April 26, 2006
Aware of the huge political risk of further gasoline price hikes as the midterm elections approach, President Bush has ordered an inquiry into whether oil companies are "gouging" the public with artificially high prices. Will this convince populist skeptics of Corporate America? No, it will only feed their suspicions of a Massive Conspiracy. He also ordered a halt to filling the strategic petroleum reserve so as to make more supplies available to the market. See Washington Post. This move might have a slight downward effect on prices, but the main effect will be the convince Iranians that the President is not really serious about launching a preemptive attack during coming months. If we really were headed for war with Iran, global petroleum markets would be thrown into utter turmoil, which is precisely what the strategic petroleum reserve was designed to offset. The President needs to let the American people know that energy scarcity is the price they have to pay for having had it so easy with cheap imports made in China for the past decade or so. The chickens are coming home to roost, and now we have to compete with the emerging Chinese economic giant for what is left of the Earth's dwindling supplies of hydrocarbons.