Wednesday, May 03, 2006

It's Not Big Oil 

It's the commodities market.

Everyone knows we're being gouged, any idiot can see it: when the price of gas climbs 50% in a week and there's no disasters in the news, it seems obvious to the American consumer that there's a hustle going on.

We know all about Big Oil and the fact that their refinery capacity is limited, and that "record profits" doesn't change the fact that oil companies profit not significantly more or less than other industries, and that ongoing supply shortfalls drive high prices in a demand fueled market. Again, the average well-trained media monkey knows these things.

So, yes, they don't build more refineries because it is profitable to have a refinery shortage but that doesn't cause price spikes. Yes, China and India are the source of that steadily growing sucking sound in the east but that doesn't cause price spikes either. Yes, natural disasters limit suppply, and that does cause price spikes, but there's no current natural disaster effecting supply.

So why the hell is gas so damn expensive right now?

Let me tell you something: unrest in the media over Iran's nuclear ambitions is being used to justify potential supply shortfalls that just don't exist andnd it's not being done by Big Oil, it's being done by Wall Street. You ARE being hustled, but the faceless money brokers who ensure a steady stream of consumables into this country are using your baseless fears to excite the market and extract short term windfalls.

Iran doesn't have the bomb, isn't anywhere near getting the bomb, and even if they do get it, so what? They couldn't use it or they would be obliterated. They could't even give it to terrorists for fear that it would be discovered they were the source and, again, they would be obliterated. They also wouldn't give up control of the bomb for fear it would be turned against them. The ayatollahs are not fanatics and they are not stupid. Iran achieving the bomb will be a non-event, IF it ever happens.

All the talk about short-term supply disruption from Iran using it's oil as a weapon against the West in a dispute is also BS. Iran doesn't sell much oil to the US to begin with, they're selling to Asia. And since Iran lags other producers in foreign refinery investment, they haven't created a stable product demand even among their regular customers. In other words, Iran's oil has almost NO IMPACT on gasoline prices in the US.

You're being set up by the commodities traders. They set the future price of gasoline based on "predictions" of future supply and demand but they get to decide what it significant in their analyses. Big Oil is the patsy, but they benefit and are used to the abuse, so they don't care. It's the money guys, the market men, the capitalists, the same guys who brought you the tech bubble, Enron, and consumer debt.

Now you know.

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