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It was August 1st, 2006, when Howard made this disingenuous remark. The oil market had soared to record highs (over $US78 a barrel) in mid-July. There was widespread consumer anger at ever-rising bowser prices and record oil company profits.
And yet, by the time US mid-term elections came around three months later, the oil price had fallen a massive 20 percent.
And now, with the US elections over, oil prices are on the rise again.
Surprised? You shouldn't be. The big question is, how did it happen, and why?
First, let's look closely at what happened. Here, courtesy of Blogging Stocks, are the average weekly U.S. average price for Super Unleaded for that period (based on data from the Energy Information Administration):
Aug 21, 2006: $3.08
Aug 28, 2006: $3.01
Sep 04, 2006: $2.90
Sep 11, 2006: $2.79
Sep 18, 2006: $2.67
Sep 25, 2006: $2.54
Oct 02, 2006: $2.48
Oct 09, 2006: $2.43
Oct 16, 2006: $2.40
Oct 23, 2006: $2.39
Oct 30, 2006: $2.41
Nov 06, 2006: $2.39
Nov 13, 2006: $2.42
Nov 20, 2006: $2.42
Note the low point of $2.39, achieved in the week just prior to the US mid-term elections, and held to the very day before the election. This fine tuning by US oil retailers was no accident, either. Can you say "price gouging"?
Specifically, on November 6th, the ratio of the price/barrel of gasoline at the pumps and price/barrel of crude oil fell to 167% -- significantly lower than the weekly average of 174% between August 21st and November 20th.
The conventional wisdom holds that the US government cannot significantly influence world oil prices, except through manipulation of the US strategic reserve. But in a globalized world, that sort of thinking is sorely out-dated:
During a meeting in the Oval Office, according to [Bob] Woodward, Bush personally thanked Bandar because the Saudis had flooded the world oil market and kept prices down in the run-up to the 2004 general election.
The remarkable link between the price of oil and Bush's popularity has already been well documented:
Many people reading this article will not be surprised by such data. A USA Today poll in September showed that a massive 42% of Americans thought the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections." White House spokesman Tony Snow was forced to address the mounting speculation at a press briefing:
"I have been amused by ... the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being. It also raises the question, if we're dropping gas prices now, why on earth did we raise them to 3.50 dollars before?"
Well, that was a stupid question from a stupid man. Obviously, if the oil industry is supporting Bush, it is expecting massive profits in return. And that is exactly what they have been getting. Well over a quarter of a trillion dollars, in fact.
The real question is not why they manipulate oil prices for political profit, but how do they do it?
In the case of the '06 mid-terms, it was a two-pronged attack. On the one hand, we had the Saudis and other pro-US players in the Middle East playing a delicate balancing game by promising their OPEC friends that they would cut production, but then failing to commit to the cuts and even raising production slightly instead. The market reaction was an interesting and significant factor here: none of the experts actually believed that OPEC would cut production before the US mid-terms, so the price never went up.
On the other hand, we had Goldman Sachs dumping more than $6 billion in gasoline futures contracts. This move was like a clarion call to the markets: when the big funds change their weighting, smaller funds quickly follow suit. Even if the move is actually contrary to market realities, it doesn't matter. As Lew Rockwell explains, what Goldman Sachs did is called "painting the tape":
Goldman doesn
Again, you represent the typical uninformed American who based all of his/her opinion on what the media spits out. 
