Prices at the pump are high. The national average for a gallon of regular, self-serve gasoline was $3.50 as of March 4 – a 32.7-cent increase from the previous survey. According to a story last week on MSNBC, gas prices in the US just posted their second-biggest increase EVER in a two-week period. As if things aren’t bad enough now, it looks like prices are going to go much higher before they get lower.
Contrary to what many experts and media outlets would have you believe, this is NOT a supply issue. There’s still plenty of petroleum out there! Crude oil prices are actually going up because the market is being manipulated. Yes, that’s right: the market is being MANIPULATED!!
Goldman Sachs recently released statements saying that OPEC has been pumping above its agreed quota since November, reducing its global spare capacity. Levels of spare capacity determine oil prices. So when investors see Goldman out there claiming that our spare capacity is diminishing, they get nervous. Is Goldman presenting a long position and then themselves shorting the market after manipulating it up??
This is bullshit! And it isn’t the first time Goldman has played both sides of the fence and had it work to its advantage. Just look at what happened with the mortgage market. Goldman recommended the mortgage market to its clients while betting against it behind closed doors. They publically recommend one thing, and then go and do the opposite. And it usually results in disaster for everyone but Goldman.
Goldman has everyone running scared. And people are buying it. Most people think high gas prices at home are caused by problems overseas – most recently Libya. Not true! Libya actually represents a small percentage of overall petroleum output. Saudi Arabia has already said it can cover the difference in the supply in what Libya isn’t producing. The Obama administration is even considering tapping into the US’s strategic petroleum reserve to help ease prices, something that’s only been done twice in more than 25 years. There’s no need – there is no petroleum shortage!!
Prices at the pump represent a false high. Tapping our reserves might provide temporary relief at the pump, but it would do NOTHING to address the real problem, which is being created by oil companies, investors and companies like Goldman. Just look at what happened in 2008…
In 2008, the financial world was in bad shape. The price of a single barrel of oil went from $60 in the middle of 2007 to $147 in the summer of 2008. Most people thought gas prices shot up because of a supply issue. In reality, once again, Goldman was to blame:
“Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures. […] By the summer of 2008, commodities speculators had bought and stockpiled enough oil futures to fill 1.1 billion barrels of crude. […] The oil-commodities melon hit the pavement hard in the summer of 2008. Crude prices plunged from $147 to $33. Once again the big losers were ordinary people.”
Looks like history might repeat itself…
MSNBC – Gas up 33 cents — second biggest two-week jump ever
The Telegraph – Oil markets brace for Saudi ‘rage’ as global spare capacity wears thin
The Great American Bubble Machine