One quick fix

Six years ago, more or less, gas prices started rising and people became very concerned, demanding the release of oil from the SPR, drilling in ANWR, the building of more refineries and other solutions. As I recall, a small amount of oil was actually released from the SPR at that time; Drilling in ANWR was defeated. But more importantly, the idea of building more refineries was shot down. The reason that infuriated me the most was that ..."it would take too long to build new refineries to have any impact on the current price of gasoline."

My reaction then was, "Yes, but then we'll have more capacity to head-off refinery shortages in the future." Now we're hearing the same response again. "Doesn't make sense to build more refineries -- it'll take too long..." blah blah blah.

Wake up, America. Those in Power believe we are all idiots. Unfortunately, they are often right.

 

The oil released from the reserve was also sold at auction to the highest bidder not sold below market price, and in the end all of it went to companies in EUROPE....

ps the strategic reserve is a 120 day supply not 2 years...

 

As an example that others also understand what is happening, and that a one time release will do nothing to alleviate the problem, check out the article quoted below from the New York times-herald on line website

excerpt;"
By Christine Young
Times Herald-Record
April 20, 2008
MAYBROOK — Bobby Locke pulled off Interstate 84 at Exit 5, got out of his rig and pointed to worn treads on the tires.
"I'm burning money," said Locke, a 68-year-old independent trucker from Stewart, Fla. "I'm surviving, but I'm not making money to buy tires."
That's because, with diesel fuel recently soaring past $4 per gallon, a big chunk of Locke's wages goes into the tank. Prices are steepest in New York and Pennsylvania, where taxes on diesel are the two highest in the nation.
While diesel is less expensive to refine than regular gas, ever-increasing global demand has caused it to spike on the commodities markets.
"The demand from China and other emerging markets has created the sense that those economies are going to grow and need more diesel fuel," said Kevin McCaffrey, president of Teamsters Local 707, which represents 2,000 New York truckers. "It's not supply and demand right now; it's just commodities-driven." end excerpt.

I believe the TOS allows attribution links but am placing it here at the bottom in case some staff decided to remove it..

The article can be viewed in its' entirety at;
http://www.recordonline.com/apps/pbcs.dll/article?AID=/20080420/BIZ/804200326/-1/NEWS

 

When OOIDA started clamoring for the SPR to be opened and other ludicrous ideas started coming forth, all I could think was, "Who thinks we're dumber, Congress or union leaders?"

We are experiencing a simple issue of supply and demand. Demand is outstripping supply, and consumers are paying a higher market price for both the oil out of the ground and the refined product.

A REAL fix would be for Congress to allow drilling in ANWR and the immediate approval of several refineries to be built across the country, not to mention the banning of several of the boutique blends of fuel and gasoline designed to reduce "greenhouse gas emissions".

Want to see < $80/barrel crude? Allow us to drill ANWR and off Florida and California and it would happen in three months.

Want to see $2.00 fuel and gas? Allow construction of refineries and ban 20% of the boutique blends and it would happen within 6 months to a year.

OOIDA is grandstanding for its members regarding the SPR stance. They know it would have no effect, and therefore they also know it would never happen. Open your eyes, people.

 

I should clarify my statement, as it was a bit lacking in specifics. When I said to allow drilling in ANWR, I didn't mean that crude prices would drop as a result of us pumping oil out of the ground up there immediately. I meant that they would drop simply as a result of speculators forseeing new supply being ready to come online. They would start spending less on futures and would start to liquidate their overweight positions in the commodity they already own. That would result in a wholesale "run on the banks" that would bring prices back down in line with what could be considered a "fair price".

 

Candab, at first blush I would say you are correct. Unfortunately, I would expect OPEC, at the very least, to further cut their production to keep prices high. Supply and demand is a fair explanation, as far as it goes. But it doesn't take into account the deliberate reduction of supply to maintain high prices regardless of demand.

That said, however, I fully support drilling EVERYWHERE oil is found in the United States. Proper care would have to be taken not to ruin Mt. Rushmore as they run pipes out of Mr. Lincoln's nose, of course.

 

As has been seen recently, the oil futures contract has become the refuge for every failing fund manager who has been struggling since their bad bets on derivatives in the "financial" markets was exposed.. ( they have been struggling since the derivatives on POWER debacle at enron, and the failure of the derivatives market on long distance at world com..LOL)

The result of unlimited drilling would barely reflect in a market based on 30 and 90 day FUTURES contracts simply because so many futures contracts have been signed by two parties who neither of them can PAY for the product they are speculating on, BOTH are simply placing BETS on CREDIT. Both of them are differing only on the amount of increase in the worth of millions of barrels of product neither of them actually intend to ever own other than on paper.

If the oil futures 90 price dropped 20 dollars tomorrow most of the wall street brokerages and all of the major banks would be bankrupt by the end of the day. The resulting financial collapse would make 1929 look like a pic nic.

We are no longer dealing with supply and demand.. NO ONE buying a futures contract is expecting to receive any OIL in 90 days, they are planning to sell the contract at a profit in 30 days.

The SPOT market where oil companies actually buy oil is not the futures market do not confuse them, even if the news casts do not make this distinction clear. Unfortunately the 190 billions of dollars invested by fund managers in oil futures represents the savings and retirement funds of almost every American worker, Just as when they made the enron and world com mistakes, the resultant pain will be passed on to the investors in the funds, the managers will take their fees salaries and bonuses and move to the Riviera or some other place where the rich can ignore the cries from the destitute workers.

 

A possible solution to the commodities market problem: Require that no one may engage in the trading of commodities unless they are physically capable of taking delivery.

Ya, it's overly-simplistic, but it's an idea.

 

As to OOIDA and their calling for a release from the NSPR... they at grain valley are in fact Democrats simply following the party line.. I disagree with that call, but then I am a libertarian not a democrat..

I still however support OOIDA as a trade association, my Senator understands the difference between real issues and talking points..

 

And when the entire economic house of cards comes tumbling down????

I hope you live far out in the country because when all the banks fail it's gonna get rough in the cities