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What's causing the steep rise in oil prices
Traders work in the crude oil and natural gas options pit on the floor of the New York Mercantile Exchange on June 20, 2011 in New York City.
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JEREMY HOBSON: The price of oil is up above $100 a barrel, they're up 2.5 percent this morning in New York Trading. And the price of oil has risen by about 20 percent in just over a month.
And that's where we'll start with our regular Wednesday analyst, Josh Brown of Fusion Analytics. He's with us live from New York as always. Good morning.
JOSH BROWN: Good morning.
HOBSON: So Josh, why this steep rise in oil prices?
BROWN: I think a lot of what you're seeing is not so much to do with commercial or industrial demand, but speculators in the market. The CFTC (Commodity Futures Trading Commission) just put out their Commitment of Traders report, and they're showing that hedgefunds have increased their crude oil bullish bets by 7.2 percent into last week. That is a high since May.
HOBSON: So these are just investors that are just trying to make money by betting on what the price of oil is going to do, not necessarily driven by supply and demand -- but I assume it still has a big impact on the global economy if oil prices go higher?
BROWN: That's the unfortunate part of this. So, the threshold for where the consumer starts to push back -- they say -- is somewhere around $5 per gallon of gasoline, which would equate to a touch over $100 crude. So the last thing we want to see is for speculators driving prices to the point where it affects the economy.
HOBSON: Well Josh, we've heard this story before, of course -- are we in any better shape to deal with higher oil prices now than we were say, three years ago?
BROWN: Probably not. I think the big problem is that the government has made bets on solar and wind, there are subsidies for ethanol, but really what we could have done, and we could still do, is something with nat-gas trucking. I think that would move the needle and have a much more ameliorative effect.
HOBSON: Josh Brown of Fusion Analytics, thanks as always.
BROWN: Thank you.
Nov 19, 2011 =>
I'd like to know what everyone on this board thinks of this guy:
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http://moneymappress.com/video/mmp/ead/ead_oil_constrict.php?code=EEADMB...
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http://www.kentmoors.com/
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http://www.duq.edu/political-science/faculty/moors.cfm
ONE "underlying reason" that comes around each year is heating oil demands along the Eastern Seaboard.. in particular, New England. That's usually good for a few bucks a barrel... and, now, with the biggest October snowfall on record, I'm sure that those who didn't buy their oil in July are kicking themselves.
What I don't understand (yet) is,why is there no push for CNG vehicles? The nearby city buses have been running these for nearly 20 years, now... and, with "proven domestic reserves" & a falling price (glut on the market?) it seems that a simple conversion should be going on apace. It ain't rocket science, folks... despite what they may say in Detroit... & D.C. ^..^
This industry is first on my list for nationalization. It’s ridiculous not to when you think about it. Once you do away with all the jingoistic yahoo about making the world safe for democracy or freeing the world from repressive, dictatorial regimes (unless they happen to be pro-corporate, right-wing regimes), you’re left with the reality of sending U.S. troops to other countries to protect the interests of multinations and their investors—public tax dollars (and soldiers’ lives) in the service of private interests. That’s bas-akwards. Give all Americans an equal stake. Likewise nationalize GM (instead of throwing taxpayer money at it), start punching out electric vehicles, and 1) reduce costs for consumers, 2) reduce our dependency on foreign oil, 3) create union jobs at the expense of company profits and investor dividend payouts, 4) eliminate the need to send soldiers off to war—quite possibly preventing WW3 by dealing directly with the real causes of war, which are historically economic, 5) provide an incentive for competing private manufacturers to retool at their own expense, and 6) address the issue of climate change. Private for-profit business models are not always the best solution, exclusive of all public industry, particularly when it comes to prioritizing public concerns.
And let's not forget the cumulative effects of our current administration. Bans or holdups in offshore/domestic drilling, burdensome regulation, an overall unfriendly attitude toward business, and constant delays in oil pipelines have each contributed to increased prices. If we had taken proper steps 3 years ago, supplies would already be greater and speculative tendencies lower.
