Elmer, have you ever watch how the speculators work? I've been watching the oil and gas prices for 20+ years and it is a crooked game that should have more government regulation. When the commodities trading was somewhat de-regulated, the prices started going up.
Our (USA) demand for fuel has been flat and is in fact less than 2007 (the high point for fuel demand in the US). With a demand that is dropping and supplies not scarce, gasoline prices should be less than the trading amount of $ 2.80/gal. And this has dropped $ .35 in a week because of the "debt ceiling" and manufacturing outlook. So what does that say about demand and supply? It means nothing to speculators, especially when they don't even take delivery on it.
Another example, look at the gasoline prices after hurricane Katrina and how they spiked. Did they every go back to the pre-hurricane levels? No. Why because more speculators began entering the market. They jacked the price to $3.50+ gallon in 2008. Then with oil prices peaking, the US & world economies started going into the tank. Price of commodities drops along with thousands of layoffs. Is there a correlation between the two? Yes. Case-in point, look at us now. The price of gasoline at the pumps is at $4.00 a gallon (CT price) and the economy is starting to slip again. People are choosing gasoline for their car over any extras or larges purchase, which begins the spiral slope down again.
Another way of looking at supply and demand and speculators:
2008: crude peak price ~ $147.00 barrel
2008: gas (nat ave) ~ $4.11 gal
2011: crude peak price ~ $114.00
2011 gas (nat ave) ~ $3.91
Where is the correlation? 20 cents difference in gas average compared to 30 dollars per barrel. This is caused mainly by speculation. Yes the dollar is somewhat weaker, but the Euro isn't exactly kicking butt, and Brent oil pricing is even worse.
Lack of drilling and refineries isn't our problem (though we need both). The supply is there and the demand is down, yet prices remain high, putting our economy in risk again.
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