One explanation... According to the experts at CBS's MoneyWatch, they think the rise has more to do with speculation in the markets than anything else. And it all has to do with Tensions in Iran. http://wusa9.com/news/article/192594/373/Gas-Prices-On-The-Rise-How-High-And-Why another The average price of gas is up more than 10 percent since the start of the year, a point that was made repeatedly during Wednesdayâs Republican presidential debate. Predictably, the four GOP presidential candidates blamed President Obama for the steep increase. Actually, the President doesnât have that kind of pricing power. The more likely reason behind higher prices, though certainly less compelling as a political argument, is the recent spate of refinery closures in the U.S. Over the last year, refineries have faced a classic margin squeeze. Prices for Brent crude have gone up, but demand for gasoline in the U.S. is at a 15-year low. That means refineries havenât been able to pass on the higher prices they are paying for oil to their customers. http://www.businessweek.com/global/...-blame-shuttered-oil-refineries-02232012.html In fact, oil prices are rising for three reasons â none of which has to do with offshore drilling or the XL pipeline. The first, on the supply side, is Iranâs decision to cut in oil exports to Britain and France in retaliation for sanctions put in place by the EU and United States. Iranâs threat to this has been pushing up crude oil prices for weeks. The second, on the demand side, is rising hopes for a global economic recovery â which would mean increased oil consumption. The American economy is showing faint signs of a recovery. Europeâs debt crisis appears to be easing. Greeceâs pending bailout deal is calming financial nerves on both sides of the Atlantic, and the Bank of England and European Central Bank are keeping rates low. At the same time, China has decided to boost its money supply to spur growth there. Neither of these would have much effect were it not for the third reason â overwhelming bets of hedge funds and other money managers that oil prices will rise on the basis of the first two reasons. Read more: http://articles.businessinsider.com..._oil-prices-crude- speculators#ixzz1nFhvQiGj So while Nancy's explanation may be incomplete, it is accurate. But I know, she's a dem so she can't be right. It's so hard to think rationally when blinded by partisanship.
ExxonMobil CEO Says Oil Price Should Be $60 To $70 A Barrel Rex Tillerson, the boss of ExxonMobil admitted last week that the price of oilâbased purely on supply and demand- should be in the $60 to $70 a barrel range. The reason itâs above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices, and speculation that is engineered by the high-frequency trading of quantitative hedge funds. http://www.forbes.com/sites/robertl...-ceo-says-oil-price-should-be-60-70-a-barrel/
Not surprisingly, the "Blame the speculators! You're partisan but I'm not" crowd hasn't even engaged with the real issues...or the utter hypocrisy of a crony capitalist like Pelosi blaming traders. With the money printing, seemingly never-ending ZIRP, war drum banging, scientifically-bankrupt "green energy," etc., yes, speculators will put their money somewhere besides a money market fund. Oil is one good bet. For Pelosi to blame them and demagogue is to totally miss the point.
LOL, Im sure Rex Tillerson is leading the charge to see to it that oil goes to 60$ a barrel again..... Barring a complete collapse in the economy like 2008 we will never see 60$ per barrel oil prices again in our lifetime, not so long as Oil prices are denominated in US dollars anyways....
Agreed. The politico's always want "to have one's cake and eat it too". They love to cheerlead the Dow, the S&P, some bogus economic statistics, but never want anybody to figure out exactly how all these things are occuring. I suppose many of them aren't even bright enough to connect the dots. So when the Bernank recklessly tells the world that it's ZIRP thru 2014, it's not much of a surprise that the "speculators" are going to herd into risk assets and drive them to the stratosphere. Either the commitee decides that inflation actually is a threat and moves rates back towards some level of sanity OR the politico's pay the price once more for foolishly cheerleading the stock market and hoping everybody ignores all the related damage of stoking the inflationary beast to try and pretend that we are somehow growing out of this mess.
Two can play this game...... Gasoline Prices Are Not Rising, the Dollar Is Falling http://www.forbes.com/sites/louiswo...-prices-are-not-rising-the-dollar-is-falling/
I think it's funny that "traders" at a trading site would question how speculation could possibly ever cause price overreach, regardless of the underlying circumstances. No such thing as speculative excess, eh? Yeah, market prices are always determined by calm and reflective economic utilitarians.
Spot on! Speculation is definitely in the price of oil - but don't mistake me, I'll not blame speculators for doing what they should do when the dollar plummets. But the responsibility rests on Ben Bernanke's monetary policy, NOT the speculators. If the politicians (and Obama) would like to fix gas prices, then they should go to the Federal Reserve Buffoon they (re)appointed and have him pull back on the CTRL-P exercises he does every day. Of course, that would not be good for ALL asset prices (like stocks). Want to continue to pump the stock market? Then you have to go with high oil prices. It's a tough trade off. What's a manipulator to do?