Give a reason - any reason - to drive oil prices higher

The laws of supply and demand apply most everywhere except oil prices. Last week, the US reported more oil on hand than at any time since keeping record began twenty years ago. Another analyst I read in UAE newspapers commented that if only supply and demand were at play the price of oil would be half what it is now... as tankers are still sitting full off the shores of the UAE with no place to go.

The US numbers are released Wednesday mornings at 9:30 Iowa time. (Must see TV for me when I'm living in the US... Hey! Stop calling me a geek.) Today's numbers showed a drop in gasoline supplies from near record levels. It's not that Americans were driving any more, it was that the refineries simply stockpiled more oil and didn't convert it to gas.

The result? By the end of the day oil closed up $2.95 higher to $69.66 and (this is where it will hit you in the pocketbook) the wholesale price of gas jumped over 8 cents.

Nothing in the fundamentals have changed; there's way too much oil sloshing around the world markets. But given any little teeny tiny excuse the markets will go up.

And you get screwed.

Happy humpday!

Update: My bad: US oil closed at $70.61... almost another dollar higher than quoted above. I don't have the wholesale gas prices but you can bet they'll be higher, too.

Congratulations! You are paying more at the pump - not because you've been driving more - but that the refineries chose not to convert as much oil to gas.

*****

As a pro-free-market liberal I can understand those who say "capitalism is broken" to the left of me. I won't go that far, but on days like this, the case can be made.