Friday, November 17, 2006
Oil prices
Oil prices
Look I’m liberal, but I know better than to blame Bush for high oil prices. Enough with the politics.
The general public is largely unaware of how financial markets work. Everyday I hear the same bickering of politicians being responsible for the high prices of oil and along with oil, gasoline.
Most people seem to have failed their high school economics classes. Supply and demand are the key to any market or economy. In a free market, price is dictated by both supply and demand. Supply is set forth by the oil companies and demand is generated from the consumers at the gas pumps and in the comfort of their heated homes.
The only way for oil prices to move is by increased or decreased supply or demand. OPEC could come out today and slash production by one half and send the market into a tizzy. Oil prices would hit all time highs, probably more than twice what the prices are now. Oil is a leveraged product, we as the consumer will continue to buy it until we can no longer make reason to do so. Even if we have to cut into our own profit margins we will make it work.
We’re dependant on oil and the oil companies are dependant on us. The consumers ultimately drive the price of oil because without demand, oil would be worthless.
Don’t pass the blame for oil prices, especially when we hit lows like we have today. Your politicians can’t do anything to affect oil because in the end, the hundreds of free markets around the globe set the price of your crude. Oil is cheap right now, take advantage and buy a position to make some money as a hedge against future prices.
I am 10000% certain oil will not settle at $56 per barrel. When next summer rolls around I think we will again see the $75 barrels we saw this summer. Lookout, don’t be surprised when this natural phenomenon occurs yet again!