Living
on the eastern end of Long Island is a lot like living on edge of the
earth. We are a scant 100 miles from New York City and obviously on an
island where there is no escape save a couple ferry routes. About 25
miles from here is an offshore oil download platform. It was owned by
the Conoco oil company and now, well, I don't know, but it is
operational. It remains a distribution point for this end of the
Island.
Regular
gas at our local pumps is about $3.60 a gallon now - well above the
national $3.12 reported today. When the rest of the nation spiked $.03 a
gallon this last week due to the cold, we went up $.10. The petroleum
downloaded at Conoco was purchased months ago at a far different price
but that is another story.
My
dad retired from Gulf Oil in the early 70s. Before he retired, Gulf Oil was
hauled into Federal Court to testify to price fixing by the oil
companies in Michigan. Gulf owned reserves in the middle east and the
entire supply chain that stretched from there to the gas stations in his
district. Soup to nuts as the saying goes. Big cheese lawyers from
Chicago were sent out to defend Gulf Oil and I went with my dad to the
federal courthouse as we were going trout fishing and this was only
going to take a minute. Actually a 9 day minute.
Traders
who are either on big oil's trading floor or operating somewhere in the
world are trading up prices - speculating. This upward price push
isn't opposed by big oil. Not one bit. The oil on the tanker heading
into the canal was purchased a long time ago and at a price a lot less
than the speculation price. But when it is offloaded from the tanker it
will suddenly and miraculously be at the new price which goes through
the same refining/distribution system but at the new cost with all the
markups and percentage add ons in place. It is then just math and you
are paying the new price on old oil. It is very simple really. If the
price goes down next week it is ok - the oil companies will claim that
it was purchased at the higher price and the new oil will be at the
lower price although you won't remember and they don't care.
If
you want proof of the price boondoggle, look at profits - up generally
over 50%. If the profits reflected a high price for the product at the
wellhead the profits wouldn't be there. Refinery profits are stagnant.
The corner station isn't making more on a gallon. It is all this
manipulation of product costs that is driving it.
There
is a lot more nuance to this than I am saying but the root of it is
spot on. What is galling is that the crude oil price seems to be fixed
as if it comes from one source - one well - in the middle east...when
the truth is just a fraction of our oil imports - not to mention our own
oil production - is or could possibly be effected by events in that part of the world.
Get
out of the way America. Big oil has spotted fresh food in the pig
trough and you should know better to get between the swine and the feed.