Two important men talking

Earlier today, US president George W. Bush (photo: “It was thàt big! Really!”) gave a press conference at the White House. On itself, that is nothing new. He explained why he decided to give the green light to off-shore oil drillers, after a long ban. At the same time however, Federal Reserve chairman Ben Bernanke gave a presentation about the troubled economy of the United States. He focussed on the housing finance crisis and the rising energy costs. This powerful mix of bad news triggered a fascinating chain of events…

As soon as CNN editors realize the impact of two of the nation’s most powerful men talking about the dark side of the economy, a tiny close-up of the up-to-date Dow Jones index appears in the right bottom corner of the screen. Despite my general interest in what’s going on in the world, watching live at the Dow Jones index is usually not my favorite way of spending my lunch. As the important men speak, the index figure goes up and down quickly, at an unusually fast speed. As the two important men wrap up their presentations, oil prices have dropped with $11 a barrel – the biggest drop in 17 (seventeen!) years – and the Dow went down by more than a hundred points. After the finished their talks, prices stabilize around $139, nearly $7 less then when the sun came up.

The heavy drop came after Bush announced to lift a ban on drilling oil off-shore, clearing the way for oil companies to get this precious black gold at home, instead of at the other side of the world. Critical journalists underlined that it would take as many as seven years before the first barrels make it to the surface. “It is merely a psychological effect,” Bush said. Apparently, the US President was right, considering the sudden drop of the oil price.

I find it fascinating to see that the market is sensitive for a decision that does not lead to an immediate change in supply or demand, and of which the initiator (read: President Bush) even admits that it is a “psychological effect.” I wonder about the psychological effect for those people who fill up their tank at the gas station, when they realize that neither the two important talking men did not made their gas price drop…

Photo source: unknown