Oil Speculation: The Enemy of the Pump

914 Words2 Pages
bulb-icon

Recommended: Oil prices and economic effects

Over the last five to seven years, the American people have had to pay outrageous prices at the gas pumps, wildly fluctuating from under $2.00 a gallon or less to paying $4.00 a gallon or even higher for gasoline. This issue of paying unreasonable and unpredictable prices at the pump comes from the higher prices of oil. Most will say that oil prices fluctuate so because of conflicts in the Middle East or due to shortages of oil, but the simple reason of the oil prices go up so high is because of oil speculation. Oil speculation is the single greatest problem of higher gas prices further causing more economic problems and compounding living for the middle and lower class individuals and families. The economical truth is that speculation is not a necessary thing. In fact, it inhibits the economic growth of the nation and will either stifle or completely suppress any economic growth or recovery. The solution to this problem is essential to the survival of the future of the United States’ economy and industrialization. Oil speculation is based on the future demand of oil supplies and on current world events. Basically, what it means is that if a crisis in a region where most of the current oil supply is produced or exported (the Middle East), and then the price of gasoline over in the western world will go up. Currently, the civil war in Libya as well as other uprisings in the Middle East, have contributed to prices increasing from up from a pre- revolution low of $2.50 a gallon to the average of $ 3.57 a gallon over a period of a few months. This increase has been attributed to the conflict in Libya and other countries, currently engaged in political upheaval. Libya only produces two percent of the world’s oil supply, which... ... middle of paper ... ...f the market’s contango [meaning spot oil prices were less than the contracted price on the date of delivery].” (Wallace,5) With the issue of the price of oil continuing to go up, continuing to cause the price of gas to go up which causes the consumer at the pump to use more money while the oil speculators continue to profit wildly. The entire problem causes the economy to stall and fail to accelerate. By removing speculators, the fixed price of a barrel of oil will cause the economy to accelerate and prosper. If famed television personality and decorator Martha Stewart could be prosecuted and jailed for stock speculation and seeking to make more profit by driving up shares in her own company based upon her needs, why can’t big oil and its speculators have the same punishment? It all depends upon who wants to rock the boat or turn their head the other way.

Show More
Related

  • The Effects of Discovering Oil in Texas

    1258 Words  | 3 Pages

    At the turn of the century there was a new law named “Capture” therefore; whoever produced the oil owned the oil. If you did not produce the oil then somebody else would be willing to produce the oil. The consequences if the production of the well ran dried out weight the reward. “Oilmen were not the only ones who knew that production was often short-lived; bankers quickly learned that no prudent lenders extended a loan on the basis of oil production. “ It was a reality that oil production started of strong and quickly dropped off within a matter of a couple months. The risk was not worth the reward for either party which is the bakers or the oilmen. The ferocious cycles from boom to bust, from having more than enough oil to not enough would swing the price for oil up and down like a roll coaster. When a new oil field came in, the local markets hand more than enough oil, pushing the prices lower, making oil more affordable. However, whenever the oil production dropped it would send the prices sky rocketing making it unprofitable to stay in business. Pattillo Higgins would be willing to take on this challenge head on of producing oil. [Who is Higgins, Ernest? By giving at least a short introduction the readers w...

    Read More

  • Gasoline Economics

    658 Words  | 2 Pages

    Gasoline is one of the many conversation starters anywhere you go. People have different opinions on why gasoline prices are fluctuating at such a rapid pace. Some Americans have chosen a way of thinking towards the prices. Whether it be making up rumors or just plainly trash talking towards our government. You make ask yourself the same questions many economist do, why has the price of oil been dropping so fast?

