Wampum

Beware the Ides of....July?

What should be keeping George Bush (and Karl Rove) up at night is not the continuing bad news out of Iraq or a lack of coherent policy to deal with the corresponding lack of job growth in the US. It's not the Justice Department's investigation into the Plame affair, or even the 9/11 Commission's investigation into his own actions before and after that fateful day.

It's the wrath of American consumers which makes the Administration quake in it's boot. The rage and frustration Average Joes and Janes in Tuscon and Memphis will feel every time they drive their gas-guzzling SUVs up to the gas pump and are faced with gas prices topping $2.00 a gallon. And we're talking regular, not premium.

While this scenario gained more credence last month when OPEC announced it would cut production on April 1st by 2.5 million barrels/day, events today may have pushed the gauge from "possible" to "probable". Both Shell and Marathon announced early today that technical problems caused the shutdown of refineries which process daily more than 400,000 barrels of petroleum into gasoline. This at a time when oil reserves are running 9% lower than last year:

The U.S. energy department said last week that gasoline inventories fell 700,000 barrels in January, when typically they increase by about 12 million barrels. It said that oil imports would have to increase to average 10 million bpd in coming weeks to help stock builds.

And what about all the promises of oil flowing like water out of a "liberated" Iraq?

Continued sabotage has also held back plans to boost Iraqi crude exports, holding back some more supply to the market. The head of oil affairs on the U.S.-led Iraqi governing authority told Reuters on Monday that no date was set for reopening the damaged Kirkuk pipeline, which once exported some 800,000 barrels per day to an export terminal in Turkey.

Weather delays have also curbed exports this month from Iraq's southern export route. Iraqi exports are running currently at 1.6 million bpd, compared with pre-war levels of 2.2 million bpd.

So can we really argue a correlation between a plummet in Bush's popularity and skyrocketing gas prices? Last September offers a clue: When gas prices increased 26 cents a gallon late last summer, Bush's favorable rating in the Gallup Poll dropped 10 points to 50%, his lowest number since early September, 2001.

Perhaps Bush should forgo his proposal for a mission to Mars and start pushing plans for a hydrogen Hummer.

Posted by MB Williams at February 23, 2004 03:54 PM | TrackBack