Saturday, February 25, 2012
Gas Prices Soaring? Care to Speculate Why?
An eye-opening analysis from McClatchey Newspapers. As in Canada, American pump prices are soaring. Republican candidates are jumping aboard to blame Obama.
But the newspaper points out to two facts that point to the real culprit. Fact one - Americans' demand for gasoline is trending downward. Fact two - so far has American demand lagged behind production that, wait for it, the US has become an exporter of gasoline.
What's driving the increases, McClatchey concludes, are the omnipresent speculators:
Financial speculators are piling into the market, torquing the Iranian fear factor into ever-higher prices.
"Speculation is now part of the DNA of oil prices. You cannot separate the two anymore. There is no demarcation," said Fadel Gheit, a 30-year veteran of energy markets and an analyst at Oppenheimer & Co. "I still remain convinced oil prices are inflated."
Consider that light, sweet crude trading on the NYMEX changed hands at $79.20 a barrel just four months ago, but soared past $106 a barrel Tuesday afternoon, partly on news that Iran would halt shipment of oil to Britain and France. But those countries already had stopped buying Iranian oil. And Didier Houssin, the International Energy Agency's director for energy markets and security, said that "there are alternative supplies that can make up for any loss of Iranian exports," The Wall Street Journal reported.
Still, oil's price shot up because it trades in financial markets, where Wall Street firms and other big financial players dominate the trading of oil, even though they have no intention of ever taking possession of the oil whose contracts they are trading.
And that is a look into the dark, enormously destructive forces behind predatory free market power. It's the inevitable follow-on once perpetual growth hits a wall. It is why Goldman Sachs is perhaps the major contributor to the now permanent global food price crisis. It is what is quietly happening to the multinationals working to corner world water markets. These characters are now speculating on peoples' very survival and the stability of nations.
This shit has to stop.