Something seems way too slick with crude oil futures
WSJ, and see immediately below:
Crude-oil futures hit a record high Monday, reaching $59.23 a barrel in Asian trading on concerns that demand will outpace refineries’ ability to produce diesel and gasoline in the second half of the year. The kidnapping last week of six oil workers, including two Germans, in Nigeria, Africa’s largest producer, also contributed to the commodity’s rise.
We have seen in recent months spikes in crude oil futures when pipelines or refineries have problems. However, this makes no sense. If anything, the price of crude oil should go down when this happens, if it does anything at all. The less product that can be refined, the more crude just sits there in inventory and waits. There is no reason for the price of wheat to go up if there is a shortage of cupcakes. The price of steel does not go up if there is a shortage of office space.
We recall well when the price of silver acted irrationally. Some very smart people wound up going bankrupt. We’ll see what happens with crude oil futures.
June 21st, 2005 at 10:48 am
With all due respect it’s called gouging. This comment aimed at the futures market.
June 27th, 2005 at 6:13 pm
I have to agree with Mike H. It is gouging by the speculators. It is the seemy underbelly of capitalism, where “on worries of high demand and short supplies,” speculators can drive up the price of the fuel regardless of the availability of same.
The watermelon greenies, along with their liberal Democrat accomplices. should be taking a large part of the blame, having done everything in their power to keep the US from building/updating refineries to preventing nuclear power plants from being build, thus consuming even more fossil fuels to generate electricity. Even the damnable French know that nukes are a key part of a balanced energy policy.
The only silver lining: I think we were spared the traditional price gouge, er, I mean increase, on Memorial Day weekend!