Friday, May 18, 2007
Why are oil and gas/petrol prices so high?
Nothing new here, just putting a few facts together in one place:
First the basics:
Demand is rising in China and India
America has a love affair with gas guzzling SUV’s
The current US Administration has constantly back-pedalled on fuel efficiency standards agreed years ago, but deemed too costly by the US Automobile Industry.
These points have conspired to make this very much a seller’s market. But that actually isn’t why the cost of Crude went up so sharply between 2004 and 2006. To be sure, the price would have gone up due to the forces of supply and demand, but what made it take off was the speculators. What you and I see as misery at the pumps and upward pressure on transportation costs and general inflation, these sharks see as an opportunity to profit. Of course, OPEC then decided it liked the prices where they are and made sure they stayed there when demand dropped a little. But the speculators weren’t done!
The price of Unleaded Gasoline futures went up earlier this year, even as Crude temporarily went down. The main reason for this is that no new refineries have been built here for over 30 years and a couple have had to be shut down for long tem repairs. This is a strategy by the oil companies to force up prices and maximise their profits. I have actually seen it written that this situation is a great opportunity for speculation. So in come the investors, causing still more misery for consumers, while they line their pockets with vast quantities of cash. And they sleep well. For me, if you profit on the misery of others, be it slave labour, knowingly saddling developing countries with more debt than they can handle, replacing high paying jobs with low paying ones or forcing up the price of something that affects everyone directly or indirectly, YOU ARE SCUM!!!
Of course, quite possibly the biggest reason for this is that the Pres and his chief hatchet man, more commonly known as his Vice President, are both Oil men. Why should they do anything to curtail Oil Company profits when they ultimately benefit from these? (That’s a rhetorical question!) They gifted their friends $8.1Bn of tax breaks in 2001 – like they need tax breaks!!
What should be done? Obviously, remove the tax breaks, but I’d go further. Give the oil companies a choice: Either use some of your windfall profits to build new refineries, or be levied a windfall tax, which will be used to build publicly owned refineries. ExxonMobil, BP et al will all scream blue murder, which means it is obviously the right thing to do
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First the basics:
Demand is rising in China and India
America has a love affair with gas guzzling SUV’s
The current US Administration has constantly back-pedalled on fuel efficiency standards agreed years ago, but deemed too costly by the US Automobile Industry.
These points have conspired to make this very much a seller’s market. But that actually isn’t why the cost of Crude went up so sharply between 2004 and 2006. To be sure, the price would have gone up due to the forces of supply and demand, but what made it take off was the speculators. What you and I see as misery at the pumps and upward pressure on transportation costs and general inflation, these sharks see as an opportunity to profit. Of course, OPEC then decided it liked the prices where they are and made sure they stayed there when demand dropped a little. But the speculators weren’t done!
The price of Unleaded Gasoline futures went up earlier this year, even as Crude temporarily went down. The main reason for this is that no new refineries have been built here for over 30 years and a couple have had to be shut down for long tem repairs. This is a strategy by the oil companies to force up prices and maximise their profits. I have actually seen it written that this situation is a great opportunity for speculation. So in come the investors, causing still more misery for consumers, while they line their pockets with vast quantities of cash. And they sleep well. For me, if you profit on the misery of others, be it slave labour, knowingly saddling developing countries with more debt than they can handle, replacing high paying jobs with low paying ones or forcing up the price of something that affects everyone directly or indirectly, YOU ARE SCUM!!!
Of course, quite possibly the biggest reason for this is that the Pres and his chief hatchet man, more commonly known as his Vice President, are both Oil men. Why should they do anything to curtail Oil Company profits when they ultimately benefit from these? (That’s a rhetorical question!) They gifted their friends $8.1Bn of tax breaks in 2001 – like they need tax breaks!!
What should be done? Obviously, remove the tax breaks, but I’d go further. Give the oil companies a choice: Either use some of your windfall profits to build new refineries, or be levied a windfall tax, which will be used to build publicly owned refineries. ExxonMobil, BP et al will all scream blue murder, which means it is obviously the right thing to do
