Tuesday, 12 July 2011 00:00

Are the Oil Companies Really Gouging Us?

Question: Are the oil companies really gouging us? If not, why does the price of gas keep going up? Mandy K., NC
Answer: They are indeed gouging. The price of a barrel of oil is set by commodity traders six months out on delivery. The price you hear the media announce every couple of minutes is not the price oil companies are paying at that time. The oil they're selling you today actually cost them much less. They have no business raising their prices in accordance with the daily price fluctuations of the oil futures market. One of the worst incidences of gouging I've ever seen is directly after Hurricane Katrina, when gas stations around the nation immediately raised their prices. This was a shame and a deep disgrace—and the nation should have rebelled at companies gouging their fellow-citizens during and after catastrophes. But our people are fat—and our government is bought off. So we have to sit back and take the shaft. For when governments team with big business, citizens have no chance except to eat salt for dessert—if that is what the pair so desires.
In the past year or so since the Slaughter in Iraq began and our occupation there took place, every single oil company has raked in multi-billions over what they have in the past. But it is not because of the economic law of supply and demand; at the end of every day there is more oil than the entire world uses. Our current supplies are so abundant that prices should be about ten-percent of what they are. But as I noted earlier, as long as the American people buy into the media myth-fact that the US is dependent upon Middle East oil and that the earth is running out of oil, this is the type of fiscal treatment we will receive.
It's a scare, a fright, and a hype that has run the price of a barrel of oil up on the futures markets since the Slaughter in Iraq began. Traders today are mostly momentum traders, just as we find among large stock traders nowadays.
For those of you who have not read my studies on momentum trading, just think of someone putting his money on whichever way the trend is going. If the price is going up, then for no other reason than because it's going up, they buy—following along with the current trend irrespective of actual supply and demand. Or, in the case of stocks, irrespective of whether or not the company behind the stock is with worth a crap or not, if the charts inform the trader that the trend is up, then they buy. And vice versa for when prices are going down—they sell irrespective of the fundamentals.
Don't worry. When prices start fading, when the fear and hype subside, then you can bet that they will crash faster than they rose. They may never get down to where they were a few years ago, when gas was under a dollar a gallon; but they will come down.
Share on Myspace