It does not take a rocket scientist to understand the simple rules of supply and demand. When the cost of a barrel of oil rose from $88 to $104, did everyone really believe it was because the general population went out and bought a gas guzzling Hummer or that the oil moguls were wringing their hands and frothing at the mouth looking to cut production to push the price higher? Conversely, when the price [image-nocss] dropped from $104 to $98, was it because everyone sold their Hummer and stopped driving, or the oil companies all of a sudden had a surplus of inventory?
Come on folks, oil is not a local economy; it is a world economy, and geopolitical issues along with other influences drive the markets. Do I believe that there is one factor that moves prices? No; however, I do believe that the wild price swings are primarily caused by speculators that, coupled with the current unrest in the Middle East and the weak dollar, etc., causes investors to protect and/or enrich themselves in the commodities markets.
Stop all the hubbub with the oil companies and get oversight legislation in place so there are mechanisms that trigger the suspension of trading when the price rises or falls a certain percentage. Those safe guards are on other commodities, why not oil? And for pity sake, stop spending my money on committees investigating what has already been investigated.
How about we focus on the future of energy in the United States? There are more reserves available to us in the Gulf of Mexico, Alaska and the Pacific and Atlantic shelves, but we refuse to allow that to happen. How about we investigate how to safely drill in 5,000 feet of water instead of spending tax dollars on committees that investigate what has already been investigated? How about we put our arrogant egos in our pockets and stop all the partisan buffalo chips and for once get on the same page to find a long-term solution to our growing energy issues?
Yes, there are problems with pulling more oil out of the ground domestically since we do not have the refining capacity. We have not built a refinery in this country since the 1970s. Maybe we need to get back to basics. I believe we need to be looking at alternative fuels, but please don't blow smoke at me by telling me ethanol is it. We don't get the same BTUs out of ethanol, which means we get less mileage than from gasoline. Is that really weaning us off of foreign oil?
And one final thought, since I have pontificated long enough: For anyone who believes that fossil fuels will eventually be phased out by alternative fuels is on vacation at Disneyland. Everything we use all day, everyday is a direct relationship to oil.
Jim Ferullo is director Southeast Division at Empire Petroleum Holdings LLC, a motor-fuels distributor based in Gaithersburg, Md. These comments are his own and do not necessarily reflect the opinion of Empire Petroleum. To respond, please send comments to glindenberg@cspnet.com.
(Click here to read the CSP Daily News report "Dogs, Ponies, Rats, Unicorns & Rhinos: Senators grill top oil execs over tax breaks, profits, gas prices; oilmen stand their ground.")
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.