The TRUTH about the Rising Gasoline prices - Courtesy of McClatchy

[Johnny Morales]

THE SPECULATORS ARE BACK!

For Progressives and Liberals the ONLY remaining news organization who maintains the standards of a "free and fair" press from last century is McClatchy.

McClatchy is the mother company owning newspapers with a variety of names and editorial stances, from conservative to liberal.

The mother company McClatchy.com does NOT rely on the member papers for its editorals. Instead it maintains one on its own.

McClatchy is the last major chain of decent size to position itself a bit left of center. Unfortunately few Progressives or Liberals even know who McClatchy is.

Their own POV is often in line with what the DU members believe, but with a difference. They will provide the facts we have to search all over for. If you read the news, try making them your go to source. You will NOT be sorry.


AS FAR AS THE PRICE OF GAS. These three articles are very clear as to what's happening

http://www.mcclatchydc.com/2010/12/08/104979/remember-4-gasoline-oil-speculators.html?

http://www.mcclatchydc.com/2011/04/21/112619/obama-orders-probe-to-find-whats.html

http://www.mcclatchydc.com/2011/03/02/109735/lack-of-information-not-lack-of.html?

[RKP5637]

1. Good summary! Thanks! n/t

[Gin]

2. the $6.00 number is another trial balloon out there... soon to be reached..

geez...do these people not care about anything but money?

[RKP5637]

3. It's compulsive greed. A true sickness and it's rewarded handsomely. BTW I walked

into the grocery store today and laundry detergent for a reasonably sized bottle was $17 each. It used to be around $10.

[Johnny Morales]

4. I have to agree when it comes to the financial sector

No number seems to ever be "enough".

It's as if having attained wealth in the billions they are in a race to be the first trillionaire, for no other reason than they'd be first. Oh and the power that comes with it.

[spartan61]

5. I'm probably way off base on this but...

Do you think this is a set-up by the rich, the speculators, and the oil companies, and, of couse, the repukes to make President Obama look bad? I read yesterday that his approval numbers are going down as the gas prices go up and people are blaming him. They so desperately want the repukes elected in 2012 and they will do anything to bring Obama down.

[girl gone mad]

7. Whatever.

Obama had every opportunity to reign in the financial sector, with the weight of the whole world at his back.

He made his bed.

[AndyTiedye]

8. Ding! Ding! Ding! WE HAVE A WINNER!

Do you think this is a set-up by the rich, the speculators, and the oil companies, and, of couse, the repukes to make President Obama look bad? I read yesterday that his approval numbers are going down as the gas prices go up and people are blaming him. They so desperately want the repukes elected in 2012 and they will do anything to bring Obama down.

While the instability in the Middle East has boosted crude prices, retail gas prices are rising more and faster than the crude it is made from.

They can jack up gas prices as high as they want. I expect we will see $7 a gallon or more by election day 2012.
Of course Obama will get the blame for the high gas prices. The Mighty Slime Machine will make sure of that.


2012 could go very badly for us.

[RKP5637]

10. Maybe one year Americans will get a clue as to how much they are manipulated, but

I do have my doubts. I've been waiting for Americans to really wake up a long time and I'm still waiting.

Maybe when most Americans work for the company store, grovel for food and live in SH** environments they might wake up, but probably they will still be blaming Obama because that's what their corporate masters told them to think.

[wellst0nev0ter]

6. And We Still Have Morons Around Here Pushing That "Chinese Deman"

line. When will we ever wake up and smell the coffee?

[GliderGuider]

9. The speculators are back? Really? Where? Lemme at those miscreants...

But in the meantime, since we're talking about prices and numbers, here are some graphs that may help illuminate what's actually going on in the oil markets.

First, let's the monthly average US price of unleaded gasoline for the last 30 years, compared to the monthly average price of oil. It looks like they track pretty closely, doesn't it?



Now let's look at the prices another way, by using a scatter plot of the same data. The tight correlation implies that 97% of the changes in gasoline prices are due to the underlying changes in oil prices:



So, if there is speculation happening it doesn't seem to be a big factor in gasoline prices themselves. That is, once the oil has been purchased by the refinery, the end price of the gasoline is pretty much set in stone. Any significant speculation must therefore be happening in the oil market.

The two factors that influence oil prices the most are supply/demand and speculation. In order to determine how much speculation might be in play, let's look at supply first. According to the evidence of the following graph, the world probably hit Peak Oil (the peak rate of oil production) at the beginning of 2005. Production has been stagnant ever since, for the last six years.



