Prices at the pump have fallen 6.19 cents per gallon in the past two weeks and are down more than 12 cents from the year-to-date high in early April according to the latest Lundberg Survey that tracks 2,500 stations across the country. The decline in gasoline prices mirrors the slump in U.S. oil prices, which are off 12.5 percent since May 1.
Oil broke its six-day losing streak on Monday, gaining half a percent after China vowed it would do more to boost domestic economic growth and Goldman Sachs released a report that said oil supplies are "increasingly constrained" because Iranian exports have fallen.
Energy prices climbed in late 2011 and early 2012 as tensions between the West and Iran flared over Iran's nuclear energy program and talks of a military strike against Iran's facilities intensified.
Iran has denied charges that its nuclear program is a cover for making a nuclear bomb, a concern held by many Western countries. The U.S. and its European allies have tightened sanctions against Iran to deter and halt the country from enriching its weapon-grade uranium into nuclear weapons. A European Union ban on Iranian oil imports goes into effect this summer and the U.S. will impose tougher financial sanctions in June. The war rhetoric had softened after Iran agreed to meet with representatives from six world powers this week about its nuclear ambitions. But Russia's deputy foreign minister said Sunday that military action against Iran was "realistic and possible," according to Reuters.
"We are receiving signals, both through public and intelligence channels, that this option is now being reviewed in some capitals as more applicable in this situation," Deputy Foreign Minister Sergei Ryabkov said.
The U.S. and the EU are prepared to release fuel from emergency reserves if global oil supplies are affected by the Iranian oil embargo. Saudi Arabia has increased its oil production in preparation for the EU ban, with output climbing to the second-highest level in 31 years, according to Bloomberg.
Whether or not Western powers take military action against Iran remains a huge wildcard, with major geopolitical and economic ramifications.
For now, however, The Daily Ticker's Aaron Task and Henry Blodget both agree that the reversal in energy prices can largely be attributed to simple economics: slowing global growth has reduced demand for petroleum products.
This may seem self-evident but it was just a few weeks ago that lawmakers in Washington vilified oil speculators for driving up prices. Republican presumptive presidential nominee Mitt Romney sought to place the blame for higher prices on President Obama and the administration's lack of a thorough national energy policy.
Such chatter has died down as energy prices have retreated, another example of how our national discourse is dominated by empty political rhetoric -- from both sides.