Although there is normally a fall off in consumer demand for gasoline at the end of the summer driving season, and the hurricane season was very benign, the demand fall wasn't so big this year as to justify the collapse in gasoline prices at the pump.

According to the Deepcaster newsletter, "We are now witnessing interventions massive in their degree and scope - that is, we are witnessing The Mother of all Interventions."

Why? Big oil has received more than $5 billion dollars in tax breaks and tax credits from the Bushistas and been complicit in many of their schemes. They provide a substantial proportion of GOP funding, and they see it all back many times over.

From The Nation: Greasing the Skids Republicans have been pleased to focus on what they can manipulate, if not overtly control. Big Oil gave the GOP 81 percent of its $63 million in campaign contributions since Bush took office. Republicans are giving Big Oil a $5 billion helping of tax breaks. Last November the Republican-led Senate Commerce Committee, headed by Alaska Senator Ted Stevens, gave oil companies a post-Katrina break to keep their exorbitant profits. Democrats called for windfall profits. Republicans didn't.

Big oil does not want to be investigated. They do not want windfall taxes. They do not want market manipulation or antitrust actions. They like oilmen in the White House and a complicit GOP Congress.

According to Doug Henwood's Left Business Observer study, there's a 78 percent correlation between the direction of gas prices and approval for the GOP.

Update [2006-10-25 10:16:4 by LondonYank]:: This is one of those issues where there isn't any "proof" one way or the other. I appreciate that Jerome and Bonddad think that gas prices are a function of the market, and of course they are right, but that doesn't mean that Bush's cronies can't give the GOP a push toward election day.

The crack price is what intrigues me most, because that is solely within the control of the handful of Bush Big Oil cronies that own refineries. They decide how much product to sell and what margins they'll accept for it individually. Driving down the crack spread from over $19.00 in July to under $6.00 in October is a pretty big sacrifice to profits. Maybe they were sitting on too much product in expectations of refinery fires and hurricanes that never materialised. Maybe the market is so competitive and efficient that they had to accept massively lower margins from July to September. And maybe they are helping the homies in the White House by dumping product into the market at a key time in the election cycle.

As Jerome noted, the gasoline futures market is notoriously illiquid because much of the market is tied to refineries, independent retailers don't buy forward, and speculators are easily spooked. An illiquid market is very easy to influence with a bit of leverage - both down and up. The refineries and Wall Street bankers and hedge funds that have done so well under Bush might be inclined to nudge the market lower - or discourage anyone they can influence going long. A campaign to talk down a market doesn't have to be explicit or coordinated to be effective.

I can't prove manipulation. It takes two views to make a market and different folks seeing the same facts will draw different conclusions.

For my money, the United States stopped being a market economy for energy when it put two oilmen in the White House and Goldman Sachs trader in the Treasury. If they can buy this election with cheap gas and a record Dow Jones, they certainly will.

But after November 7th, don't be surprised if you pay through the nose again as rhetoric against Iran hots up - whether war follows or not, OPEC brings in production curbs, and as the refineries increase the crack spread back to the obscene levels they have come to expect as their due.