The Real Reason Gas Prices Are Soaring

pResident Obama had some “interesting” things to say about “climate change deniers” and rising gasoline prices as he spoke at a $35,000 per person Democratic fundraiser in San Francisco.

Let’s talk about the REAL reason gas prices are soaring

the price has nothing to do with supply and demand for oil. It’s the financial market for oil, filled with both professional speculators and amateur investors betting on poorly understood oil exchange-traded funds, who have ratcheted up the price of gas to such sky high levels.

“There is no supply issue going on here – what you have is the perception of the possibility of a supply issue,” Dicker says. “A whole bunch of people are pouring money into an oil market trying to take advantage of what they perceive to be a real risk in supply. It’s a marketplace that I argue should not be allowed to be wagered on like a stock or bond.”

Among the biggest winners of the new oil markets are investment banks like Goldman Sachs… In 2004 and 2005, Goldman Sachs made $1.5 billion a year trading oil, Dicker says. In the first half of 2009 alone, the firm made $3.4 billion oil trading profits.

We hear lots of propaganda from the Democrat[ic Socialist] left about the “greedy” oil companies making a profit. Oil companies produce a product that we all need. Will we hear those same leftists complain about the multi-Billion dollar profits that greedy Goldman Sachs is making from driving up the price of oil while adding no value?

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20 Responses to The Real Reason Gas Prices Are Soaring

  1. —————————————–

    July 14, 2008: President Bush lifted an executive order banning offshore oil drilling, and urged Congress to follow suit. President Bush also called for exploration of Alaska’s Arctic National Wildlife Refuge (ANWR).

    That led to the drop you see in the July-August 2008 timeframe in the above graph, but then prices rose again in the anticipation that the Democratic-led House and Senate would not follow Bush’s lead in lifting the offshore drilling ban.

    What happened when the House DID follow Bush’s lead?

    Late on September 16, 2008, the House approved on a 236-189 vote legislation that would open waters 50 miles off the Pacific and Atlantic coasts to oil and natural gas development.

    Is it any coincidence that September 16, 2008 marked the record high, and that the price of gas fell after that?

    But note the slope of the decrease from September 16th to September 27th, and then the slope of the decrease after that.

    What had changed?

    On September 27, 2008, the U.S. Senate by a 78-12 vote eliminated a 27 year ban on offshore drilling off the Atlantic and Pacific coasts of the United States.

    Open up supply, remove any “perception of the possibility of a supply issue” (see original post above), and the price of gas dropped from a high of $4.058 to a low of $1.572 in three and a half months. That’s a decrease of over 60%.

    So who do we have to thank for gas prices approaching new record highs?

    Barack Obama for his illegal moratorium.

    Barack Obama for his illegal war in Libya.

    Do you want to see gas prices drop by more than 50%? The answer is DRILL HERE! DRILL NOW!!!

  2. Local copy of Gas Price Graph:

  3. And oh, by the way, if we began to “DRILL HERE! DRILL NOW!!!”, and began tapping our proven oil reserves which are over THREE TIMES the size of the proven oil reserves of the world’s #1 oil exporter (Saudi Arabia), there would be absolutely NO “perception of the possibility of a supply issue”, and the price of oil would likely drop by more than 50%… just like it did in 2008:

    (Click picture or here for full article)

    That graph is from a December 9th, 2010 news article. Gas prices were “approaching” $3/gallon. Now, only four and one-half months later, gas prices are approaching $4/gallon in that region (a roughly 25% increase in price in less than 6 months!) Some parts of the country are already over $4/gallon, and I’ve heard that in Washington, D.C., prices are approaching $5/gallon.

    ———————-

    UPDATE 2/19/2012
    They have removed the gas price graph from that story!
    I’m glad that I saved a local copy and used in the comment preceeding this one!

  4. zmalfoy says:

    And that about sums it up. I file this in the same folder with all the other parts of the “Plan to Destroy America”.

  5. skeeter says:

    The oil companies begin screaming in the 1970s about the shortage of oil. Then came the long lines at the service stations. The oil shortage scam worked so well for the oil producers there begin to be a shortage in coffee, toilet paper, you name it, there was ahortage of it. Whatever IT was IT was in short supply. Then Opec got into the act and begin to set prices and as soon as the price was right the gas lines disappeared. So did our money. It went into our gas tanks and came out and into the oil producers pockets.

    Peak oil has been a scham now for decades. It was reported a few days ago North America has enough proven natural gas reserves to last for the next 200 years at the current demand. There is oil in sand on the earth’s surface along the American Canadian border that can be strip mined. The oil is then extracted with heat and pressure. Oil in shale that lies on top of the ground. Oil everywhere.
    The American oil producers have been happy to sit back and let Opec take the heat for high fuel prices. There is IS NO SHORTAGE OF OIL! PERIOD! I have seen new gathering systems constructed for hundreds of new wells that were tied into the systems only to be shut in until the companies got the price that OPEC set for the product. They are still doing that today.
    Has anyone seen any gas lines in the last few years? Where is the shortage that was ocurring 40 years ago? Here is the catch. There is a shortage in refineries. We need more refineries, we have that crude, we need the refineries and Obama (&climate change??? cap and trade) will not permit the construction of new refineries. But that is not just something Obama has started, that has been an ongoing situation now for years. It works in well with oil producers cover-up for shortages. Even if OPEC sent US an extra 20,000,000 barrels of oil each and every day we do not have the capacity to refine it and produce gasoline. America has an abundant supply of fossil fuel, but not as abundant as the greed of the oil producers.
    Here is a little post script–PS just think how much our supply of natural resources would increase without the extra 25,000,000+ illegal aliens that are sucking it up like a sponge. Even with the extra burden of those 25,000,000 THERE ARE STILL NO GAS LINES. THINK ABOUT IT.

