Friday, October 24, 2008

So Predictable

Who among us leftie libruls is surprised that gasoline is going down in price as the election approaches? We saw it in the last election too, and immediately after the election in 2006, gasoline prices shot back up.

Predictably, the big oil industry output says nothing about the supplies being up long months ago, and the refinery non-production. All those huge revenues they were raking in were used to enrich the executives and make big profits, not put into capacity for production.

The oil industry isn't trying to improve the economy it sucks off of. It's that greedy, self-destructive type Alan Greenspan so believed in, according to his testimony yesterday.

Yesterday, with leaders of Iran and Venezuela forging ahead, OPEC cut oil production to try bringing back its bite of the world's economy.

Though OPEC said it will revisit the cuts in its next meeting on Dec. 17, analysts believe it will be hard to convince the oil producing nations to further slash production.

"The Saudis took a third of the cut off the books," Laughlin said. "But the Saudi minister made pretty clear that this is the cut, and they're not going to get another one in December."

Second cut?: But if the cut wasn't enough to restore the market to equilibrium, Laughlin said we're headed towards oil at $50 a barrel. If oil sinks below $50, he said OPEC will be forced to act and cut production again.

In its statement, the cartel seemed to anticipate continued demand destruction and falling prices through the winter months.

"This slowdown in oil demand is serving to exacerbate the situation in a market which has been over-supplied with crude for some time," the statement said. "Moreover, forecasts indicate that the fall in demand will deepen, despite the approach of winter in the northern hemisphere."

Gasoline: The fall in world oil prices since July has pushed gasoline in the United States, the world's largest oil consumer, from a high of $4.114 a gallon on average to $2.781 a gallon Friday, according to motorist group AAA.

According to the U.S. Department of Energy, gasoline consumption for the past four weeks averaged 8.8 million barrels a day, or 4.3% lower than the same period last year.

There is nothing new going on here. After driving the economy into stagflation, skyrocketing prices at a time when salaries and benefits are going through the basement, the oil producers will keep pushing on that envelope. Alone of the oilmen, T. Boone Pickens has made a move into alternative energy. The rest are going, lemming style, off the edge of profit-taking - over which the lenders have just exited.

The role that the oil industry has played in bringing on our economic disaster is being overlooked as attention focuses on banks' dilemma, propping up the lenders at the expense of the salaried worker.

This is a time when we should put energy into developing alternative sources, not relax because cynically the oil crowd has lowered prices for awhile. No new capacity for production was developed from the recent huge profits oil raked in. The oil producers are poised for further advantage to themselves, not any far-seeing policies to encourage an economy they depend on.

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Anonymous Anonymous said...

A supremely important side of this story which I have not seen reported anywhere: WTF is going on with heating-oil prices? How about diesel?

Don't use either myself but the former could still be a disaster for those who use oil for heat. Most of the companies that supply it probably stocked up months or at least weeks ago when prices were still at their highs.

And the price of diesel is a large factor in the continuing surge in retail prices as nearly everything is delivered in diesel-powered vehicles.

1:13 PM  
Blogger Ruth said...

You are so right, the prospect of winter at these obscene rates is scary. And a recent re-drill of a lease that Exxon abandoned has turned up hundreds of billions of barrels of oil - the Blackbeard site - that wasn't enough to get the Exxon firm to drill. Just obscene.

9:25 AM  

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