As of Friday, oil had fallen below $100, down $12 from its February high. Gasoline prices are retreating too, falling from a national average of $3.95 to $3.78, and to $3.67, where I fill up. The falling oil price is good news, except for those who insisted that rising oil prices were the responsibility of President Obama or supposedly conspiring oil companies.
The Obama and oil company theories--one the favorite of the ideological right and the other of the ideological left--are both nonsense. In the first quarter, world oil demand fell 0.4% and world oil supplies are now up about 1.35 million barrels per day. This softening of demand and boost in supply, combined with a cooler voices prevailing in the Iranian crisis, has led to the recent approximately 10% fall in oil prices since February, with the gas price lagging a few weeks behind the oil price.
Oil is fundamentally priced in a global market over which neither the President of the United States nor the oil companies headquartered in Houston have control. Indeed US domestic oil production has risen under Obama, reversing a 40 year decline, and foreign oil imports are decreasing substantially.
As for the oil company conspiracy theory, Exxon, BP, Shell, Chevron are small players compared to the national governments such as Saudi Arabia, Russia, Iran, Iraq, Venezuela, Brazil and the oil companies that they own. National governments and/or the oil companies that they own control about 80% of the world's oil supplies, and they alone have the ability to fix prices.
Longer-term rising oil demand from the one-third of the world's population in China and India will continue to stress the ability of oil supply to keep pace. As such, oil prices are likely to trend higher in the coming years, even without a war disrupting oil supply.
For that reason, dependence on foreign oil remains a threat to our national security, economic health, and environment. Reducing oil consumption by energy efficiency and by substituting gas, biofuels, and electricity for oil cannot be done fast enough.