So I followed a link from Glenn Reynolds to a piece from the always worthy David Goldman (aka, “Spengler”) on oil prices, namely, that today’s high oil prices are owing to simple supply and demand rather than the Middle Eastern “risk premium” that everyone (including me) supposes:
It’s complete and utter nonsense. Oil is trading in lockstep with expectations for economic growth, as reflected in stock prices. There’s not a shred of evidence that geopolitical uncertainty has added a penny to the oil price. Obama’s $20 to $30 per barrel risk premium is a number pulled out of a hat, without a shred of empirical support. In effect, the President is blaming Israel for high oil prices.He makes an interesting case, noting the close correlation with the stock market, which may also correlate with a weak dollar and paltry bond returns as much as improving economic prospects. See David’s nifty charts at the link.
Oh it's a great theory, and since it "proves" that increased domestic production will lower prices, $4 gas is all the Kenyan Socialist's fault. The problem is fellas is that your little theory here? It's easily testable thanks to the fact our oil production is now at an eight-year high and growing. Except for the actual correlation between increased domestic production and gas prices showing that increased production doesn't lower prices, which the AP destroyed last month.
A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.
If more domestic oil drilling worked as politicians say, you'd now be paying about $2 a gallon for gasoline. Instead, you're paying the highest prices ever for March.
Hayward, Instadoofus, and the "Gatestone Institute" here conveniently forget that little point, the one where actually pitting the data against their theory kind of obliterates their theory as complete garbage.
By the way, the Gatestone Institute is a right-wing think tank dedicated to the US turning Iran into a parking lot. Kinda cool the way they lie about President Obama, who seemingly doesn't want to do that, yes?
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