A recent downturn
in gas prices has come as a welcome relief to most
drivers in North America. The timing, however, of the
price drop has many people thinking conspiracy theory.
A recent poll of
Americans showed that a staggering 42 percent of
respondents believe that George W. Bush and the ruling
Republican administration in Washington lowered gas
prices in time for the November 2006 mid-term elections.
While this may or
may not be the case, the various stock markets around
the world do have a real time impact on the price of
oil, and therefore gasoline.
culprit in the lowering of gas prices might actually be
Mother Nature. In preparation for the upcoming hurricane
season, many investors on Wall Street and around the
world invested heavily in gas and oil futures, guessing
that another direct hit by a Katrina-like storm directly
on gas and oil pipelines in the Gulf of Mexico would
send prices through the roof like they did last year.
But a recent
correction by hurricane forecasters who downgraded the
2006 hurricane season caused the price of oil to plummet
and all those investors who bought futures to cry.
But it wasn’t just
the hurricanes that did it. The announcement coincided
with the end of the summer season for drivers, which
also dragged down the price of oil.
The price of oil
over this time fell off the table, going from an August
7th high of $77 a barrel to $58 a barrel in
October. It doesn’t take long for this drop in prices to
be felt at the pump.
This seismic shift
in oil and gas prices over such a short amount of time
left many investors in deep financial trouble. At least
one mutual fund that was invested heavily in oil and gas
futures went belly up due to this dramatic drop in
At the same time,
there were other funds that did quite well despite the
portfolio-ruining drop in oil prices. As they say in
sports, sometimes it’s better to be lucky than good.
While it may be
naive to think that global politics never plays a part
in the world’s commodity markets, it is unlikely that
the sole reason for the massive and speedy drop in oil
prices was due to upcoming elections.
The number of
variables that play on the world’s stocks, bonds and
commodities is too vast in number to be influenced
completely on one country’s elections.