  6. kj says:

    Yes, we do need refining capacity. No one wants a refinery in their backyard.

    Some oil producers may shut in wells if the price is too low to make producing the well economical. To move the oil out of a well, you must have some place to put it, like a pipeline or storage tank. What if the pipeline and storage tanks are at capacity?

    In the 1970s, I experienced gas lines. The gas lines were due to two factors: the Iranians refused to sell us any oil, deducing supply, and the Carter administration refused to let the marketplace dictate the way that gas was distributed. Gasoline was “allocated” to each gas station. Some cities were short of gas resulting in gas lines and empty gas storage tanks, while the supply in most rural areas was quite adequate.

  7. kj,
    Thank you for your comment.

    we do need refining capacity

    Agreed. More refining capacity never hurts.

    What if the pipeline and storage tanks are at capacity?

    Then EXPORT IT AT A PROFIT.

  8. skeeter says:

    When the bidding began for oil/gas leases on Alaska’s North Slope (1960s) this was the opportunity the major oil companies had been looking for to get rid of the many small independent oil producers and by extension the small independent drilling companies. The majors bid the Alaska leases so high the independents could not compete. It worked quite well in the lower 48s also. BP begin early in Alaska and lucked out.
    !970s is when we begin to have oil shortages=gasoline shortages=long service station line=increase in price per gallon for gasoline. The majors (oil producers) could now begin to control gasoline prices. The small independents had kept the price of gasoline below 30 cents per gallon and they were still making huge profits in the 1950s-60s, brand new $$$$$$millionairs yearly.The old movie “Giant” was a good example.In some areas of the United states gasoline was 15-16 cents per gallon. I know as well as anyone with time any product will of necessity increase. From the 60s into the early 70s prices doubled and in some instances tripled.
    This is when all the shortages begin. Remember Richard Milhouse Nixon? AKA Tricky Dicky–LOL, late 60s early 70s.!!! He even went on national TV to tell us we had to tighten our belts. One of his suggestions was, “husbands and wives should shower together” in order to conserve our resources. Sort of like the Obama telling us to keep our tires inflated to conserve on gasoline.
    Seriously, Note the diferrence in the BP (British Petrolem) and Richfield (American petroleum co.) The American cos. raised the bid in order to drive out the competition.

    http://www.starzhost.com/petroleumnews/products/BP50AK_cover.pdf

    just to show how competitive and to what extent these oil producers would/will go to. In New fields, like the North Slope was, there is very little data let out by the drilling and oil cos. They call this “Tight Hole” meaning , everyone working for those cos, KEEP YOUR MOUTHS SHUT, even with the threat of bodily harm in some instances! The majors would keep helicopters in the air hovering above competing companies drilling sites in order they could count the number of stands of drill pipe when the drilling rig(s) had to pull out of the hole to change drlg bits. A stand of pipe being 90-93 feet long= 9,000-9,300 feet deep. They wanted to find out the depths of the pay zones that were in “tight hole” areas not yet proven.That is just an example, those wells were deeper than that. There was/is no limit to the expense these producers would go to. Now we have no independents to speak of to help keep the price down.
    When the small independent operaters finished a well they needed returns on their investment immediately. They could not wait for the price of crude to go up-hence they helped keep the prices down.

    I am not accusing democrats or republicans of one being more greedy than the other. However, I do know the major oil producers are ALL GREEDY. That is a fact. If one refinery goes down, prices increase exponentially, if a hurricane is in the weather forecast prices increase, if there is the threat of conflict (anywhere) in the world prices increase. If we have a cold winter, and that is what winter is, cold, prices increase. If we have a warm summer prices increase and then there is the extra increase because the school children may visit their grandparents while school is out (vacation).

    Without natural resources we can’t wage war(s), even to protect ourselves. That is why Germany was producing so many synthetics. Some say today, the greatest threat to our national security is our national debt, our economy. Our economy is dependent in every way imaginable on ENERGY, our natural resources. Even “back in the day” –WAY BACK IN THE DAY, the oil producers were among the most patriotic people in America, and FARMERS were called “The Backbone of America”.
    Meanwhile,today, the manager of one of America’s Chain Supermarkets told me last week “the fish farms are filling in their ponds in order to plant soybeans and grasses from which ethanol can be made”. Farmers have already swithched from wheat and other food crops to only corn, from which ethanol can be produced. GREED is what is being produced today, abundantly.
    I know I haven’t shown any statistics and/or numbers, which over time I could. What I am basing what I am trying to write on is 50 years experience in the oil and gas industry from W.Texas, to Alaska, Saudi Arabia, Laurel Mississippi and everything in between. Both land and offshore.
    But even yet, it still seems odd that back in 1970 when we begin to experience long gas lines, we had millions less in population than we have today, those lines have disappeared. We were supposed to be “running out of petroleum” 40 years ago, PEAK OIL. So why haven’t we depleted our source of oil yet? Because there is no cap on the amount of money that can be made on a barrel of crude.