    Read More

  • US Needs to Have Energy Independence

    795 Words  | 2 Pages

    America is dependent on other nations for their ability to create energy. The United States is the world’s largest consumer of oil at 18.49 million barrels of oil per day. And it will continue to be that way for the foreseeable future considering the next largest customer of oil only consumes about 60% of what the U.S. does. This makes the U.S. vulnerable to any instability that may arise in the energy industry. In 2011, the world’s top three oil companies were Saudi Aramco (12%), National Iranian Oil Company (5%), and China National Petroleum Corp (4%). The risk associated with these countries being the top oil producers is twofold. One, they are located half way around the world making it an expensive to transport the product logistically to a desired destination. And two, the U.S. has weak, if not contentious,...

    Read More

  • Supply And Demand of Gasoline

    1019 Words  | 3 Pages

    ...oline is affected by many different factors. The biggest factor is crude oil, but the supply and demand of crude oil will ultimately determine the price of gasoline. The supply and demand of crude oil and gasoline are also affected by several factors. The price is continually increasing and the supply is becoming harder to produce and deliver. So it seems we, the United States, need to find a way to slow down our fuel consumption and decrease our demand. This may be the only way to bring down the price of gasoline. I know I would not mind, because then I could use the extra $40 to buy a couple more DVDs for the kids to watch while we are running around town in the Expedition.

    Read More

  • America’s Dependence on Foreign Oil

    1087 Words  | 3 Pages

    The United States has had several scares throughout its history in terms of oil, most turn out to be over exaggerations of a small event. However, these scares highlight a massive issue with the U.S. and that issue is the U.S.’s dependence on foreign oil. Why does it matter that our oil should come from over seas? In a healthy economy this probably wouldn’t be as relevant, but the U.S.’s economy is not exactly healthy at the moment. There are 4 things that I would like to address: what the problem is, how it affects us, what some solutions are, and what solutions I feel are best.

    Read More

  • The Pacific Oil Case: Conflict Management and Negotiation

    911 Words  | 2 Pages

    The first problem with the renegotiation of this contract was the projected demand for VCM creating a “buyers market”, according to the textbook, “the demand was high, but the supply was to increase exponentially” (Lewicki, Saunders, and Barry 2010) Reliant was already locked into a five year contract with Pacific Oil, but there would be stiff competition at the expiration of the that contract. Knowledge of this market situation put Reliant in a position of leverage and trapped Pacific Oil into a desperate sign at all costs scenario. Gaudin and Fontaine assumed that even with a fluctuation with price; Reliant would sign a new because of their established relationship Pacific Oil. Gaudin and Fontaine’s assumption opened themselves up to more concessions by not attaching conditions to the price adjustment. They could have countered with a reduction of the formula price on the condition of contract length.

    Read More

  • Why Are Gasoline Prices Going Up So High?

    587 Words  | 2 Pages

    the gas prices unfairly in order to make a bigger profit. It's true, gas prices

    Read More

  • Diesel Fuel Prices & Trucking Industry

    1760 Words  | 4 Pages

    The main reason for the price increase is that OPEC (Organization of Petroleum Exporting Countries) has decided to cut back on its oil production. What is the reason for this? Simply stated, OPEC knows that they have the United States under their control in terms of what price they want to sell crude oil to us at, and how much they want to ship. With the present economic prosperity in the U.S., it didn’t take long for OPEC to seize the opportunity to make more money by cutting production of crude oil, and thus forcing consumers to pay more for fuel. Just how much higher are prices you ask? “Crude-oil prices in early March hit $34 a barrel, while a year earlier it was selling for $12 a barrel, which is nearly a 75% price increase since last year. This equates to an additional 48 cents a gallon” (Logistics Management 15).

    Read More

  • Porter's Five Forces Model Of Occidental Oil

    736 Words  | 2 Pages

    Economist has analyzed the causes of decline in world oil prices. Typically, the price of oil is determined by demand and supply of the world market and forecast advance to invest in which level of demand depends on the level of economic activity and behavioral use of energy from humans. The oil price decline has a benefit for oil importers like China, India, Japan, Europe but unfortunately for oil exporters such as: Kuwait, Venezuela, Nigeria, and Iraq. Crude oil prices fell steadily in the past seems to be a result of two main factors being the levels of demand declining and a level of increased supplies (Economic, 2015)

    Read More

  • The Economic Reality Of Hybrid Vehicles

    1178 Words  | 3 Pages

    Today people all around the world are facing unusually high oil price hikes. Oil has become so very expensive that people are trying all kinds of extreme measures to lower the price.

    Read More

  • Oil: The Cause And Effect Of Gas Prices

    1635 Words  | 4 Pages

    Oil is Important it makes more things possible than most people know. It has far reaching effects on countries. Crude oil is broken down into many everyday products. There are many products that many people don’t even realize are produced from oil being separated. The most important being gasoline. Gas is needed to transport all items that ride on trucks and all people drive. Gas Prices can affect how well off a countries economy is. A good economic situation can determine how help business flourish and give people money to help keep the economy going through consuming goods. Gas prices have risen and fallen through history and has affected everyone form OPEC (Organization of the petroleum Exporting Countries) to the average American consumer. Government policy, scarcity, and abundance can all effect gas prices. The price of Gas has many obvious effects and many effects that may remain unforeseen for quite some time. Gas Prices are important and have cause and effect variables that can be explained and regulated.

    Read More

  • Monopoly of Petroleum: OPEC

    1029 Words  | 3 Pages

    ... production costs is amongst the lowest in the world. Iraq has the potential of overthrowing OPEC's regime if OPEC countries like Russia and France are ready to develop Iraq's oilfields so that it can be used to full efficiency. Does this mean that, to stop a monopoly, another monopoly must be used to overcome it? Time will tell, especially when UN sanctions are lifted and the new Iraqi government is formally established.

    Read More

  • Supply and Demand of Oil

    1396 Words  | 3 Pages

    In conclusion, the supply and demand of oil is a complex issue that depends on several factors. Geopolitical affairs are the major issues that affect supply and demand of oil. Geopolitical factors include wars, uprisings and political inconsistencies in the world. Other factors that influence the demand and supply of oil include market domains, availability of oil, recession and the world GDP. Since 1859, the price of oil has been inconsistent. Despite the fact that oil prices increased and fell, there has been a considerable rising trend in those prices. In most cases, the falling of the price reaches the previous price level. However, increase of prices goes beyond earlier prices. This trend has seen oil prices rise over the years. With this in mind, it is clear that by 2020 the real price of oil will be more than 200 dollars.

    Read More

  • Petro Oil Case Study

    2152 Words  | 5 Pages

    A sharply higher oil prices can set difficult economic challenges for oil importing economies as it can simultaneously slow economic growth while stoking inflation. In net oil-importing countries, high and volatile oil prices ripple through the numerous segments of the economy. As prices move up and down, so does the cost of production, which has far-reaching effects on the economy, fiscal and trade balances, businesses, and household living standards. As Petroleum Products consumption form significant part of economy, oil availability and prices thus affect the output capacity, rate of growth and level of inflation and hence oil price fluctuations can have important macroeconomic repercussions depending on the composition of oil sector in the economy.

    Read More

  • The Fuel Subsidy We Need Analysis

    854 Words  | 2 Pages

    Bayon's first body paragraph illustrates America's economic vulnerability in order to prove the topic of America's dangerous overdependence on oil. We consume more than our domestic oil supply due to being so oil dependent, and as a result the author indicates Washington D.C. is practically forced to do business with hostile countries for oil. This creates economic vulnerability of the United States to oil price spikes and inflation possibilities. In 2008, "The United States imported 4 million barrels of oil daily, or 1.5 billion barrels yearly from "dangerous or unstable" countries at a cost of about $150 billion per year. (www.americanprogress.org)." These oil prices of $150 billion dollars per year can be decreased if hydrogen fuel cells were in greater use. As a result of the laws of supply and demand, the United States will have no power over the increasing prices o...

    Read More

More about Oil Speculation: The Enemy of the Pump

Open Document