The drop in oil prices also is good for drivers, of course, as the average price for regular unleaded gasoline dropped from $3.68 per gallon in 2014 to $1.83 per gallon in late January, according to AAA, as crude oil supply continues to outpace demand. Gasoline prices dipped to $1.209 at a gas station near Houston.
Republicans are loathe to give President Obama any credit for the drop in gas prices, although they were willing to blame Obama in 2012, when the nationwide average price for regular gas hit $3.60 as he was running for re-election.
In truth, the president has marginal impact on oil and gas prices, but Obama’s policies allowed domestic production to nearly double over the last several years while the administration also pushed vehicles to become more fuel-efficient. That forced foreign oil producers to find new markets while the demand for fuel in Europe and developing countries is weak.
The glut in oil and gas has sent the oil industry into its worst tailspin since the 1990s, Clifford Krauss noted in the New York Times (Jan. 7). Forty American and Canadian oil companies have filed for bankruptcy protection in the last year or so, and industry reports have predicted more pain in 2016.
But Austin-based economist Angelos Angelou says lower gas prices are good for the economy — even in Texas. “Higher oil prices tend to benefit specific regions of Texas, as well as the US, and certain parts of the world. But lower prices put a lot more money into people’s pockets,” he told KUT radio in Austin.
Angelou estimates the lower prices give consumers $23 billion annually, just in Texas. Meanwhile, the slump has caused layoffs in the state’s energy sector costing $9 to $10 billion, Angelou says.
The state comptroller reported that in the 12-month period ending in November, Texas lost more than 30,000 jobs in the fossil fuel sector and an additional 36,000 jobs in manufacturing. But overall, the state gained179,000 jobs during that period, thanks in part to big increases in the health care and hospitality industries.
Angelou says the future of the Texas is “bright” for 2016 because many different industries make up the state’s economy.
“We are far more diversified than the media portrays,” Angelou says. “It’s not all about the oil and gas industry. We have ports. We have finance and technology. We have the medical centers in Houston and other places. So it’s not just the one single sector economy like Saudi Arabia, or Russia, for that matter.”
Even with the falling oil prices hurting oil and gas producers, the big integrated oil companies can make some of that up in the refining end of their operations.
Exxon Mobil reported third quarter earnings of $4.2 billion, down 47% from $8.1 billion profits for that quarter in 2014, while Chevron’s third quarter profits of $2.04 billion was a 64% drop. Exxon’s stock price in the past year dropped from a high of $93.45 to a low of $66.55 and rebounded to $77.15 on Jan. 26. Chevron dropped from a high of $112.93 to $69.58 and was $85.17 on Jan. 26, as the price of oil fluctuated between $29 and $32.
Both Exxon and Chevron executives credited “downstream” earnings from the refining end of their businesses as well as cost-cutting with maintaining profits.
Meanwhile, Saudi Arabia is running out of financial assets because of the reduced revenue from lower oil prices. But the Saudis refuse to curb their production without action from others and Russia has been pumping at record levels.
We suspect that a major reason that Republicans are opposed to improving relations with Iran and relaxing sanctions on Iranian businesses is because American oil and gas producers don’t want to see Iran resume exporting oil, which would keep the downward pressure on oil prices. Iran hopes to export more than 500,000 barrels a day once the sanctions are fully lifted.
President Obama should restore diplomatic ties with Iran, welcome it back to the community of nations, and encourage more Iranian oil exports. At the same time, we must speed up the pace of turning to renewable fuels such as solar, wind and hydroelectric power to replace fossil fuels. When the day comes that the world can keep its lights on and run cars on renewable fuel and make gasoline obsolete, we can let the Mideast nations fight their own grudges and let Exxon and Chevron figure out a new way to keep their profits up.
Don’t Break the System Any FurtherAs we await the results of the Iowa caucuses, national political commentators once again are casting shade on Iowa and New Hampshire as the leadoff states that start trimming the field of presidential candidates.
Iowa has 3.1 million people, and while its ethnic breakdown — 92.1% white,; 5.6% Latino, 3.4% black and 2.2% Asian — doesn’t reflect the rest of the country, Iowa is a swing state with a relatively well-educated populace (91% high school graduates vs. 86% nationally). New Hampshire is even less representative, with 1.3 million people, 94% white, 3.3% Latino, 2.5% Asian and 1.5% black —and 91.8% high school graduates.
An underfunded candidate can run in Iowa and New Hampshire and conceivably can reach most if not all of the counties in both states without having a billionaire backer and/or a super PAC. If he or she connects with voters in one or both states, that candidate deserves to be taken seriously by the news media, which otherwise only treat candidates seriously if they have billionaires backing their multi-million-dollar ad buys.
Iowa legitimized Barack Obama in 2008 when he won the caucuses with 37.6% of the vote, showing a black man could attract white voters, while Hillary Clinton finished third behind John Edwards. Before that, many black voters supported Clinton, believing that Obama couldn’t possibly win. After Iowa, black Americans reassessed Obama, who finished second in New Hampshire to Clinton but blew her out in South Carolina, 55.4% to 26.5%.
On the Republican side, in 2008 Republicans preferred Mike Huckabee, while eventual nominee John McCain finished fourth but went on to win New Hampshire. In 2012 Rick Santorum eked out a narrow win in Iowa by 34 votes over eventual nominee Mitt Romney, who went on to win New Hampshire with 39.3% while Santorum finished fifth with 9.4% and was swept under.
This year, Bernie Sanders, a Vermont senator who still speaks with his distinctive Brooklyn accent, has earned credibility as a presidential candidate by spending time in Iowa and drawing large crowds there with his populist rhetoric.
On the Republican side, Donald Trump has shown that rural Iowans will support a wealthy blowhard New York real estate developer, though evangelical Christians might be able to pull off a victory for Goldman Sachs-financed blowhard Ted Cruz. New Jersey Gov. Chris Christie, however, has not campaigned much in Iowa and the caucus results probably will show that his appeal is confined to the East Coast and New York TV studios. Christie might do better in New Hampshire, but South Carolina should spell the end of his national ambitions.
Without Iowa and New Hampshire, campaigns would be run almost entirely in Washington, D.C., New York and Los Angeles, and you’d only hear from those candidates who are anointed by the billionaire donors and executives at the news channels, who have had little use for Sanders or other progressive populists, much less discussion of sensitive political issues that the business elites are trying to sneak through, such as the Trans-Pacific Partnership and telecom companies’ attempts to reverse net neutrality.
And remember, Iowans watch those early TV attack ads so the rest of us don’t have to. — JMC
From The Progressive Populist, February 15, 2016
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