2-27-08 by dugan
If oil were shoes, its price would be sinking today like a 6-inch spike heel on the beach. Oil and gasoline consumption are down nationwide and U.S. stocks of oil keep rising. The shoe store manager in this situation would have the "50% Off!" signs in the window pronto. Yet as we keep seeing, oil is captive to speculators, not a competitive market. The gamblers and the oil companies win big-time, and economic consequences be damned.
Oil prices spiked to another all-time record today, over $101.00 a barrel for crude oil. Gasoline prices are headed in the same direction, rising at the rate of more than a penny a gallon a day, to $3.14 nationally and $3.37 in California, says AAA. Diesel fuel hit another daily national record of nearly $3.60 a gallon ($3.81 in California, driving up the price of California crops that are delivered across the nation). What’s the result? The highest wholesale inflation rate in a generation.
"Year over year, the [wholesale index] is up 7.4% — the fastest pace since 1981," noted MarketWatch.
On top of all that, some major refiners are cutting back on making gasoline and diesel, a deliberate effort to drive pump prices higher. It’s a combination that makes $4.00 a gallon gasoline real. Diesel is almost there in the West.
Yet the White House is silent and Congress is moving at the speed of molasses. Even if a measure to begin regulating the hedge funds’ energy trading isn’t amended to death (it’s part of the farm bill being negotiated between the House and Senate versions), the mild regulation it may take months to get passed and a year more to get up and running. No part of goverenment is proposing oversight of refineries, no matter how fast they break down and shut down.
If the presidential candidates respond with the specifics of what they’d do about these record prices and inflation rates, we can have a glimmer of hope that change is possible. The remaining candidates are not the biggest recipients of oil industry money (see "Slick Seven" on OilWatchdog’s front page). That could change, and we’ll keep a close watch on it.