In another bad omen for Democrats hoping to ride a wave of voter anger into power, gas prices have dropped dramatically over the last few weeks. USA Today reports what every driver has noticed when they hit the pumps:

Gasoline prices continue to tumble, almost free-falling toward levels not seen in five months.

The nationwide average for regular was $2.618 a gallon, the Energy Information Administration reported Monday. That was 10.9 cents lower than a week earlier.

"The reason prices are going down so far so fast is that they shouldn't have been that high in the first place. Two reasons they were: fear and speculation," says Mike O'Connor, president of the Virginia Petroleum, Convenience and Grocery Association. It represents gasoline distributors who operate about 4,000 stations. ...

Although motorists worried that once the $3 barrier was pierced, prices never would fall much, the current drop-offs are logical, Gamson says: "The driving season is over. There's plenty of gasoline in inventory and crude oil prices have been dropping a lot. It's mainly market fundamentals."

Market fundamentals ... gee, that sounds familiar ...

Oil, as I have written previously, is a commodity, and it responds to normal market forces. A number of factors play into this drop in price. First, as the article notes, the summer driving season has passed. Gas prices normally drop after Labor Day as children go back to school and family vacations make their way to the scrapbook. Also, this season has seen much lower levels of violent weather, and while we're not out of hurricane season yet, the chances of a really damaging storm in the Gulf of Mexico gets less likely with each passing day. Traders buy oil on futures, which means their speculation now extends past the hurricane window -- and since they had built bad weather into previous pricing, it makes sense that we would see a sharp drop now.

Fear and nervousness always play hob with commodities markets. Unfortunately for the Democrats, they built it into their political stocks as well by claiming that high oil prices were some sort of Republican plot. Few Democrats have familiarized themselves with the market or the calendar, and they will now pay the price. If prices continue to drop through November, their Chicken Little rhetoric will appear even more shrill and hysterical than it does now.

None of this means we should stick with an oil economy in the long term. We need to move to other energy sources and use our own resources to allow us to make the transition. The recent find in the Gulf of Mexico of a massive oil and natural-gas reserve gives us an opportunity to do so. We need to transition our electrical generation to nuclear power and our vehicles either to electricity afterwards or to a safely-delivered hydrogen system that would replace the gas stations we have now. Energy independence is a requirement for national security in both the near- and long-term. The sooner we quit putting money into the pockets of Middle Eastern authoritarians, the better off we all will be, including those trapped in kleptocracies and mullahcracies in that region.

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» Let the Political Paranoia Resume from Considerettes
Drudge’s big headline this afternoon is that gas is down to $2.05/gallon in Iowa. Did I not catch the news story proclaiming that the federal government had moved in and enforced price controls? No, I (and you) missed nothing of the sort. Ins... [Read More]

Tracked on September 12, 2006 12:44 PM

» Let the Political Paranoia Resume from Stones Cry Out
Drudge's big headline this afternoon is that gas is down to $2.05/gallon in Iowa. Did I not catch the news story proclaiming that the federal government had moved in and enforced price controls? No, I (and you) missed nothing of... [Read More]

Tracked on September 12, 2006 12:51 PM

» Let the Political Paranoia Resume from Stones Cry Out
Drudge's big headline this afternoon is that gas is down to $2.05/gallon in Iowa. Did I not catch the news story proclaiming that the federal government had moved in and enforced price controls? No, I (and you) missed nothing of... [Read More]

Tracked on September 12, 2006 12:54 PM