Quote:
Originally Posted by TheDaliLama
You want the price to go down?..then create more sources.
|
You really have no clue as to why the prices go up or down do you?
Please read this:
The main culprits have been with us for more than 29 years, and they aren’t the threats to Middle East oil or from Iran to close the Strait of Hormuz — through which 20 percent of Middle East oil transits. No, the real culprits are commodities traders at the New York Commodities Exchange who buy and sell futures contracts of crude oil and refined gasoline.
Now, it’s understandable for big consumers of oil and gasoline to hedge their bets on the future cost of a commodity that ranks as the number one or two expense in their day-to-day operations. Think about an airline, freight company, railroad or utility company and you begin to understand who the legitimate players in this field might be. Heck, imagine the amount of gasoline a corporation such as Freedom Communications, the parent company of The Daily News, burns daily throughout the United States.
But not everyone engaged in the buying and selling of commodity futures — related to oil and gasoline — is an end-user of petroleum products. In fact, they may only claim ownership for a fraction of a second.
It’s estimated that more than 60 percent of the contracts traded daily for oil and gas futures are done so between people who never intend to take delivery of the commodity, unlike airlines or freight companies that use the futures’ market to hedge against price spikes in the future.
The trading floor of the NYMEX has been described as a human brain processing up-to-the-minute information such as geo-political strife around the world, economic data and weather, etc. Using this data, traders place bets on the effects of the perceived future supply and demand of crude oil and gasoline.
Crude oil futures have been traded this way since March 30, 1983. Until then, more than two out of three barrels of crude oil sold on the world market were produced by countries affiliated with the Organization of the Petroleum Exporting Countries, a global cartel. Now, because of advances in drilling technologies, the United States purchases less than 50 percent of its daily crude from foreign countries.
But oil and gasoline are worldwide commodities, regardless of where oil is pulled out of the ground or where gasoline is refined.
When the price of the contract settles at the end of the trading day, it becomes the indexed price used around the world for a barrel of oil or a gallon of gas — regardless of actual supply and demand. When the price settles higher, motorists usually see an immediate rise in the price they pay at the pump. When futures’ prices recede, the savings at the pump takes a longer to be actualized. It can be debated why this phenomenon exists.
Are retail gasoline stations colluding on prices? I don’t think so. I believe they work on slim margins — somewhere in the neighborhood of 10 cents per gallon — so when prices recede, they ratchet the price downward slowly as they are still at the mercy of wholesalers who set the price retail gasoline dealers pay.
Gasoline consumers in Swansboro have seen regular gasoline prices above $3 a gallon since Jan. 5, 2011. This streak of 446 days has eaten away at household budgets and caused many people to make a choice of driving fewer days and spending less money on other discretionary items such as vacations, movies or a dinner at a local restaurant.
And now the headlines blare and the energy analysts predict this nation’s average gas price will surpass $4 a gallon by spring. Remember, we were over that symbolic point for six days in July 2008, when prices nudged above $4 to settle in at $4.019. But by Oct. 17, they had dropped to under $3 to $2.979 and fell further over the next 30 days to be sold at $1.999 a gallon.
Will we ever see gasoline prices again under $3 or $2 a gallon? Perhaps, but the drop in price will not be achieved by opening up more land to explore or even drilling more. Crude oil extracted from the ground today or refined gasoline delivered to your neighborhood station today will automatically be priced by the contracts traded on the NYMEX and world markets.
If President Obama wants to do something about rising gas prices, he should begin focusing the discussion on the effects speculators have on the price of crude oil and gasoline.
