Facts are important, especially given the use of lies and propaganda used to gain political power and to increase wealth for already wealthy people.
Generally speaking, U.S. presidents cannot affect gasoline prices. There was an exception, Nixon’s insane price controls enacted in 1971, and they can start wars or trade wars, like Trump’s perhaps equally insane trade war with China. Texas senator Phil Gramm pushed through his Commodities Futures Modernization Act in 2000, which did have a disastrous impact. Look at the chart above. You can see what happened after Nixon’s price controls were implemented and the OPEC embargo, and the results of Gramm’s legislation. He was rewarded in part by a vice chairman position at Swiss UBS.
Simple Version:
Gasoline prices are a function of world wide crude oil and petroleum product prices.
There are three major factors, 1) supply and demand, 2) statistical trends and analysis, and 3) market psychology, anticipation, SWAG (Scientific Wild Assed Guesses).
I was an accountant, financial analyst and petroleum product analyst for a major oil company, trader for a small crude gathering and trading company for two years, and a trader for one of the two largest petroleum trading companies in the world. After that I was a broker and traded my own account on NYMEX.
Arbitrage: the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
Traders create price equilibrium world wide using arbitrage. If crude oil or petroleum products are $50/bbl in the U.S. and $40/bbl in Asia, tankers will go to the U.S. until prices in Asia reach equilibrium.
Supply and demand are what traders call “fundamentals”, real world causes of price changes. Statistical analysis is the study of price history, analyzing prior changes and price directions using very complex models to predict future prices. Neither can predict “Black Swans” unpredictable highly improbable events. If you’re interested, I highly recommend reading Nassim Taleb’s “The Black Swan”. You can google it and find summaries.
There are two distinct but connected markets for crude oil and petroleum products, the “physical markets”, purchase and sale of crude oil and products between sellers and buyers, delivery of same, and “futures markets”, obligations to sell and buy commodities in specific periods at fixed prices.
In 1978 heating oil trading was introduced on NYMEX, the major futures trading market in the U.S., perhaps the largest in the world. It was very successful, so in 1982 crude oil was added, followed by gasoline contracts. In January 1981 I went to work for the first trading company, in 1983 the second.
Nixon’s price controls resulted in the creation of numerous trading companies and what were called “teakettle refineries”, the commoditization of crude and petroleum products created an explosion of opportunities to make fortunes.
There’s another important factor in all commodity prices. Texas senator Phil Gramm pushed through his Commodity Futures Modernization Act in 2000. It allowed financial institutions unlimited positions on commodity exchanges, NYMEX the most significant. Traders drive prices up and down, making money in both directions.
Two of the keys to understanding commodity markets were explained in the movie “Trading Places”. Prices can be manipulated, and brokers make profits regardless of whether their clients make or lose money.
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