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.
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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.
The problem is too few refineries. Getting new refineries approved is tricky. The oil companies are reluctant to invest in refineries, with the signals sent by the adminstration on cap-n-trade, additonal taxes on profits, etc.
ReplyDeleteThe companies are in it for a profit and as public companies they have a responsibilty to their shareholders to inest wisely.