Oil Storage « Our World and Everything in It

Posts Tagged ‘Oil Storage’

Gas Prices Rise Just in Time for Summer Vacation 2009

Saturday, May 23rd, 2009

Gas prices rise just in time for summer vacation—again. Is this not a testament to the power of the oil industry and other wealthy entities like Morgan Stanley and Citigroup? Big oil has the greatest motive to raise war against environmentalism—mega profits. Yet there are those of us that just can’t see how much more powerful that motive is compared to any plausible objectives pro-environmentalists may have.

Reading article after article about supertankers storing oil, “super contangos,” and “backwardation,” it’s all about power, wealth, and manipulation and to heck with the environment and us. Big oil is going to do their darnedest to stay in business. And with mega billions in their coffers, it will be extremely hard to get untangled from that web of power especially when other big investors are in on the game. Don’t believe me that we’re audaciously manipulated by this mega monopoly? Do a Google search “supertankers at sea storing crude oil” and look at the roster of articles about who has and hasn’t contracted huge supertankers for the express purpose of storing crude oil for big profits. A NY Time’s article stated:

Private trading companies like Vitol and Phibro are storing oil in expectation of higher prices. They are taking their cues from markets where traders buy and sell contracts for future delivery of oil, which are signaling higher prices down the road.

Adam Sieminski, chief energy economist at Deutsche Bank, noted that a trading company could buy oil at the spot price of nearly $40 a barrel, store it and sell a contract to deliver it in a year for about $60. ‘You pay between $6 and $10 a barrel to store it, and you can make $10 a barrel,’ he said. ‘That’s why Cushing is filling up rapidly and people are leasing tankers.’

The oil being stored was bought back when oil prices were low, then stored in ships that have been lollygagging at sea, waiting for the right season to sell. What seems to be glanced over in many of the articles is the fact that storing the oil is also “withholding” oil from the marketplace, which in turn forces prices up like it does when anything in demand becomes scarce. This is being done in lieu of cutting back on production.

Taking a risk and investing in stored oil with the “hope” that it will go up in the future is one thing. But storing the invested oil for the express purpose of creating more demand for what appears to be lesser supply is every bit as unethical as what the diamond industry does to drive up prices of diamonds. It’s faking scarcity of a product to drive up cost. And we are forced to eat that cost because we have no alternative.

Any entity that sets up to become wealthy like this at a time when so many are already suffering from a poor economy is purely sadistic. The right season to unload this oil is right now when gas prices are high. It’s the summer season when people cannot afford air travel, or distant, expensive vacations, and have opted instead to take the family to local events. All of these events mean car travel of course that is not kind on gas. Attending local events means traffic backups and slow going in urban areas. You know, the kind of driving that just eats through a fresh tank of gas.

So there we have it again. A big kick in the pants from the manipulations of big oil and the wealthy, another summer of putting up with higher gas prices. It’s time to break out the tent and set it up in the backyard and get a projector to show movies on the side of the garage! Add a fire pit, and food and beverage and there is no need to go anywhere. Maybe it’s high time we meet all our neighbors with block parties, or traveling parties where every neighbor involved takes a turn at the barbeque. And in the course of doing these things we may rediscover “family life” the way it used to be, and possibly a way to bring gas prices down to where they used to be too.

This You Tube video is a response to “oil price manipulation on wall street” that’s not too hard to understand: