NEW YORK (AP) – Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two boats in the Persian Gulf. Retail gas prices as expected rose further into record territory, nearing $3.60 a gallon. Crude prices rose on initial reports that a U.S. ship had fired on two Iranian boats; the news raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region. A Navy spokeswoman said the origin of the boats was unclear.
The news was enough to send light, sweet crude for June delivery up to $119.55 before the contract retreated to settle up $2.46 at $118.52 a barrel on the New York Mercantile Exchange.
Every day the excuse to charge more for oil gets more ridiculous than the day before. How it can be justified that the world price of oil should be higher based on a minor incident in the Persian Gulf is a jump over the Grand Canyon. When there isn’t any reason to raise the price of crude, they raise it anyway and call it “Market Sentiment”. What is market sentiment? I have come to believe it is traders wanting to profit from raising the price of oil.
Recently, OPEC said they wouldn’t increase the production of oil because there was enough supply to meet demand. Since I haven’t seen any shortage in Canada or the USA or heard of any around world I have a tendency to believe them (OPEC). So why is oil going up daily? In the last 6 years it has tripled in price. Could it be sub-prime greed? And furthermore where does all that money go. The oil companies haven’t invested in any new oil refineries even though last year they made over 30% on the money they have invested. Are they creating shortages by reducing the capacity to refine the oil they do have? And isn’t 30% return on investment more than enough reason to invest in the business of refining oil?
The key to the oil company’s scheme is to look like they aren’t in control of the price. They claim it is the market that sets prices. What they mean by that is, there are a bunch of guys in a room bidding up the price it would appear for no rational reason. Of course they can’t help that – now can they?
Real market driven pricing isnt’ determined by a handful of people. It can only be measured when there is unbiased competition for demand. But prices aren’t set by demand, but by the perception of demand. It is a handful of traders who decide the price, based on their perceptions of demand. When the price of oil rises rarely is the justification anything to do with demand, or supply for that matter. When one group controls prices and supply they have an unfair advantage in the market place. What we have is not a free market, and there should be intervention world-wide to protect the consumer and our economy from being raped.
When prices where $40 a barrel the oil industry was profitable, at $80 is was outrageous. At $120 per barrel the profits are immoral, but they still want more. They will continue to gorge themselves on oil profits and recently predicted $200 per barrel of oil. Why? Don’t they have enough money? How much more money do they want/need?