Why did gas prices drop immediately after Bush talked about oil exploration?

In any market, future expectations are priced into current valuations. This principle explains why stock prices rise on good news and fall on bad news. For example, you hear of a company's stock falling after their quarterly earnings report did not meet analysts' expectations. The market had already priced that expectation into the company's current valuation, even though the earnings report was still in the future.





When Bush made his announcement, even though no new oil would come innto the market as a result, the prospect of future increases in oil supply was enough to convince investors that the price was too high. Investors had believed that the future held no new oil. It may not. If Congress refuses to act on drilling, that may convince investors to price that future shortage into higher prices now.Why did gas prices drop immediately after Bush talked about oil exploration?
Because Bush removed the restrictions on drilling in so-called ';sensitive areas';, putting the issue into the hands of congress. People started talking about it and put some pressure on congress. This in turn has made the oil speculators jumpy-driving the price down.


Congress and the oil speculators know full well the vast amount of oil that is readily accessible in those areas previously excluded from drilling. The speculators know if we drill for oil in those places, it'll vastly increase the supply - driving the price down.


The democrats want high gas prices. The higher the better. The more people that the dems can convince to oppose drilling, the more that will drive the price UP! And they want it as high as it can go!


Drill for the black gold NOW!. Watch what the oil speculators do.


Guaranteed, the price will drop faster than you can imagine.


Why did gas prices drop immediately after Bush talked about oil exploration?
It started going down a couple days before Bush made the announcement, there was no big change in the trends. It's up for a week or so, down for a week or so and in huge prices showcasing supply has little to do with supply -- it's speculation.





It's like saying OPEC increasing supply caused the prices to go up (which the cost did massively go up that first after they increased supply significantly). So shall we conclude more supply = higher costs? No. It's manipulation of the markets.
Bush's talk AND an increase in oil inventories (a result of the the reduction in driving we have had) were enough to drive some money out of the futures market.





Anyone who tries to tell you that we would not see a dramatic reduction in oil prices if we just opened up more regions for drilling domestically - doesn't understand how the futures market or supply and demand work.
Speculation of future markets causes a bit of the sway in oil prices. What this exactly means is, they look at long term. Supply and demand for the future. So if supply is a concern then they need to increase price so, in theory people would cut back. So, talking about more drilling/exploration puts the theory of more supply into future markets. I know it sounds rather silly, but hey, thats the system.
It is very simple along with supply and demand the price of oil depends on future supply. As soon as Bush started talking about off shore drilling the second part of how much a barrel of costs became a little more clear. As such the price oil came down as it lessened concerns about long term sources of oil.
Not true. Gasoline prices began to drop prior to Bush's announcement due to the US economy.
Even though Liberals know the real answer to that, they are going to do a Bush bash instead of admitting they've been wrong all this time.
He did not just talk, he rescinded an executive order. If congress had done the same the price of oil would have kept coming down.
Because speculators know we have the ability to do it. Yet we have the socialists with their noose around our necks. Guess who listened?
They didn't drop because of what he said...they dropped because people stopped driving as much and are using public trans,, biking and walking
since there was no physical change in supply... I would have to assume there are other forces at work here...





perhaps Republicans should look into this...
Speculators changed course and shorted the oil futures market.
cause the one thing Bush/Cheney have succeeding in doing has been supporting their oil buddies
Uhh...do you think that maybe the Arabs really don't want us to drill for our own? Drill Now! Drill Here! Drill often!
It's what's coming so contact your sen=and demand there vote on drilling%26gt;Dem's need to get a new approach on what the USA CITIZENS WANT%26gt;Since they work for us%26gt;