Fun with October surprises!

Posted by Joshua Holland at 4:31 AM on September 26, 2006.

It's amazing how Karl Rove can promise a new, double-super-secret October surprise, and a world full of chumps 'ooh' and 'ah' as if everything he's touched since the 2004 elections hasn't gone to crap.

Rove's reputation as a genius is now indelible -- he could design the Maginot line, drive up to it in his Edsal and announce that he was throwing the full weight of the White House behind New Coke, and people would still say he has magic in those chubby hands.

Actually, what Rove's got is a president with a 30-something approval rating and a front row seat from which he can watch all these GOP Reps run away from his boy in a mad, screaming panic. Make no mistake: keeping a few of them in the fold is what that leaked October surprise story -- and the huge ad buys that the RNC is saying it will come through with -- is all about.

But let's play along because October surprise season is always a time for some good, clean, old-fashioned fun.

Gary Hart, a guy who's much, much smarter than I, thinks it might be an attack on those Perso-fascists in Tehran:

It should come as no surprise if the Bush Administration undertakes a preemptive war against Iran sometime before the November election.

Were these more normal times, this would be a stunning possibility, quickly dismissed by thoughtful people as dangerous, unprovoked, and out of keeping with our national character. But we do not live in normal times.

And we do not have a government much concerned with our national character.

Well that last is certainly true, but I'll have to disagree with the rest, at least as far as the timing goes. An attack on Iran in the midst of negotiations and just before the election would be so transparent, such a blatant 'wag the dog' scenario that it would become the story, which would mean backfiring on the administration terribly. Also, we learned a lot in the lead-up to Iraq about timing, marketing and product roll-out, all of which leads me to ask: could we really lay out the proper groundwork for an attack by late October? I don't think so.

But Hart may be onto something if you jigger the timetable a bit. While an actual attack might backfire, all the administration has to do by election day is ramp up the fear-mongering, crank the vilification of Iranian president Mahmoud Ahmadinejad as the Next-Hitler® up to eleven and signal to the base that the Repubs will take care of those dirty heathens right after they slay some weak-kneed Democrats.

Send those subtle coded messages in the aural spectrum that only dogs and Bushbots can hear promising that they might just get their Republican-led rapture and, either way, they won't have to face the ignominious prospect of negotiating alongside a bunch of perfumed French pansies. Tell them if they don't get out and support the Grand Old Party, the Dems might win and we could end up with religious police enforcing Sharia in Greenwich Village!

Then maybe attack in January.

The problem with that idea, though, is that you've got quite a paradox: rattle your saber towards Iran and, yes, you'll energize your base, but you'll also send gas prices high, and that loses everyone else.

Gas prices are key, and that's why I'll stick with what I wrote way back in April -- and what the Associated Press calls a "conspiracy theory": a steady decline in gas prices is your October surprise, and you're already soaking in it.

(Later in the day, after I wrote that post, the administration announced that they were halting deliveries of crude to the Strategic Petroleum Reserve. It wasn't enough to make a real difference in price -- just 1.8 million barrels had been delivered in the previous month -- but it was symbolic.)

Here, a few facts bear noting. First: gas is retailing at $2.38 a gallon, which is 50 cents less than a month ago, according to Energy Department statistics. That's a 17% drop, leaving it 42.5 cents lower than a year ago, right after hurricanes Katrina and Rita ripped through all that Gulf Coast energy infrastructure.

That's awfully good news for the administration. As this handy and illuminating graphic by Stuart Thiel suggests, there's pretty clearly an inverse relationship between gas prices and the preznits' approval ratings, :


(click for larger version)

If you look at that and think: 'well of course the White House is working those gas prices!' you're not alone; a new Gallup poll finds that 42 percent of Americans agreed that the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections" (from the AP story linked above).

