Oil prices fall on rumor, but Obama insists nothing can be done

Neil Munro White House Correspondent
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President Barack Obama repeatedly says there’s no magic wand to force down gas prices and salve the public’s increasing anger.

His spokesmen say there’s no magic wand, quick fix, or silver bullet.

But mere rumors quickly cut $2 off the $106 per-barrel Thursday morning,

The price fell because traders reacted to rumors that the White House was going to sell oil from the nation’s oil storehouse, the Strategic Petroleum Reserve.

The prospect of a sudden increase in supply, amid slack demand in a stalled economy, prompted a rush of oil trades which dropped the price by just over $2 in one hour.

The rumor was false, and prices lurched back up to $105 by the end of the Thursday, and $107 by the end of Friday.

But the rapid shifts in price shows how the supply of oil is so low that it is bumping against slack demand. That collision raises prices somewhat because oil-traders buy, sell, dump or hoard oil to make incremental profits whenever they predict a local or temporary shortage or surplus.

The mere rumor of a SPR sell-off dropped prices by $2, or 2 percent.

But there was a real sell-off in 2008 when prices fell by $9.26 during a announcement by President George W. Bush that he would push to open up new areas for oil exploration. That presidential promise of more oil yielded a 6.3 percent drop from the prevailing price of $136, even though that oil would not come online for 10 or 15 years.

Thursday’s temporary drop “tells us what the American Petroleum Institute has been saying for weeks — that the president can do something now that will put downward pressure on prices,” said Eric Wohlschlegel, API’s spokesman.

The price drop shows what could be accomplished if the president really wanted to increase supplies of U.S. oil energy, said Dan Kish, senior vice president at the Institute for Energy Research.

Obama’s claim “that there is nothing he can do about oil prices is pure unadulterated bullshit,” Kish said. “If he announced to forward markets that the United States was going to get serious about starting to produce its energy…. it would put down pressure on price, huge downward pressure,” he said.

“You’re not going to drop it to $50 a barrel, but you’d put a huge amount of downward pressure on it,” he said. The oil would not arrive for years, but many people would be immediately hired to help develop the oil fields, he said.

However, Obama is curbing oil supplies, and forcing up oil prices, to protect his business and political allies in the green-tech sector, Kish said.

Lower oil prices would ruin allies’ business plans, slam the bank balances of his venture capital donors, cut funding for the environmental groups and disrupt his crony capitalist networks, Kish said.

On March 15, Obama denounced his critics’ calls for a Bush-like action to increase the oil supply, even as he tried to take credit for work done by Bush, by state officials and by oil companies during the last several years.

“There is no such thing as a quick fix when it comes to high gas prices,” Obama told a cheering crowd of supporters at a Maryland community college this week. “There’s no silver bullet, [and] anybody who tells you otherwise isn’t really looking for a solution,” he declared.

He’s used that “silver bullet” phrase at least six times since January while trying to control the political damage caused by the gasoline price spike on his watch.

He’s also increasingly contemptuous of people who disagree with his insistence that he can do nothing about oil prices. “If some of these folks were around when Columbus set sail, they must have been founding members of the Flat Earth Society,” he said at the March 15 community college speech.

His deputies offer he same defensive mix of derision.

“If somebody is going to promise that they can wave a magic wand or sprinkle the pixie dust or plant the beans in the right place so that we can get out of this problem, they’re just not being straight with you and they’re not being straight with the American people,” deputy spokesman Josh Eaton claimed Feb. 24.

Obama will travel to Nevada, New Mexico, Oklahoma and Ohio March 21-22 to discuss the gasoline price increase and tout new alternative energy development.

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