    Does anyone remember Old oil/New oil regulations? That has gone by the wayside. Once upon a time Old Oil could not be sold at New oil prices. That is to say, oil produced when the cost of producing it was say, $2 a barrel, could not be sold for New oil that might cost $3 a barrel to produce three or four years later. Does that still apply? Today it seems all oil is sold for new oil. Talk about profits? GREED! Price of oil in the early 1950s? $1.30 a barrel more or less. But what the hey, a brand new 1950 chevy sedan — less than my lawn mower cost today. That was a chevvy with a radio, heater, and cigarette lighter. You had to buy your own cigarettes though.
    Natural gas was/is so abundant it was flared off, burned, because it was ——– oh well forget it. Needless to say, obviously, I have just about as much love for the oil producers as I have for the Obama rhat will not let them DRILL—-DRILL—-DRILL, or China will.

  9. skeeter says:

    Drill pipe at 90-93 feet per stand x 100 stands–sorry= 9,000-9,300 feet depths, sorry.

  10. skeeter says:

    http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm

    Note the Rig Count FAQs, especially “When was the highest and lowest active rig count recorded?”
    Who was prez in 1981? who was prez in 1999? The Republicans have always been oil industry friendly. The socialists have always been anti oil industry because it would/will not go union. There was an old saying in the oil industry, “There is nothing like Reed whiskey and Hughes bits” and “Only a jackass can’t tell the diferrence”. That is because when the salesmen came to the rigs peddling drill bit, Hughes bits were so superior to Reed bits the drillers always chose the Hughes. However Reed would always give the crews a fifth of whiskey as a PR gesture in hopes of selling bits in the future.
    “Howard Hughes was ‘A Raving Republican’ “.The Howard Hughes who owned Hughes Tools Company.
    Reed also known as Smith International INc. and Wilson Industries, should have followed Halliburton to Dubai (should be small d).

    Both lovely creatures of the oil industry.

    The Securities and Exchange Commission (SEC) charged that two high-ranking company officers, the CFO and the controller, authorized the payment of a $75,000 bribe to an Indonesian government official in March 1999. (The two officers both resigned later in 1999.) The bribe was made to induce the official to reduce the company’s tax liability from $3.2 million to $270,000. This was a violation of the Foreign Corrupt Practices Act. The SEC further alleged that similar payoffs had been made in India and Brazil. In September 2001 Baker Hughes reached a settlement with the SEC regarding these charges, without the firm admitting or denying the charges and without a fine being levied. Then in March 2002 a former Baker Hughes employee filed a civil lawsuit claiming that he had been fired in October 2001 for refusing to pay a bribe to a Nigerian oil official in order to secure a large drilling contract. Both the SEC and the Justice Department soon launched investigations into the matter. (copy and paste).
    The old Movie “Giant” was indeed a good example of the Good, the Bad, and the Ugly in the Oil Industry.
    But you know what RP? I did get to witness ancient pieces of cottonwood trees wash up from the bottom of the Bering Sea in Prudhoe Bay Alaska. Proving “Climate Change” is not a new thing. 10,000 years ago the North Slope of Alaska was a sub-tropical region. The oil Industry is what we make of it, and believe me the oil producers are making the most of it as possibile. I don’t blame them, we only go round once. ;)

  11. At HotAir:

    Video: Who gets the blame for high gas prices?

    … only 1% of the national media’s stories on rising oil prices have mentioned Obama’s [illegal] permitorium in the Gulf

  12. skeeter says:

    I seen and listened to a news reporter on Fox News the other day ask the question that was asked in a poll’. I like Fox News, don’t get me wrong. The Poll question was “How many trust the goverment to prevent another oil spill like the one in the Gulf of Mexico and the Deep Horizon Drlg rig And BP.

    EXCUSE THE HELL OUT OF ME. GOVERNMENT HAS NOTHING TO DO WITH OIL SPILLS. GOVERNMENT KNOWS NOT ONE IOTA ABOUT THE DRLG. INDUSTRY AND THE HAZZARDS INVOLVED IN DRILLING FOR OIL !!!! Obama does not know how to tie his shoes, much less how to prevent oil spills. Anyone who thinks diferrently should check the air pressure in their tires.

  13. Speaking of economic sovereignty…

  14. Look what else Goldman Sachs has been doing…

    How Goldman Sachs Created the Food Crisis
    Don’t blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street’s at fault for the spiraling cost of food.

  15. Pingback: FROM HOPEY/CHANGEY 2008 TO | THE ANTI LIBERAL ZONE

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