Oil production has even stayed stubbornly constant despite massive swings in price. In fact, despite a swing of +/- 55% over the last six hears, oil production has varied only +/- 2%:

Further, because of the stagnanat oil production and rising consumption in the newly wealthy producing nations, the amount of oil making it to the world market has flattened and begun to decline. Ignore the two projection lines on the next graph, I put them on there to illustrate another point. The real issue is that oil exports are showing the initial signs of signs of decline.



The behaviour of oil prices when the world supply is interrupted or constrained is shown in the next graph. In it you can see the effects of the Middle East turmoil from 1973 to 1985, as well as clear evidence of the current production plateau.



So how much of the price rise in oil and the closely associated rise in gasoline prices is attributable to speculation? I can't say for sure, but I can say that the behaviour of oil prices looks exactly like what's I'd expect in a supply-constrained market. As a result, my inclination is not to worry about the impact of speculation too much. The less oil we use, the better it is for the planet, so high prices may just be the pain of that healing process.

[Johnny Morales]

14. The price of gas has always tracked the price of oil - your #s don't address speculation

Because, It is the PRICE OF OIL that is the subject to speculation.

As long as investors can buy $100 worth of oil with $6 and sell it as soon as it exceeds that $100 original value, speculation will play a huge role.

This is a RECENT phenomena, the opening of commodities to speculative pressure.

Just how ridiculous it is, you can't buy $100 worth of stock for $6. To buy that requires around $50.

so the result is a lot of money once tied to the stock market is flooding commodities trading.

[GliderGuider]

11. The current price of oil and gasoline is NOT evidence of speculation

It's evidence of world supply limitations.

• Gasoline prices track the underlying oil prices with great precision.
  
• The only time oil prices have risen above $40 (when adjusted for inflation) is when the world supply has been limited.
  
• The world's oil supply has been limited for the last six years.
  
• There is no "appropriate" price for a depleting resource that has no substitutes.
  
• It is now a seller's market for oil, world-wide.
  
• Peak Oil is here, we can expect more of this from now on.

I think there are a couple of reasons for the umbrage over speculation right now. The first is that it's much easier to blame unethical behaviour than geology. People don't generally understand the inner workings of oil wells, or what geological factors affect the physical recovery rate of oil. Human malfeasance, on the other hand, is easy for most people to understand and there are things that could be done about it if it were true. That makes the "speculator story" very easy for people to buy into.

The second reason is that TPTB are taking everyone's eye off the ball by using a head-fake. They are perfectly aware that the world oil supply is going into permanent decline, and that there is sweet bugger-all anyone can do about it. If that became general knowledge, it could have dramatically destabilizing effects on world markets and the profit-recovery potential of the next few years. So in order to keep the proles feeding peacefully in their stalls, TPTB pooh-pooh the very idea of Peak Oil (just like they do with climate change) and float the idea that rising prices are all the doing of some shadowy, nefarious band of "speculators". Everybody gets all relieved that they really know who to blame, grab their pitchforks, run out the door and jump in their gas-powered cars - driving off in a cloud of dust looking for an oil trader to lynch.

In the meantime the guys in suits who yelled "Speculators!" in the first place retire to the salon, count the day's take, and congratulate themselves that nobody is saying that maybe we should slow down our oil consumption. The accusation of speculation is a ruse, folks. We're being herded.

[lfairban]

12. You know you are an ebiker when . . .

. . . people start talking about the rising cost of gasoline, and you ask, "What is that getting up to now a days?"

Actually, I do notice. It always brings a smile to my face.

If speculation is a part of the problem, there is a good way to remedy that. Since the futures in this case are a bet that gas prices will go up, they will lose if prices don't go up. That means we should boycott gasoline.

An organized boycott would be best. What if everybody decided to reduce their gas consumption in July by half, and buy no gas whatsoever during the second week. The resulting reduction in demand would force suppliers drop their prices. This means the speculation will not pay off, and instead of profit, the speculators see loss.

[bhikkhu]

15. One of the problems with a global market -

if we boycott gasoline and reduce our demand, there are plenty of buyers for it in the rest of the world. Demand has been exceeding supply this year, even before Libya and the others, and prices have been rising in response. Of course there are people making a buck on it, but the "market fundamentals" say the price goes up anyway.

With that said, I'm in for a boycott - who else will switch to commuting by bicycle for the rest of the year?

[BlancheSplanchnik]

13. THANK YOU! I didn't realize about McClatchy

I didn't know this.