Here is an explanation about how petroleum is bought and sold.
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Oil is sold under a variety of contract arrangements and in spot transactions. Oil is also traded in futures markets, a mechanism designed to distribute risk among participants on different sides (or with different expectations) of the market, but not generally to supply physical volumes of oil. Both spot markets and futures markets provide critical price information for contract markets, and so they are discussed first.
A spot transaction is an agreement to sell or buy one shipment of oil under a price agreed-upon at the time of the arrangement. In a sense, a consumer's purchase of gasoline is a kind of spot transaction -- the consumer needed supply, found the price acceptable, and made no promise to make additional purchases. More traditionally, however, the oil industry uses the spot market to balance supply and demand. When a company temporarily has too much supply for its own needs, it will offer some for sale in the spot market. Likewise, if it needs additional volumes to meet a demand spike, or because supply is unexpectedly curtailed, it will purchase oil on a cargo-by-cargo, shipment-by-shipment basis. In recent years, the growth of "merchant refiners" has depended on viable spot markets. These independent refiners manufacture products not to fill their own marketing networks, but to sell the oil in third-party transactions to the highest bidder.
Prices in spot markets send a clear signal about the supply/demand balance. Rising prices indicate that more supply is needed, and falling prices indicate that there is too much supply for the prevailing demand level. There are "spot markets" for different commodities and qualities (crude oil, for instance, as distinct from gasoline or heating oil, and low sulfur crude oil as distinct from high sulfur crude oil), and for different regions (Rotterdam/Northwest Europe, New York Harbor/U.S. Northeast, Chicago/U.S. Midwest, Singapore/South East Asia, and the U.S. Gulf Coast, for instance).
The evolution of a regional market into a pricing center has its foundation in logistics. These markets have a ready supply, transportation choices, storage facilities, and many buyers and sellers.
http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/price_transactions.htm
It would be difficult to tell oil companies that they cannot sell excess oil on the open market. And it would be very difficult to put a stop to speculation on the excess oil. Even if the demand is being created by speculation, how could you stop it? There was a time when the U.S. government could flood the market with its reserve oil, but the market is just too vast and our reserves too small to do that today. We have to change patterns of consumption of energy. We have to switch to more conservation and alternative energy sources. That is how we can lower demand -- and help our environment in the process. This switch can be made with the help of government subsidies.