Tags: Oil | Political | Weapon

Oil Is A Political Weapon

Wednesday, 29 September 2004 12:00 AM

Gasoline prices hovering around $2 a gallon for most of the year has hurt the disposable income of most Americans.

In fact, the economy, which had been roaring ahead, suddenly seemed to stall earlier this year. We started to run out of gas as energy prices stifled the recovery.

This is bad news for George Bush. Americans vote their pocketbooks. And they also vote from the gas pump.

I recently reviewed a chart that showed oil to be a key determinant of stock market prices over the past three decades.

During periods of oil price declines, the market rises. The opposite is also true.

For example, during the period of the two largest declines -- the mid 1980s and the mid 1990s -- the U.S. economy was roaring and the S&P hit new highs.

When I analyzed presidential elections based on the same chart, the results were equally conclusive. During periods of increasing oil prices the incumbent always lost.

In 1976 Gerald Ford lost as oil prices rose. In 1980 Carter lost as prices reached new highs. In 1984 Reagan won a re-election landslide and his vice president, George H.W. Bush, was elected in 1988 -- both during periods of declining oil prices.

The period before the 1992 election saw an increase in oil prices as Bush was defeated. In 1996 oil prices were hitting new lows, which helped Clinton win re-election.

In 2000, Gore was the de facto incumbent. The economy was still OK, but oil prices had definitely risen in the 12 months before the election. It was an open secret that the Arab countries -- led by Saudi Arabia and Kuwait -- did not want Gore as president and they played a role in keeping oil prices high. (Remember in the summer of 2000 as prices rose the Clinton administration even moved to sell off some of the Strategic Petroleum Reserve?)

This is not good news for Bush -- though the fact that America remains in a war on terrorism may help Bush turn the historical tide.

It is clear to me that most of the major oil producers want George Bush defeated and again are playing with oil prices. But you won’t hear that in the U.S. media.

Instead, high oil prices are blamed on everything from increased U.S. demand to refineries running at maximum capacity to increased demand in China, the falloff in Iraq oil, and the lack of new oil exploration. But the truth is somewhat different. Consider the statement of Purnomo Yusgiantoro , president of OPEC.

In an interview earlier this month, Yusgiantoro said bluntly that once the U.S. elections are over, the price of oil will collapse by 30 percent or more!

“If we can remove the political premiums, the world oil market will stabilize around $30 a barrel,” he said while attending the World Energy Congress in Sydney, Australia.

What does the U.S. presidential election have to do with the supply and demand of oil?

Nothing and everything. Of course it has nothing to do with all of these claims of high demand in places like the U.S. and China. But it has everything to do with world politics.

And the politics of the world today is that most nations do not like George Bush and want him defeated.

As it turns out, some of the nations most worried about Bush and his war on terrorism directly control much of the world’s oil supply: Saudi Arabia, Iran, Libya, Venezuela, Russia.

Another interesting fact about oil prices is that a number of financial publications have identified an unusual pattern of hedge funds interfering in the oil markets, driving up prices on oil contracts.

There is no evidence that billionaire George Soros, the king of hedge funds, is behind this.

But two things are very clear.

Soros desperately wants Bush defeated come November.

Secondly, just as oil prices hit all-time highs this year, Soros’ hedge fund, Soros Fund Management, sold almost all of its oil stocks, including BP, ChevronTexaco, ConocoPhillips, Occidental Petroleum and Marathon Oil -- some $348 million of stock value.

What does George Soros know that we don’t?

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Gasoline prices hovering around $2 a gallon for most of the year has hurt the disposable income of most Americans. In fact, the economy, which had been roaring ahead, suddenly seemed to stall earlier this year. We started to run out of gas as energy prices stifled the...
Oil,Political,Weapon
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2004-00-29
Wednesday, 29 September 2004 12:00 AM
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