Oil has reached a new record - $93 per barrel - despite plenty of supply. The news will tell you that it's because of geopolitical tension between the Kurds and Turkey or because of refinary problems in Mexico but the reality is, the world oil markets are pretty calm. The Fall hurricane season was tame and neither the Kirds nor Turks are big oil exporters. There is also a plentiful supply of oil.
So, what's happening? It appears that traders are using any news story to drive up the price of oil and make enormous profits. Remember when electricity rates spiked in California? At the time everyone thought it was because California didn't have enough electricity. It turns out, traders were artificially inflating the price. Notice how prices have come down and there isn't any more talk of a dire electricity shortage.
There is plenty of oil. Eventually prices will come down. Hopefully, the general consumer won't have to pay for others to get rich much longer.
Comments
Jeff Seymour
October 31, 2007
Sam, It appears you are right on, as always. The Saudis are going to flood the market so that alternatives become less attractive to develop and implement. You'll see it under $60 a barrel very shortly.
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