by Ben Hoffman

Originally posted on Epiphanyblog:

Recent reports show speculation driving prices for commodities and gas higherAccording to two recent studies, speculation is the main culprit for causing rising gas and commodity prices.

The Oil Price Information Service (OPIS) and the Wall St Journal points to speculators as the party most responsible for driving up prices:

Strangely, the current run-up in prices comes despite sinking demand in the U.S. “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more.”

Kloza believes much of the increase is due to speculative money that’s flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. “We’ve seen about $11 billion of speculative money come in on the long side of gas futures,” he says. “Each of…

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8 Comments to “”

  1. ” “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact … ”

    Those of us who keep track of these things are not ” puzzled “. How can anyone be puzzled by the oil market ?

  2. Maybe conservation has had a perverse effect. Refineries are closing in the US. They are in a squeeze. Imported oil is more expensive so their input costs have gone up . Meanwhile gasoline consumption in the US has gone down and they can’t price the refined products high enough to stay in business. So they do two things . They sell gasoline on the higher priced export market which lowers the US supply and causes prices to rise. They also close any marginal refineries, further lowering the US supply, and causing prices to rise. It’s actually very funny. The less gasoline we use, the more we pay.

    • Gas consumption has gone down because of the stagnant economy — not because of conservation. Gas prices are rising because of speculation and market manipulation. Oil prices in the U.S. move in tandem with world prices. In 2008, prices tumbled because the financial market collapse. They’ve gone up in recent years due to unrest in the Middle East.

      Oil Prices

  3. Mr. Hoffman,

    Wow I am impressed. Facts, figures, and graphs too.

  4. Mr. Hoffman,

    ” So you agree you’re full of crap? ” No, I am just amazed that you posted something so factual . Your posting only tells part of the story . In the eastern US, refineries are closing. Once they close odds are they will not reopen . So even when Crude oil comes down in price, we are losing gasoline capacity . Look it up, it’s easy to confirm .

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