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3/08/2011

About those prices ...


One merely has to be breathing in order to know that gas prices are running upward with no end in sight. Everybody is affected by the upsurge in prices. And not favorably.

I have wondered, for a while, why the prices are swinging upward so rapidly. I have been hearing that the Saudi's have increased their production of oil in order to keep world production levels stable - so why are prices going up if supply is actually exceeding demand? Oil production is, at this point, exceeding demand, by the way.

The answer is simple - and the answer pisses me off. Royally.

The answer is Speculators. Hedge Funds and Pension Funds have jumped into the oil market and their speculation in oil is what is driving up the prices - their speculation based on the assumption that unrest in the Middle East makes supply to the rest of the world shaky, at best - and an inability on the part of the Middle East to keep supplies steady means that prices will go up, and they want to be in the market when the prices go up. Of course, their speculation in oil drives up the prices even in the face of, not only steady, but increasing supplies.

Hedge Funds? Pension funds? Now comes the part that REALLY pisses me off.

Hedge Funds typically have large buy-in figures. You and me? We can't afford to buy in. You and I don't have a million or so to throw into the Fund. So we can't participate in the profit taking - we can't hedge against the increase in prices. And the Pension Funds? They jump into the market with hundreds of millions, if not billions, of dollars and, along with the Hedge Funds, lock up large amounts of oil by outbidding the oil companies that would otherwise purchase and process the oil into the various products that oil makes, including gas.

It's time to license the ability to buy crude on the 'open' market. It's time to sell those licenses to Oil Companies and not to Hedge Funds and Pension Funds. Their only purpose in oil speculation is to make money - and they make that money by reaching into your pocket and mine - and by stifling this fragile recovery from recession.

They are making it harder for you and me - in the name of making a buck - and you can't tell me that they care WHAT the impact is on the national economy.

And one more thing ... does anyone, besides me, see the irony in Pension Funds making it more difficult to get to the point one can actually retire?

Ndinombethe.

6 comments:

Megryansmom said...

The only thing not going up is my paycheck :(

PattiKen said...

I'm reminded of the fire in a Taiwanese resin factory in the 1990s. The resin was used in computer chips, so destruction of a source might understandably affect prices. But the next day? I went in to CompUSA the next day to by a memory chip, and the price had more than doubled from the day before, when I'd called to ask how much it was. The fire was the reason they gave for the jump. Yeah, huh?

It all comes down to greed. But karma's a bitch. Every now and then, the Madoffs of the universe rise up, and the greedy begin eating each other.

HalfAsstic.com said...

PattiKen's comment reminds me to be hopeful that the greed won't win out for long.

Tracey - Just Another Mommy Blog said...

It truly sucks and I have no idea why we can't do something about it before it breaks every low income family into bits...

Coal Miner's Granddaughter said...

It all comes back to one of the seven deadliest sins: greed. Pisses me off.

moneythoughts said...

There are good reasons for corporations, such as airlines, FedEx, UPS and others to lock-in oil prices by investing in oil futures. True, hedge funds and other speculators are part of the reason for prices going up. If I was president, I might try selling oil from the government reserves to take away some of the speculation, but that does not always work. There is an expression in trading, "don't try to catch a falling knife." Going against the tape can be dangerous in a financial way.