A Congressional Research Service Report from August and an independent report by Masters Capitol Management clearly states that recent oil price increases for consumers stem from "downstream" costs, mostly related to oil speculation and markets. So I would like to say "stick it" to all those pundits and media hacks who have been defending oil prices as natural market fluxuations - the worst being Hannity, Cavuto, and Limbaugh - talking points parrots all.
From the CRS Report:
"...the increased price of crude oil since the fall of 2004, profits of virtually all firms in all segments of the oil industry have increased. However, the greatest increases have been in the downstream, or refining and marketing, segments of the industry. These increases in profit are apparent whether the major integrated oil companies, the independents, or refiners are considered, lending some credence to the viewpoint that industry profits are the result of factors beyond the elevated price of crude oil." (Report can be read at: http://www.usis.it/pdf/other/RL33021.pdf)
From the MCM Report:
"...investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July. Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically."
"We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down,” said Michael Masters of Masters Capital Management. The reports stated that the amount of money moving into oil futures markets by large institutional investors in the early part of the year was “way off the scale.”
MSNBC reports that Masters said its analysis shows investors “began a massive stampede for the exits” on July 15 and that this caused the price decline. “These large financial players have become the primary source of the dramatic and damaging volatility seen in oil prices,” concluded the report.
I know many of you probably love any market conditions that earn those of us with money, money, but I try to look out for those who have less and believe that we must change this system. We must return it to a fair, supply and demand system. This should not be allowed to continue.
Feel free to share. R&R Blog Member