At the height of the petro price crisis I predicted here that petro prices would again fall to record levels. In the past week experts have predicted a fall to about $2/gal this autumn. A few months ago the industry announced a major petro discovery in Cuba's waters. Now comes word of the discovery of an even bigger storehouse -- 50% the size of all existing known reserve! -- in US waters in the same gulf. As predicted, the price and profit spikes that panicked so many people led to new discoveries that will reduce the price of petro. Those evil CORPORATIONS!
As the petro epoch continues (stomping on its periodic obituaries), so does the development of the technology that will surely one day -- as it always has -- lead humans to yet a new source of fuel.
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"A few months ago the industry announced a major petro discovery in Cuba's waters. Now comes word of the discovery of an even bigger storehouse -- 50% the size of all existing known reserve! -- in US waters in the same gulf. As predicted, the price and profit spikes that panicked so many people led to new discoveries that will reduce the price of petro. Those evil CORPORATIONS!"
The fact that none of that oil has even been drilled yet let's you know that the price of gasoline is completely arbitrary. By tying gas and oil prices to petroleum commodities markets, corporations (and governments) can manipulate the prices be sending those scares into the crude oil market.
From the article:
"It will take many years and tens of billions of dollars to bring the newly tapped oil to market, but the discovery carries particular importance for the industry at a time when Western oil and gas companies are finding fewer opportunities in politically unstable parts of the world, including the Middle East, Africa and Russia."
The evil corporations are screwing with us. You'll laugh when I say this, but Bush's approval ratings are way down. Watch gas prices go up after the election.
Nadir: The drop in oil prices in resonse to the announcement of new, untapped finds reveal not an "arbitrary" price system, but economic ignorance on your part. If Prince announced that he would perform at your next concert, ticket value would soar. If you refused to increase ticket prices because your cost had not increased and you believe in "economic justice/equality", you can bet the scalpers would increase the prices for you, because they and your customers live in a free society. But Prince hasn't even played yet! And if you announced that the venue had switched from a 1,000 seat hall to a 100,000 seat colleseum, the prices would fall... even if you refused to cut the price, people would aggree to pay less.
People make choices where to invest their wealth based on their assessments of various investment opportunities. Permitting traders to bet on oil brings more money into the petroleum industry, providing more profits and capital for investment in exploration and technological development. If you could ban petro trading you would certainly not achieve low petro prices, any more than banning "price gouging" results in cheaper water or petro during times of crisis! You would deny potential investment inflow to the petro companies, and thus cause prices to increase due to inability of these competing companies from upgrading to new advances.
Some analyst may tell you that "20% of the 3$/gal price represents specuation". Well, if you ban "speculation", you can get that fraction down to 0%... of 5$/gal petro! The same as forcing to petro stations to not increase their prices during a disaster: you get empty stations advertising pre-disaster prices. What good is that? The campaign to cap or eliminate evil profits has succeeded, but who has won? Nobody. Horray for 1$/gal petro... at empty petro stations. Only free markets and free people can get 1$/gal petro again in stations that actually have petro to sell.
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