COMMENTARY | It was once said that if you lined up all the economists in the world, they would all be pointing in a different direction. That pretty much sounds like their guesses as to why gas prices are going down, even during the Spring Break travel season. There’s a simpler explanation: the politics behind the approval of the Keystone pipeline.
We’ve heard a litany of speculative reasons why oil prices may have been declining this past month. There’s one argument that says Asian speculative markets are the reason for the price decline. Another report from the EIA says the falling prices are the result of world stockpile data. The Associated Press points to the rising U.S. crude supply coupled with weak European Industrial production and the weaker Chinese economy.
All have one thing in common: guesses. The sheer number of excuses for the falling gas prices as the weather warms and more people travel and oil prices traditionally follow the higher demand. None of these explanations can adequately account for how gas prices were much higher a month and a half ago, when fewer people traveled.
In mid-February, I wrote a column contending that there was a relationship between rising gas prices and pressure on the Obama administration to approve the Keystone Pipeline. There was no extra Middle East pressure, and there’s not much travel that occurs during the second month of the year. Moreover, my research in that article found that the holiday travel season did not significantly spike, which might have put pressure on existing stockpiles.
The State Department sneaked through an approval of the Keystone Pipeline on a late Friday afternoon, when few people were paying attention. Sure enough, the gas prices began to fall, even though it is the Spring Break travel season. It doesn’t make sense to lower prices as demand increases, unless there’s something else in play. Middle East instability is not appreciably lower today any more than it was dramatically higher in the middle of February.
It’s hard to believe that something happened so dramatically in Europe or China or with U.S. crude production to warrant such a swing in prices. But it is easier to see oil companies turning the heat up on Obama as protesters encircled the Washington Monument with a faux pipeline, along with celebrities getting arrested, trying to convince Obama to shut down the northern part of the pipeline. Obama would get rewarded for not blocking the pipeline with lower prices, and better approval ratings.
There’s talk that with the busted pipeline, leading to a major oil spill in Arkansas, that pressure will mount again on the Obama administration to cancel approval of the Keystone pipeline. Should the pro-environment crowd renew their efforts, expect prices to rise again, just to make sure Obama doesn’t do that.
John A. Tures is an associate professor of political science at LaGrange College in LaGrange, Ga.