Jan 23 2009
Why Gas Prices Are Still High When Oil is Low
Oil refineries like profits. Anyone who ran a business would like a profit. And no one can deny that unless a business turns a profit, they won’t be in business long. Therefore few people would say that oil refinery businesses shouldn’t turn a profit.
But the last time oil prices were this low, gas was almost a dollar a gallon. Suddenly oil is low and gas prices are still double what they were the last time oil was this cheap. What is with that? The truth is that oil is getting bottlenecked on purpose at the refineries. Refinery producers, who enjoyed the nice profits they were getting when oil was over $100 a barrel were in the unusual position of being able to control their profits when their main commodity tumbled in price. The result, less fuel on the market, more profits in their pockets.
This isn’t happening all over the world, and Americans should be concerned. Sooner or later the cuts in production from OPEC will take hold and the price of oil will increase. When that happens the price of a gallon of gas will double again, perhaps even up to six dollars a gallon.
A local business owner last week speculated that the reason people do not have any money to spend is because the price of fuel spiked so high at one time. It was his humble opinion that people in rural America as well as bigger cities have never truly recovered from that time when gas was almost four dollars a gallon. “People had to dip into their savings or on to their credit cards to live and get to work,” he said. “And they have never recovered from it.”
Maybe. But if oil refineries continue to tighten the squeeze on the American pocketbook, recovery during a recession or depression will be long indeed. While there isn’t much that government can do about such things, there is something investors can do to hedge the money going out of their pockets: buy oil refinery stocks soon before their quarterly profits statements come out. That way the upward movement of gasoline can at least spearhead your portfolio. Tomorrow we will look at a few of those stock.
Hey. I just wanted to say thanks for your comments. I’m sure your blog will be just fine. If you want to continue reading my blog it’s at www.treasuredbelle.blogspot.com . Thanks.
Hey, thanks for stopping by with those links. I’m sure the readers will use these sites to their educational benefits.
Thanks for stopping by my blog and for the words of encouragement! Love your blog!
As for the oil prices, I was watching Fox on Friday when they interviewed the CEO of Gulf Oil. He said that this was just a little “bubble” and the prices will go down again, perhaps as low as $1.50 by the summer, but that doesn’t really answer the question about NOW. I have a fuel oil bill to pay, and will need to order another 200 gallons this week to keep our old farm house warm here in NY. I dread the thought of paying the next bill since I’m ordering when prices have gone up again. I’m sick of these greedy oil companies and the ridiculous bonuses they pay to their CEO’s. That is where our money is going.
There’s a true breach of understanding between the men/women who earn millions and the rest of the planet. They simply can not understand the stress these high bills give to the rest of us. Thanks for stopping by.
OPEC has actually done some cut backs and managed to cut production though that’s historically been hard for them to implement. As we know, speculation really is only one way—upward—prices have fallen because they tapped most Americans out…..and the fall was slow and constant….Whenever ONE little newsworthy junket is floated that speculators can jump on Gas skyrockets….I don’t buy for a minute that we’re still heading too much lower….maybe a little but the market’s still way too volatile….one move or read from someone of importance and this thing shakes.
Agreed. And speculators can really upend the price of gas It’s just unreal. Thanks for stopping by.
watch out, these people raping us, who own/control the oil companies are the same people who own/control the government. they are called new york bankers and other names. they turn the funnel upside down and funnel money from the masses to just the few. They need to leave this country.