Last week, crude oil hit an all-time high of $146/barrel. I know everyone is feeling the financial pinch of the rising costs of gas. While we were in Europe, there were several protests by frustrated people looking for some relief.
I’ve always believed that speculators destroyed the real estate market in America, driving up prices artificially. The greed of individuals and corporations took over resulting in sub-prime loans and alternative forms of financing that, eventually, crumbled the market leaving thousands of people nearly bankrupt. We can see where that speculation landed us. Economists anticipate another 2.5 million home foreclosures this year.
In my humble opinion, speculators are doing the same thing to the crude oil futures market. Twenty years ago, 21% of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66% of all oil futures contracts, and those numbers are only the deals we know about. Speculators buy up large amounts of oil and then sell it to each other – over and over again. Greed takes over because of demand but much of that “demand” is artificial (created by the speculators). Prices skyrocket and speculators pocket millions of dollars. It is estimated that a barrel of oil may trade 20-plus times before it is actually delivered and used. And with each trade, the price goes up and all of us pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs. That means oil COULD be selling between $86 and $116 a barrel instead of $146. And that translates to considerably lower prices at the pump for consumers.
I’ve stated before that I believe we should definitely be exploring alternative forms of energy. I also believe that we should be drilling for oil in our own country to reduce our dependency on foreign oil. But both of those things will take time in order to see an impact. Speculators, on the other hand, can be stopped much sooner resulting in dramatic decreases in crude oil prices now.
If you want to know more, check out www.StopOilSpeculationNow.com. You can make a difference!