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November 7, 2005
The Soft (And Quiet) Landing Of Gas Prices

One of the major media stories over the past two months has been the explosion of gasoline prices. Starting with the Iraq War but exacerbated by Hurricanes Katrina and Rita, gasoline prices have more than doubled over the past three years and have blown by the $2/gallon and $3/gallon milestones in record time. The media used gas pricing as a baseball bat on George Bush's energy policies and foreign policy. However, since the rebuilding efforts began after the twin hurricanes in the Gulf, prices have steadily fallen, but the media hasn't done much reporting on their decline. USA Today provides one exception:

Retail gas prices plunged an average of 23 cents nationwide in the past two weeks, marking a return to pre-Hurricane Katrina levels, according to a survey.

The weighted average price for all three grades declined to $2.45 a gallon on Friday, said Trilby Lundberg, who publishes the semimonthly Lundberg Survey of 7,000 gas stations around the country.

Self-serve regular averaged $2.43 a gallon nationwide. The price for midgrade was $2.53, while premium-grade hit $2.63.

In the Upper Midwest, the price of a gallon of gas has fallen by almost a third from its peak just a month or so ago. We had seen regular unleaded go as high as $2.99/gallon in October, but this weekend, Minneapolis pricing had dropped to the $2.05/gallon range. With more of the Gulf refining capacity coming back on line and action taken this week in Congress to expand exploration and refining capacity in the next few years, expect the pricing to drop even further.

Why has the media remained so silent about the drop? The superficial reason is that people don't complain about cheap gas, and all consumers can see quite clearly that it has dropped; the price improvements don't qualify as news. However, the quick response by the Bush administration to the disasters in waiving all regional special formulation requirements and in issuing a strategic but small release of crude from the National Reserve allowed the markets to balance themselves, keeping the nation from panicking into price controls or hoarding, both of which could have touched off long gas lines and out-of-control secondary market behaviors.

The media, so far, hasn't reported on these successful manuevers, nor has it reported on the psychological impact that expanded American exploration will have on foreign oil markets. The last time an American president allowed more robust oil exploration, the Arabian-based oil cartel OPEC nearly came apart under the weight of low market prices and the loss of one of its main markets. While ANWR drilling and extraction remain economical (even while theoretical), that threat of greater independence will press oil futures down, keeping the price lower for American consumers at the pump.

Don't expect the mass media to report this, however. It would demand an answer from politicians as to why it took so long to get ANWR and other exploration efforts going -- a question that eventually will be asked of the media itself, which provided much of the anti-ANWR hysteria that kept us from tapping our own oil stocks and buying from the Saudi royal family instead.

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Posted by Ed Morrissey at November 7, 2005 5:43 AM

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Tracked on November 7, 2005 8:58 PM

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