The Oil Drum

He didn't quite say it that way, but sure did turn down the saber rattling noises for now.

If someone announced a breakthrough that promised cheap energy for everyone, it would put downward pressure on prices.

Would the super-hyped announcements of months-old new from "Jack 2", count as "announced a breakthrough that promised cheap energy"?

I'm shure you're right. Such an attempt would be crazy. Given all these efforts to make it work - and a single hurricane could easily send crude prices back to $70 or even $80.
And no politcal party can foresee the hurricane season until the elections are over.

My point here is that there is no concerted effort to drop prices before the election. The level of complexity something like that would entail is mind-boggling.

A few years ago it would have been thought technically impossible to monitor all telecommunications in real time and sort for key words.  I assure you that no matter how complex a  system is required for that task, the NSA and CIA computer complexes are doing it.  Just because something is improbable doesn't mean it is impossible.

Well, a single oil CEO may not, but 'the industry' is more than one CEO. Again, I do not believe that the ever so politically convenient for incumbents drop in gasoline prices comes from a single phone call. Though of course a CEO determines profits, at least in the sense of deciding what margins are acceptable for a number of variables (like BP and Alaskan maintenance costs - the profits to be earned by not spending it on maintenance seem quite hard to resist, for example).

And I absolutely agree that major components of the price drop are externally induced. For example, as noted by your writing 'If Bush announced that we were going to try really hard to work with Iran, it would put downward pressure on prices' - which he seems to have done recently, as I recall.

Seasonality is also a very important aspect of the price drop, of course. It would be interesting to see how the switch over to heating oil is going this year compared to the past - New England is pretty much a loss for Republicans anyways, so refineries which keep producing gasoline later than customary could have an interesting effect on gasoline prices. (This could even increase the margin on heating oil later, making it a zero sum game.)

And if ExxonMobil or Chevron or Marathon or BP decided to get competitive in their retail markets, they could set off a price war, lowering gasoline prices a few percent easily - and of course, in this case, one CEO could start such a price war.

Strange - I just figured out one proven method (we saw it happen in real time, I believe), one unproven/conspiracy theory (though it could be checked), and one potential way (still open for exploitation) to lower gasoline prices by a solid percentage, and I didn't need to call anyone or even waste more than 5 minutes typing.

It is very likely that the pros can do a lot better than me in dropping the price of gasoline within a month or two window. And sure, events can overtake all of these methods - one large late season hurricane would really play havoc to such plans. (Not everything is under human control - but how you react separates the winners from the losers.)

But you seem so close to understanding the essential point -
'He tries to make sure the company is in position to profit.' without seeming to understand that the idea of 'position' is very multi-dimensional. I doubt very much that a company like ExxonMobil, for example, has lost so much institutional memory that they can't remember the windfall profits tax the last time oil prices started to have deep ramifications for the American voter - the same way that a company like ExxonMobil hasn't forgotten that the last time Americans bought small cars en masse, it equalled smaller profits. Oh, did I forget to mention how the price in gasoline could just happen to spill over into another ailing part of the American economy? Or have I wandered into the Iron Triangle?

Politics is at least as fun as watching oil prices - except oil has many more direct connections to physical reality. In this sense, you are right - the market is too complex to easily manipulate. What you forget is that the market encompasses much more than physical goods - the rule of law comes to mind, especially the current rule in America that seems to say oil companies are forced to charge higher prices because of leftists and nationalists who don't understood what profit means.

Profit, to a politican, is just another way to spell power - whether to tax or to appropriate or to redistribute or to keep among friends. Of course the oil companies have preferences - can you say tax cut? They certainly can - it comes in that part about 'dictate profits.' The oil CEO wants to dictate where the profits go, as that is infinitely preferable to having the voters determine, for example, that any company earning a gross profit above 3 billion dollars a quarter gets taxed at a 5% higher rate, the revenue to be placed in a special fund to be used to provide health care for children. Such intereference in the free market is what evil dictators like Chavez do (with commie Cuban doctors, no less), and it is not what America stands for. Lucky that American corporations still have the right to spend money in elections - what 50 million dollars last election cycle for the oil industry alone? - to keep such thoughts far from America's not to be trusted electorate.

If oilco CEOs have never dictated prices, they're unique among modern corporations.