|About $1.20 of the cost of a gallon of gas is speculation.|
Sunday, February 26, 2012
"United States has a big glut of crude oil sitting in the middle of the country"
Remove all regulations, give the Private sector what they want, government should get out of their way. Give the Private sector American Land, American waterways and American Territorial waters to let them drill! drill! drill!. The result an oversupply of American Produced Oil and rising Gasoline Prices!
ReutersRight now, the United States has a big glut of crude oil sitting in the middle of the country, and no easy way to move it. The combination of surging production from Canada's tar sands and North Dakota's Bakken region has overwhelmed the existing pipelines to the Gulf of Mexico, where it would ordinarily be refined and shipped onto the global market. As a result, the price of American and Canadian crude oil is trading at a steep discount to varieties from elsewhere in the world. After all, with fewer potential customers, oil buyers can dictate friendlier prices. West Texas Intermediate, which is traditionally considered a benchmark variety of crude used to price other types, is selling for about $106 a barrel. But according to Oil Price Information Service analyst Tom Kloza, oil from North Dakota has recently been selling for around $83 a barrel. Canadian crude has been trading for even less.
The United States is producing more oil right now than any other time in its history, The US oil and Gas consumption is at its lowest at any time in the past 10 years. There are millions of Barrels of Oil sitting all over the United States creating this surplus of Oil. Our refineries are running below capacity because the Oil companies refuse to bring these refineries up to maximum capacity. By the way these refineries were built in part by Tax Payers money on the very promise that if the government help to build these refineries the oil companies will be able to deliver gasoline cheaper.
There are many or all parts of this sinerio ordinary Americans like me seem not to be able to understand, it makes me feel stupid just to think that when we have lots of oil the price of gasoline goes up anyway. I used to think that if there is an over supply of a commodity in the case of oil and there is less demand then price goes down. That used to be Econ-101 and the way things are supposed to work in a normal free market society, as it currently is in the United States the beacon of free enterprise. But, there is nothing Normal about how things are in the US anymore, there is a place called Wall Street that the brightest people in the world work and because of technology these people do not even have to be at wall Street to work there.
Companies like Goldman Sacks according to Reuters, " Goldman Sachs is now urging investors to go long on American crude futures. In other words, the bank is telling it's customers to buy cheap while they still can". That means although America is producing more cheap oil than it ever has but the market is now and has been for some time controlled by speculators on wall street who through saber-rattling and corporate and political propaganda are able to create instability in the market place and drive up the price of Oil. The people who produce Oil and Gasoline does not anymore make money from the Oil Production itself but from the rigging of the market place and Political gamesmanship.
About $1.20 of from the price of each gallon of gasoline or oil based product purchased today has nothing to do with oil production and delivery at the Pump but with speculation by men in suits in offices who has never seen Oil Sands, never been on a rig would never be seen around oil production or delivery but hedge their bets on finding a way to deliver gasoline to the marketplace at the highest cost bleeding consumers of the last penny and some making themselves richer and even further removed from the plight of the people around them and the country they proclaim they love.