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Stacey Vanek-Smith: Oil’s up a bit today. Crude had been in something of a free fall — it’s down 15 percent from last week. But we’re still well above the lows of recent months. That jump in price evidently has had a lot to do with speculators. Marketplace’s Bob Moon has more.
Bob Moon: Oil price speculators don’t just pump money out of our wallets. They’ve apparently been skimming profits off the big oil companies, too.
Industry analyst Stephen Schork says gas and diesel prices don’t follow oil in lockstep — especially if drivers and factories aren’t buying.
Stephen Schork: Prices there are more linked to actual supply-demand cost drivers in the market, whereas the crude oil market tends to be more susceptible to speculative runs. And that’s exactly what we saw at the beginning of this year, is that speculative run, and hence we’ve got the tightness in the margins.
Schork explains that’s what’s crimping quarterly profits — the difference between the price they have to pay for crude going in and what they’re able to charge for the refined product going out.
This summer’s rising pump prices didn’t make up for the difference. Only a year ago, the oil companies could still bank huge profits selling crude. But now, Schork says all sides of their operations are hurting:
Schork: Bottom line: This is going to be a very ugly year for the oil business. We’re not going to hear anything about windfall profits.
Of course, on the heels of their biggest profits in history, they’re not likely to find many wells of sympathy.
I’m Bob Moon for Marketplace.
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