[SustainableTompkins] Fwd: Oil Prices By Ralph Nader

[Tony Del Plato]

Hey Seneca Jean,
Do you have the link to this article? The left side has been lopped off and
it's too frustrating to read missing letters
Tony Del Plato
Ithaca NY

On Nov 6, 2007 12:20 PM, <senecajean at aol.com> wrote:

>
>
>
> -----Original Message-----
> From: Ralph Nader <info at nader.org>
> To: alerts at lists.nader.org
> Sent: Tue, 6 Nov 2007 10:23 am
> Subject: Oil Prices By Ralph Nader
>
>
>
> Please share with others.
> -----------------------------
> The Price of Oil
> By Ralph Nader
> uestion of the day- who and what is determining the price of oil and your
> asoline and home heating bills? Don't ask Uncle Sam, because George W.
> Bush and
> ick Cheney are running a regime marinated in oil that does not issue
> reports
> hich explain the real determinants of petroleum pricing beyond the
> conventional
> upply-demand curves.
> First, let us create a historical framework to provide some background. In
> the
> ood 'ole oil days, before the producer-countries' cartel in the Third
> World
> ained pricing power, there were seven giant oil companies called the
> 'seven
> isters' led by Standard Oil (now Exxon) and Shell. As chronicled in Robert
> ngler's classic book, _The Brotherhood of Oil_, they were able to affect
> ricing through extra-market means. Economists called them a tight
> oligopoly.
> OPEC later took their place at the table in the mid to late Seventies and
> set
> he price of crude oil at highly publicized meetings of the various member
> ountries representatives from the Middle East, South America and Africa.
> djusting, 'seven sisters' concentrated their pricing and supply power
> ownstream at the refining, pipeline and marketing levels.
> Pricing power was never total but it was always complex, occurring in the
> nterstices of an industry few outsiders understood, and fewer regulators
> could
> ffect. Besides, natural gas was de-regulated between 1978 and 1993, after
> which
> ts prices really took off.
> Today, a third party has moved to the table—the New York Mercantile
> Exchange, a
> imilar operates in London and a new one in Dubai. There, boisterous
> traders buy
> nd sell futures contracts on the delivery of oil. But as Ben Mezrich, the
> uthor of the new book _Rigg_ed said recently, the dollar amounts of these
> utures contracts are far far larger than the actual oil deliveries they
> epresent as they turn over and over at the Mercantile Exchange.
> So now the critical resource of oil is driven by speculation at ever
> higher
> bstract electronic levels of futures trading. Increasingly, the distance
> ecomes greater and greater between this abstract trading (fueled by rumors
> of
> torms in the Gulf of Mexico, or some possible political turmoil in a
> region of
> he world, or some other frightful excuse for bidding up) and the physical
> upply and demand for oil and its refined products.
> These oil gamblers in New York and London try to justify their frenetic
> daily
> idding by saying that these futures markets provide liquidity, and a clear
> rice for oil. Alright, but who benefits when, how and where?
> Certainly, the strain between physical supply and demand in recent years
> does
> ot explain such extreme volatility. With OPEC countries down to supplying
> only
> 0 percent of the world production, Chinese demand for oil growing fast,
> and the
> xpansion of production by Saudi Arabia and others to meet this demand,
> crude
> il supplies are not tight enough to explain such pricing behavior.
> Old factors like inadequate oil company investment in refinery capacity,
> longer
> own times for repairs than some observers believe necessary, and the
> slumping
> ollar are factors that western governments, especially the Bush regime,
> have
> ot wanted to investigate. After all, with consumers paying sky-high prices
> for
> hese fuels, free market theorists are supposed to expect expanded supplies
> from
> ecoverable reserves to grow. But, of course, the global market for oil is
> nything but a free market from the producers- both corporate and
> governmental-
> oward the downstream companies to the consumers.
> In recent days, the price of crude oil escalated to over $90 a barrel,
> luctuating up to a high of $96 a barrel. Yet the average price of gasoline
> in
> he United States—around $3.00 per gallon—is about what it was earlier this
> year
> hen the price of crude oil was around $60 a barrel. Why the disconnect?
> "It's a big gambling hall," _The Washington Post_ quotes Fadel Gheit, an
> oil
> nalyst at Oppenheimer. "This time it's just speculation," Peter C. Fusaro,
> hairman of Global Change Associates, told the _Post_, adding, "There's a
> large
> et out there that prices will continue to trend higher. But it's detached
> from
> undamentals because there's no shortage of oil."
> Meanwhile, the government of Big Oil runs Washington, D.C. It thumbed its
> nose
> t pleas from then Chairman of the powerful Finance Committee, Senator
> Charles
> rassley (R-Iowa) who asked the major companies, swimming in massive
> profits, to
> ontribute some charitable dollars to help the poor pay for their winter
> home
> eating bills, and has smugly watched the major Presidential candidates
> avoid
> he subject in their debates and declarations.
> Oil companies seem to spend more executive effort looking for oil by
> merging
> ith other companies (note the unchallenged merger of Exxon and Mobil under
> the
> linton administration) than with developing efficient oil-producing and
> onsuming technology or expanding their solar energy subsidiaries.
> So long as the price of crude oil is set by speculators on trading floors,
> so
> ong as the oil-indentured politicians are not challenged by new candidates
> tanding tall for people and environments, so long as we do not protest for
> hange and press ourselves to prevent wasteful habits and uses, get ready
> for
> igher oil prices.
> END
>
>
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