The reason that's being dismissed as a loony bit of conspiracism is our abiding belief -- a persistent myth that's especially pervasive in the U.S. -- that there is a free market in which prices are set by a hidden hand. Joanne Shore, an Energy Department analyst, assured the AP that it's just market forces at play: "U.S. inventories of gasoline [are] at 207.6 million barrels, 6% more than last year and slightly above the five-year average for this time of year," she said, adding: "What company in their right mind would step forward to kill their profit?"

The White House also scoffed at the idea; earlier this week, press flack Tony Snow said: "the one thing I have been amused by is the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being."

He added: "It also raises the question, if we're dropping gas prices now, why on earth did we raise them to $3.50 before?"

There's the tip, of course, and why you shouldn't let anyone tell you it's impossible for the administration to impact oil prices: those sky-high prices weren't the result of real supply shortages or demand increases during the early summer: they were the result of perception, of expectations, of speculation. The administration didn't raise prices earlier in the summer and they don't need to overtly "rig" prices now -- smoky back-room deals are not required.

First, consider what they can do to impact the pricing environment. The AP story notes that at the beginning of the summer prices rose, in part, because of fears of a war with Iran, but "by summer's end, these fears had largely dissipated." Why? Because the administration took a somewhat more conciliatory tone with Tehran, recommitting itself to negotiation. That pissed off William Kristol and Charles Krauthammer, but it also soothed some jumpy energy analysts.

And you've got an administration that is wired into a relatively small community of oil executives, brokers, energy reporters, analysts, etc. Given those relationships, and this is important because it's what separates a plausible scenario from a conspiracy theory, you don't need active collusion to bring down prices. All you need is whispers -- markets can move on mere scents in the breeze. Over drinks, you mention that drilling in ANWAR is definitely going to happen next year, that the White House understands that Shell and the Niger Delta's Ogoni activist groups are close to a settlement, that new liquid gas terminals are going to see approval in 2007.

Finally, we're talking about energy companies that are rational actors seeking to maximize profits and they know which side their bread is buttered -- they don't necessarily need to be asked to give the administration a l'il help. The top oil companies -- the same folks who discussed who-knows-what-exactly in Cheney's infamous energy task-force -- control the market, not a bunch of little suppliers in intense competition.

As Katherine Morrison, an attorney with the U.S. Public Interest Research Group, noted in testimony before the House Committee on Resources last year:

In 1981, 189 companies operating in the United States owned 324 refineries; by 2001, 65 firms owned 155 refineries. The market share of the top ten largest refiners grew from 55 percent to 62 percent over the same period of time. Today, the top ten refineries control 78.5 percent of domestic refinery capacity while the five largest oil companies (ExxonMobil, ChevronTexaco, ConocoPhillips, BP and Royal Dutch Shell) control half of all domestic refinery capacity. In addition, together they own 48 percent of domestic oil production and 61.8 percent of the retail gasoline market.

That's an oligopoly, and those firms have every reason to want a good fall for the GOP. Take, for example, Chevron. It's one of the companies closest to this administration, it's extremely well-positioned for juicy Production Sharing Agreements in Iraq, Democrats recently hauled its executives before Congress to answer charges of price-gouging -- hell, they've got a tanker named the Condoleezza Rice. Now, just three weeks ago -- ten weeks before the election -- Chevron announced "a discovery that could boost U.S. oil reserves by 50 percent and ease fears that the world is running out of oil." Is that estimate optimistic? Is the timing of the announcement a coincidence? How the hell should I know? I don't want to spin a conspiracy theory or anything -- I'm just sayin!'

Now, speaking of October surprises, conspiracy theories and French pansies, there was also that unconfirmed report in the French press last week that a Saudi intelligence report had Osama bin Laden dead of typhoid in some spider hole in Pakistan. The U.S. stressed it wasn't reliable, and yesterday it was reported that the Bush dynasty's friends in the Saudi government denied the report outright.

Might it be confirmed in late October? Well, that would certainly be a surprise!

What do you think? Conspiring minds want to know.

Joshua Holland is a staff writer at Alternet and a regular contributor to The Gadflyer.