallon. Now, one of the reasons for this is seasonal. When we get to autumn, or fall, the refiners are allowed to switch to cheaper blends of gasoline for the cooler months.
That has to do with emissions, requirements and controls and pollutants and so forth. Driving demand declines after summer vacations have ended, as well. But what is a surprise to everybody is the drop in global crude oil prices, despite increasing violence and turmoil. Every time this happens… I have to tell you, folks.
On the verge of every Gulf War we’ve ever had, there have been stories left and right just trying to scare everybody. “The gasoline price is gonna go through the roof because these wars are gonna interrupt the supply! These wars are gonna interrupt all of the drilling and all the production and the refining, and you can look for $8-a-gallon gas!” You remember? Every time.
Gulf War one, Gulf War 2, the Iraq war, and before this latest skirmish with ISIS, the same thing was said, and it never happens. One of the things that is incredible is that a lot of times global oil prices actually end up falling, despite increasing violence and turmoil in the Middle East. It’s below $97 a barrel right now. That’s close to its lowest level in more than two years. But let me tell you what the real reason for it is.
It isn’t Barack Obama policy.
It isn’t some mysterious, powerful dude in a room who determines the oil price, or the gasoline price. (interruption) You know, people still think that? People still think it! Bill O’Reilly is still hunting for the guy. People think there is one guy that determines what the gasoline price is gonna be, or some powerful group that determines it, and they do it independent from market forces and in an arbitrary way.
But there’s something happening in this country that is being barely reported on, that is resulting in massive discoveries of new oil. As we discover ways to tap it and bring it up and use it, the United States has very quietly been on the verge of becoming a worldwide oil leader in capacity and drilling and all of that, and I’m talking about fracking. Fracking is this new technology that allows drillers to consistently increase production.
This is what’s going on in North Dakota and Texas. It’s a way of getting oil previously unobtainable. The oil has always been there, but there was no cost efficient way to get it. But fracking is a new way of going in at an angle and finding reserves of oil in shale and any number of other places where heretofore it’s been impossible to get. Where fracking is occurring, economic booms are taking place, such as in North Dakota.
The unemployment rate in North Dakota is 3.5%. In North Dakota, they cannot build housing fast enough to accommodate all the people moving there working in the fracking industry. Now, commensurate with this outbreak in fracking is the left and the global warming crowd and the environmentalist wackos attacking fracking and trying to blame fracking for earthquakes and other potential violence natural disasters.
(impression) “Because it shouldn’t be done. Going in there and getting this oil the way we’re getting it, uh, Mr. Limbaugh, is destabilizing the earth’s crust and the very foundation on which our forests sit,” and blah, blah, blah, blah, blah. It isn’t… Do you know the guy and his wife…? I’m having a mental block on his in my right now. Pegula, I think. He owns the Buffalo Sabres and just bought the Buffalo Bills for $1.1 billion, whatever.
Fracking. Fracking is one of his businesses. It’s happening in many ways under the radar, and it ought to be a focal point of something we were talking about in the first hour: Economic growth, tax cuts and all that. Fracking is causing grown despite Obama, despite all the liberalism that Obama has inculcated, despite the stagnation elsewhere in the economy. Fracking is a boom wherever it is happening, because it’s oil.
And I don’t care what anybody says: Oil is the fuel of the engine of freedom. There isn’t a replacement for it. There isn’t a substitute for it. They can dream all they want about using french fry grease in jet airplane engines. They can dream all they want about solar panels and windmills and all this. But there is nothing — we aren’t even close to having anything — that substitutes or replaces oil.
By the way, we are in no danger of running out of it. The earth has more oil reserves than anybody one time believed. It was just couple years ago it was thoughts that we barely had 50 or 75 years left, then all of a sudden that was revised to be 200 years, and now it’s even more than that. Because oil is a lot of places that heretofore have not been economical to explore. It’s cost more to get it than you could sell it for, based on world prices.
So one of the factors that is increasing production from fracking is the decline in world oil prices. It makes it far more attractive to go get it. In fact, the going and getting it is contributing to the plummeting oil price — which, again here, is below $97 a barrel for the first time in two years. So long way of explaining: This is not a Democrat plot, there’s not somebody in a room lowering gasoline prices to benefit incumbents and particularly Democrats.
This is the result of natural market forces taking place. One thing I love is every time that there is hostility, declared hostilities in the Middle East, the media does predictable things. One of the predictable things is to warn everybody of the possible and likely interruption in oil supplies and shipments and therefore the supply will be drastically cut back and therefore the price of gasoline and every refined product will go through the roof.
It doesn’t happen. It’s amazing how it doesn’t happen; the opposite does. It’s something that Keynesian economics can’t explain, because they ignore market forces, particularly free market forces. So this is a phenomena, but if I had to say, if I had to pigeonhole what explains it, it’s that market forces always largely going to dictate prices.
Now, in oil, there are various regulations that raise the price, the various blends for different parts of the country based pollution and smog and so forth, transportation costs and so forth. But it’s still a supply-and-demand business. Fracking is increasingly the overall supply. By the way, there’s another thing: Oil use is down. There are a lot of people not working in this country.
There are a lot of people not driving to work anymore. Young people, Millennials, they’re getting their jollies off by bragging about it. “I don’t even want to have a car!” Yeah, they’re content to ride their bicycles and keep a record of it on their health app and all they’re waiting for is their Apple watch so they can get a accurate record of how healthy they are riding their bicycles and blowing their kazoos or whatever.
But the bottom line is, they’re taking great pride not having cars. They take mass transit. They think that’s advanced. Mass transit, yes! That’s forward thinking; that’s elite. But the bottom line is, there are fewer people working, fewer people driving to work, the down, fewer people going on vacation, fear people drive.
It all adds up to supply and demand being the reason why gasoline prices are on the way down.
RUSH: By the way, folks, it’s worth pointing out, it’s worth reminding you how the Associated Press and the rest of the Drive-By Media used to mock the whole idea that increasing oil production in the US could ever lower global oil prices. They mocked it. They made fun of the idea that raising domestic production could result in oil independence from the Middle East.
Oh, you don’t remember that?
Well, do you remember a woman named Sarah Palin and, “Drill, baby, drill”? “Drill here, drill now.” You remember all that? You do, right? You remember how they mocked that, remember how they mocked her, remember how they made fun of the whole premise. Even when people agreed with her, they made fun of it. “Aw, come on! Don’t be serious. That’s so shortsighted. ‘Drill, baby, drill,’ right? That’s really your answer?”
“Yeah, it’s kind of like, ‘Just say no.'”
“All right, that really is serious. That’s really gonna work.”
“Well, it happens to work every time you try it.”
“Yeah, but it’s so simplistic! You need a lot more nuance. You can’t just say, ‘Drill, baby, drill,’ and end up with more oil.”
“Yeah, you can. It’s, in fact, exactly what you do. The point is happening with fracking. There’s another thing going on, by the way, folks. This you might find fascinating. You know ISIS, this bunch that we’re trying to wipe out? We’re bombing oil installations over there because ISIS has gained control. ISIS is selling oil at $25 a barrel on the black market, instead of the $97-, $95-, $100-a-barrel price that’s out there.
Now, I’m slightly kidding, but they are undercutting the world price with black market sales, ’cause they don’t care about the oil market. They just want money, like everybody else just wants money. (laughing) Especially the people who say they don’t care about money. Because of their ideology, because of their social concern, because of their social devotions, because of their religions, whatever. When they say they don’t care about the money, it’s all about the money. And ISIS is trying to make a quick grab on as much as they can.