President Bush's latest moves to affect the prices at the gas pumps don't address what's causing the price of a barrel of oil to hit around the $70 per barrel range and the price of refined transportation to hit $100 a barrel or more.
A major part of the problem is oil speculators.
Who regulates them?
They react to fear of future events, while largely ignoring the current level of supply, demand and reserves that the oil companies are waiting to process.
A single problem in a single oil field which might affect the flow of oil by a miniscule amount is enough to cause the speculators to panic and drive the cost of oil up.
The current list of excuses include fear of Iran and fear of what the West might do about Iran's nuclear program; fear of terrorist acts in Nigeria; fear of violence in the Middle East, fear of Willowby the Gorilla farting in his cage; and every lame-brained excuse that grabs a headline. For example, over the weekend Iran's president threatened to attack Israel if the West attacks Iran; the price of a barrel of oil almost immediately hit close to $75.
And then when those fears of oil disruption go unrealized, the price goes down slowly, compared to the fast jump upward in prices. Gas prices should fall just as fast as they increase.
But it's not happening because the system is being abused. As a result, the price of oil and gas is overvalued by at least 40%.
And on that point, the ongoing investigations will not yield any results, because the problems are happening outside the box, while the investigations are focused INSIDE the box. What good is an investigation if it only focuses on the tail end of the industry? They need to go after the speculators, too, where they'll find what they're looking for.
No comments:
Post a Comment