Reasons the cost of oil and gasoline are so high
Speculation – Speculators are helping to drive up the price of oil. It is similar to what happened in recent years in the housing market. Many of the speculators are Americans, not people from OPEC countries. Who are the speculators?….Hedge Funds, Pension and Endowment Funds, Individual Investors, ETFs (passive index funds), etc.
Oil Demand – Worldwide demand for oil is increasing, especially in developing countries like China and India, with their huge populations. If China and India base their growth on carbon-based energy, the sustainability of the world’s environment will be further threatened.
Oil Supply – The world’s ability to pump oil may have peaked, at least for now, at about 85 million barrels per day. The US and other Governments have decided not to drill in some locations where there are proven oil reserves. In some countries where the government owns some or all of the oil production capability, oil production is inefficient and the governments are not investing oil profits in oil production capability (e.g. Russia, Iran, Iraq and Venezuela, etc.). In Venezuela, Iran and Iraq oil production is well below all-time highs.
OPEC – OPEC helps to keep oil prices high by keeping a lid on the amount of oil each of its members drill. As oil supplies are kept tight, prices rise. OPEC represents 40% of world oil production, somewhat limiting OPEC’s impact on oil prices…. OPEC vs. non-OPEC data – http://www.eia.doe.gov/emeu/cabs/nonopec.html
Security Concerns – Concern about terrorist attacks on oil production and shipping (Nigeria) facilities and possible war (Iran) have added a premium to oil prices. Terrorist attacks on oil pipelines and oil drilling sites in Nigeria have actually reduced Nigeria’s and Iraq’s oil output.
Refining Capacity – No new refineries have been built in the US in the past 30 years. The existing refineries have been significantly expanded. Increased refining capability would help contain the cost of refined oil products. With relatively few refineries, the risk of refinery downtime is significant (due to hurricanes, earthquakes, terrorist attacks, sabotage, accidents, technical problems, etc.).
Pronouncements from Oil Gurus and Investment Banks – Billionaire energy investor T. Boone Pickens and investment Bank Goldman Sachs have recently predicted much higher prices in the coming year and beyond. Their predictions of oil prices affect how investors act when making investment decisions. When more and more investors and dollars chase a barrel of oil, the price rises.
Weak US Dollar – The weak US Dollar is a significant reason the dollar cost of oil and other natural resources and agricultural commodities have escalated. US economic and energy policies, or lack thereof, are major causes of the weak US Dollar. The last eight years have been devastating to our economy, with budget deficits and the balance of payments out of control.
Insufficient Research Into and Use of Alternative Energy Sources – Much more needs to be done to develop and implement alternative and current energy sources, including renewable energy, clean coal and nuclear energy. Mistakes may have been made in emphasizing corn-based ethanol, which has significantly impacted food costs with questionable benefits in terms of energy generated per dollar spent.
Subsidized Oil Prices – Some countries including China are subsidizing their oil companies. Other countries that are oil producers are subsidizing gasoline prices within their own countries (Saudi Arabia, Venezuela). Oil and gasoline subsidies keep prices artificially low and drive up demand, impacting the worldwide price of oil.
Much of America’s Proven Oil Reserves are Off-Limit for Drilling – We need to drill for more oil here in the US. This will provide an intermediate-term partial solution to our energy crisis while long-term alternative solutions are developed and implemented. Information on proven oil reserves – Alaska http://www.anwr.org/ , US http://www.anwr.org/ , World http://en.wikipedia.org/wiki/Oil_reserves, The Bakken Play region http://www.kiplinger.com/businessresource/forecast/archive/The_U.S._Poised_to_hit_New_Oil_Gusher_080317.html, shale oil http://www.dailyreckoning.com/rpt/OilShale.html
on August 5, 2008 on 9:28 pm
The only energy or oil monopoly in this country is a governmental institutionalized monopoly on our country energy market. The legislative branch has been engaging in anti-competitive energy practices from drilling to building new refineries and much more. They are in clear violation of the
“Sherman Antitrust Act
This Act expresses our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers.” http://www.usdoj.gov/atr/contact/newcase.htm#file
Clearly the governmental restraint are in violation of a free market economy and is criminal negligence on the part of the liberal politicians who are the real cartel that profit in taxes more then 3 to 1 to the oil companies that actually work for their money and then have to pay taxes on top of that. So when Oil profits go up the tax revenue increase is 3 times that of the oil companies. So who do you think is the real cartel???
This criminal incompetence of the democrats and legislative politicians anti free market energy economy in allowing American companies to meet American Oil needs is in need of change and with bush opening up offshore drilling it is time that we conservatives take a page from the left wing play book and for us to us the judicial system in upholding our laws and open up drilling.
Why dose the Senate call for investigations on big oil? Because they are trying to transfer the blame off of them by placing the blame on someone else. By placing the blame on the oil companies and keep people from seeing that government is the true problem they are able to offer false hope in an effort to gain more power and money from taxes while eliminating a free market economy in our country and forcing us to send our money to unfriendly Middle Eastern countries.
Why should we drill?
1) Create more high paying jobs for Americans
2) Become energy independent and stop sending $700 billion to middle eastern countries that support terrorism
3) Invest the $700 billion in America
4) $700 billion is 6% of the yearly US economy, and investing this in America would do what to our economy? Lower inflation and strengthen the US dollar?
5) Instantly drop the price of oil because oil Speculators like me would invest in commodity producers that provide the product like Exxon, Chevron, BP, Shell, because this is the smart investment. When Oil Speculators transfer investments the Oil price falls on the stock market.