The Real Conspiracy on Oil Prices
Both Bill O’Reilly and President Obama blame ‘speculators’ for the run-up in oil prices. O’Reilly just doesn’t know any better; you can decide for yourself what Obama’s motives are. Speculators are people who buy and sell futures contracts either to make money or to protect themselves from future shortages and/or price swings. When I was in the wool business we bought futures to guarantee a supply at a known price. There is nothing illegal or immoral about speculation in a commodity.
The main ingredients pushing up the price of oil are twofold: 1. fear of shortages from closing the Straits of Hormuz or an embargo, and 2. the declining value of the dollar due to Obama’s massive borrowing and spending. The real conspiracy is discussed below:
Oil and Gasoline Prices
By Seldon B. Graham, Jr. March 12, 2012 American Thinker
Actual oil prices are unknown to most Americans. The only oil price reported by the media is the Wall Street speculators' guess of the price of oil six months in the future. A guess about the price of oil six months in the future should not be the basis of emotional and unreliable opinions given to the public about the rising prices of gasoline (not "gas," which is natural gas). The American public deserves more.
The truth is that we do not know what the actual oil prices are. A few of us know that the price of U.S. crude oil is always cheaper than the price of foreign OPEC crude oil. Some of us know that because we have followed "World Crude Oil Prices" on the website of the Energy Information Administration (EIA) of the U.S. Department of Energy for years.
On November 11, 2011 (probably while I was marching as a World War 2 veteran in the Veterans Day Parade), the EIA shut down the World Crude Oil Prices website. EIA did not even leave up the valuable historic data on the website. The Obama administration has hidden actual oil prices from the public. That should be a scandal.
U.S. crude oil prices have always been lower than foreign OPEC crude oil prices because of "posted prices," a concept unknown to Bill O'Reilly and the Democrats. Long before there was an oil commodities market on Wall Street, the definition of a "posted price" was that price which a buyer makes public to give notice that the buyer is prepared to pay a certain sum for a barrel of crude oil. In the past, U.S. refiners used to post at the gate of their plant the price at which they were prepared to buy a barrel of crude oil on a given day.
Today, posted prices of crude oil buyers are often found on the internet. Examples: Chevron, ExxonMobil. Posted prices of a certain crude oil buyer tend to become permanent with oil producers since it can be extremely expensive for the oil producer to build a new gathering line from the producing field to a different crude oil pipeline.
U.S. oil producers do not sell their oil to the highest bidder, like Bill O'Reilly has told his audience for years.
Last November, when EIA removed the data from the World Crude Oil Prices website, the actual average foreign OPEC oil price was $112.51 per barrel and the actual average U.S. oil price was $106.04 per barrel, a $6.47-per-barrel difference. At that difference in price, American consumers would save $21.8 billion annually if U.S. oil replaced foreign oil.
Clearly, Americans need to demand that the U.S. Department of Energy provide actual oil prices as it provided before November 11, 2011. These actual prices would show the need to expedite U.S. oil drilling on federal lands.
In the meantime, there is a way to immediately lower gasoline prices. Remove the ethanol mixed with gasoline at the pump. Refineries are having to pay millions of dollars for cellulosic ethanol waivers because there is no cellulosic ethanol production. This causes gasoline prices to be higher than they should be. Ethanol has only 61% of the energy of gasoline, so it gets very poor mileage. Removing the mandate which forces ethanol to be mixed with gasoline at the pump would result in cheaper gasoline, which would travel farther and cost less per mile of travel.
Ethanol production in 2010 was less than 10% of foreign oil imports and can never replace foreign oil imports. Using ethanol emits more carbon dioxide into the air than using gasoline. It's the ethanol, stupid. Ethanol is increasing gasoline prices. Get rid of the ethanol mix in the gasoline at the pump.