Let's start with the very basics. Oil is a market commodity. The oil producers range from small businesses to huge international conglomerates. Oil producers operate from, and in, many different countries around the world. Outside of the United States and Saudi Arabia, oil is produced in the North Atlantic, South America, Africa, Southeast Asia and Australia. Once produced, the oil enters the international markets. In these market conditions, the oil has no home. It may as well be thrown into a big bucket. Oil is bought and sold, quite often, months before it is produced.

Once produced, oil must be transported. Transport has more to do with where oil goes than anything else. For instance, some Alaska produced oil must be transported by tanker. The tanker could go down the coast to California or anywhere in the pacific rim. A lot of that oil goes to Southeast Asia, because the cost of transport makes it more efficient. Much of the oil used by the US comes from the Gulf of Mexico and South America, or from OPEC.

So, in other words, the oil being used by Americans could be produced anywhere, by nearly anyone. That's basic concept #1.

Back to the market. Since oil is a commodity, it is traded in futures markets. Futures markets allow investors to purchase contracts to buy or sell commidities. These investors are trying to make money by speculating on the supply and demand of that commodity over a specified time. With oil being an internationally produced and consumed commodity, the futures markets in oil are also international. Since Summertime is a major driving season, more oil is needed in Summer. Since Winter requires more oil for heating, more oil is needed in Winter. During Summer, air conditioning is run a lot more, requiring electricity. Likewise, Winter is a high-demand electricity season because of electrical heat. In the United States, as in most of the world, Oil is the most-used fuel for creating electricity. More electricity demand means more oil demand.

Wait, there's more. When it's Summer in the Northern Hemisphere, it's Winter in the Southern Hemisphere. That means that the higher demands of Summer and Winter are AT THE SAME TIME.

Higher demand, with static supply creates higher prices. That's basic concept #2.

Okay. Knowing all that, how is it possible that George Bush could cause oil prices to be higher? I can only think of two possible ways. One would be to limit supply. In order to do that, he'd have to undertake a worldwide campaign to limit how much oil is being pumped out of the ground. The other would be to corner the commodities markets by purchasing a vast majority of the futures contracts.

If George Bush has done anything to affect the supply of oil, it has been to INCREASE the supply. Thanks to the war in Iraq, millions of barrels of oil are now being exported that were previously unavailable on the market. As for cornering the futures markets, I really doubt he has the money.

Okay, here comes a more advanced concept. Haliburton is a services company, and not an oil producer. If you have oil you want taken out of the ground, Haliburton is the company you hire to do the job. Once they've started extracting the oil, you can sell it. In other words, Haliburton does not benefit from a higher gas price.

Higher gas prices mean people use less gas. Less gasoline usage means less demand. If demand drops enough, then oil producers will produce less oil. Less oil production means less work for Haliburton. If I were George Bush, and I wanted to make Haliburton make more money, I'd try to get the oil prices down as low as possible, and push production through the roof. That would mean more work for Haliburton, and therefore more money.

You know, these aren't very complex concepts. This is all very simple, Economics 101 stuff. Heck, I understand it and I never took Economics 101. I do, however, have a brain, and I know how to use it. When it comes to economics, I learn from some of the best Econ professors around. Walter Williams and Thomas Sowell are big favorites of mine, that I read often. I also love keeping up with Marginal Revolution and The Volokh Conspiracy, blogs run by Economics professors. Maybe if more liberals read these sites, they'd quit being liberals.

Nah. Truth is no friend of liberalism.