How it do: Oil Spankulation

Many years back I became aware of how oil prices are, and are not set. I also learned some other interesting facts about how the price of gas and diesel has less impact on the price of good than some would lead you to believe.

Imagine for instance, the price of Diesel goes up by 10 cents per gallon. Now, if the trucks(combined) use 200 gallons of diesel to deliver a load of saltine cracker to their destinations that means an increase of $20 for the entire load of saltines. So, if there were only 100 boxes of saltines on a truck (it’s way, way way way higher), that would be at most 20 cent per box of saltines. Yet the cost of saltines would routinely increase by 30 cent to $1 for the same increase in fuel costs.

This is done because, well, because ‘they’ can. If a company can blame a $1 increase in consumer price on a 3 cent increase in delivery cost, they will.

What’s even more irksome, as the link below will get you started on, is that gas prices are NOT based on supply and demand. They are based on speculation. Speculators, it so happens, are often very wrong. This is because it is an accepted fact and practice that the petroleum market is entirely artificial. That’s right, despite it being positively essential to life in America, the prices are totally made up.

The government, and sometimes companies will withhold ‘strategic reserves’ to justify the artificial inflation if anyone gets too upset.

It’s written though, that without speculators oil and gas prices would pretty much go batshit crazy. In fact it’s dogma. You’ll notice in the links below, is a WSJ entry about the topic. The topic of hour oil prices, and consumers are better off since they most of them are jobless now. Unfortunately it’s a paid link.

Now there are many, many who will argue that this is all due to evil gubment interfering in the market to prevent monopolies and price gouging, and that the market would be better off without it. To those people, I would suggest you pick up a history book and see the real examples of what a completely unregulated market looked like in America; but we all know reading and critical though aren’t really in your modus operandi. Let’s face it, facts induce a severe histamine reaction in way too many Americans these days. Link to google results supporting that statement.  That goes for fans of Trump, Hilary and everyone else. Although I have to say, Trumps supporters are objectively more ignorant than Hilary’s were.

The politics aside, every single American should know what speculation is, but before that I suppose more than a third of Americans would need to understand basic supply and demand.

Then there is this nugget.

http://oilprice.com/Energy/Oil-Prices/Ignoring-Fundamentals-Speculation-Has-Been-Driving-Oil-Prices.html

http://www.payvand.com/news/15/feb/1049.html

https://www.wsj.com/articles/where-have-all-the-oil-speculators-gone-1453853578

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