High Gas Prices: Greed and Unregulated Commodities Markets Are To Blame

We just finished reading an enlightening article written by Ed Wallace for BusinessWeek that pinpoints the true reasons behind the surge in gasoline prices that we’ve been experiencing for some time now. Wallace –rightfully in our opinion- blames the unregulated commodity markets and greed for the sharp spike in oil prices and not, as many media outlets support, due to huge demand combined with a supply crisis.

To support this, Wallace says that only in the U.S., oil reserves climbed by an amazing 11.9 million barrels in the month preceding the Energy Information Agency's (EIA) May 7 inventory report. Since January 2008, they have been up by nearly 33 million barrel! As for demand, MasterCard's May 7 gasoline report showed a 5.8% decrease at that period, while the government suggested that gasoline consumption might have fallen by slightly over 6%.

China, which is often blamed by media for the surge of gasoline prices, is expected to see its consumption rise this year by a mere 400,000 barrels a day (b/d). Just so you can get an idea, while the U.S. consumed around 20.7 million b/d in 2007, China imported 3.2 million b/d and its estimated total usage was around 7 million b/d.

And to top it all, on May 2, Bloomberg reported that Iran – a major oil producer- is once again storing its heavy crude on tankers in the Persian Gulf as the country has run out of onshore storage tanks while awaiting buyers… Via: BuisinessWeek