Apr 18, 2006

Oil Tops $72 per Barrel

(London) Oil hit a record $72.20 a barrel on today; analysts blamed Iran's continued defiance of US pressure to halt its nuclear program.

North Sea Brent crude oil jumped 74 cents to set the new all-time high as Iran and the West escalated rhetoric over the Islamic Republic's determination to push ahead with its uranium enrichment plans.

Some industry analysts believe that oil may hit $85 per barrel during the peak summer demand, which could send gasoline prices skyrocketing to $3.50 a gallon or more in the US.


Peahippo said...

Today's WSJ has a frontpage article titled "Oil Settles Above $70 a Barrel, Despite Inventories at 8-Year High".

The included graphic shows "U.S. Commercial Inventories" and "Nymex-traded futures" side by side. The commercial inventories range on a slight upward trend from about 270M barrels at 2004 January, to 346M barrels today (over 2 years later). That's a 28% increase in SUPPLIES.

However, the FUTURES trading has a much steeper upward trend, from about $30/bl to $70.40/bl today, for the same period. That's a 135% increase in SPECULATION upon demand.

I hardly needed to see this sort of proof, since as I've said before and I'll repeat: the prices we pay for commodities are being largely decided by market speculation, NOT supply and demand. The prices are being strongly decided by brokers buying up contracts, NOT by people producing (then distributing, then retailing) to the people who consume the product.

Market theologians are only increasing their control of our goods and services, and that trend seems to have no end in sight. Since there's next-to-no populism to counter such things, it falls to the consumer to arrive at consumption conservatism. To wit: reducing usage, increasing efficiency, and decreasing waste.

As long as we continue to believe that it's legal and moral for monied interests to buy up tons of stuff that they don't use, just to turn around and re-sell it to people in need at a later time for remarkable price increases, then we'll continue to slide downward into the depths of sick "market fundamentalism", which will effectively make major portions of America into Third World nations. (As a Rusty City in a Rusty State, Toledo itself is very much like a Third World nation, and is only disguised as an American city. The working class around here is living in a sick horror over any economic bump. Money is the Toledo Warlord, and you either obey him or he kills you and hangs your corpse up on a pole as an example to others.)

-Sepp said...

Some people just excell at being scumbags.

Dariush said...

Well said, Peahippo.

Hooda Thunkit said...

And, we're sitting on all of our own domestic reserves and not exploring for more oil here???

A question I think I already know the answer to:

When the oil dries up everywhere else, we uncap our reserves, and begin exploring for more here, where do you think that the price of oil will go then???

Note to Oil Speculators:
Bide your time until oil dries up everywhere else and then "stick it" to EVERYBODY; muhahahahahahahaha!

A little oil humor:
Q. What is the price of oil when the whole world is addicted to it and you are the only one that has any left?

A. Whatever YOU say that it is...

historymike said...

I bow to the populist smackdown that GuestZero/peahippo delivered. May more people achieve the same level of wisdom.

Unfettered free markets do not necessarily lead to the happy outcomes envisioned by most modern libertarians. Even Adam Smith, free market icon, warned of the dangers of monopolies, oligopolies, cartels, and other "unnatural" market phenomena.

historymike said...

A bitter laugh to Hooda's "joke"...