May 2004 – Gas Prices Rising – Iranian Oil Minister Comments Wisely
The presidential election was not too far off on May 23, 2004, in political time anyway. Gasoline prices were up 14 cents in the previous two weeks, to $2.10/gallon, the highest yet in the Bush administration. Concern grew in the land; what next, $3.00/gallon?
We know what happened. Gasoline prices kept rising, to $4.16/gal. late in Bush’s second term, when a historic financial collapse intervened to drive oil consumption down, down, down.
Two dollar a gallon gasoline is presently a delusional goal. Perhaps forever. Probably forever. Anyone who promises us two dollar a gallon gas is lying, unschooled, or clinically insane. My apologies to Mr. Gingrich. More on that and him soon, but for now . . .
Here’s a vignette from those days in May 2004 when two dollar gasoline was alive and well, and a national crisis. Today, $2.00 gas would be cause for running bare assed in the street and partying all night in the police station.
The excerpt provides a peek into the ways that nations attempt to bring that gas price down. Nothing new here. One Bijan Namdar Zangeneh, Iran’s Oil Minister understood the politics of the urgent need for lower U.S. gssoline prices, and he actually spoke of it . . . italics my own . . .
Excerpt – May 23, 2004 CNN report:
When the group meets formally in Beirut on June 3, [OPEC Director-General Purnomo Yusgiantoro] said, the [OPEC] ministers will “do what we can do to assure market stability.”
[U.S. Energy Secretary Spencer Abraham] said the Saudis will boost their production from nearly 7.1 million barrels per day to 9.1 million — a 28 percent increase.
Before the announcement, Abraham had said that “strong action is required” to bring down oil prices, which would translate into lower gasoline prices.
The United States is the world’s largest consumer of oil, and record gasoline prices have spiraled into a key campaign issue for President Bush.
Iranian Oil Minister Bijan Namdar Zangeneh said the pressure to boost production was related to November’s upcoming presidential election in the United States.
“We had the situation like it four years ago where we were very close to another presidential election in the United States,” he said. “Every day we are going to be closer to this date, we will have some pressure … to do something and to satisfy their voters.”
Oil analysts told CNN that OPEC has already raised production previously, a move that did not provide a long-term solution.
One of the biggest factors behind the price surge, analysts said, is limited U.S. refining capacity. The United States has had to import large amounts of gasoline — crude oil refined elsewhere — thereby increasing the strain on the overall oil market, the analysts said.
Many U.S. refineries have shut over the last two decades, and the operating ones face environmental regulations. But Abraham rejected suggestions that U.S. refinery capacity is to blame for the price hike.
“The big difference is not U.S. refinery capacity, it’s world demand,” he said.
Purnomo said oil ministers Saturday discussed “the many factors” that have driven crude oil prices higher in recent weeks.
Some in OPEC are angry that Riyadh has decided to lift its production to just over nine million barrels daily in June, a rise of about 10 percent, without OPEC approval.
“They can’t. It’s a mistake. Saudi Arabia can’t decide alone to increase production,” Libya’s Oil Minister Fethi bin Chetwane told reporters.
On Friday, Venezuela’s oil minister Rafael Ramirez said his country opposes any increase in OPEC oil supply, saying it would not help alleviate the recent spike in oil prices.
As it worked out, despite the OPEC and Saudi decision to pump more oil, the price of gasoline, although it fell by 11 cents over a three week period, was $2.07/gal. on election day . . . I’ve forgotten who won.
