Petroleum Prices Spike, but Why?

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Leashing the Speculation Predator! Gasoline in US has risen by well 20%+ in just a month or so. Bad news for Obama as well as consumers. While most other economic trends were positive including employment, US consumer confidence went down in last week’s reading– I suspect linked to petroleum/gasoline prices. This week they continue to rise. Petroleum demand forecasts globally though have been revised downwards. Further, US gasoline demand is down. So why the rise? Some will try to rationalize on basis of recent more positive economic indications. However, the economic data is better but not so much better to rationalize spikes of more than 20-25%. US refineries are actually closing down – while only a few years earlier refinery capacity constraints were blamed for gasoline price spikes. The prospect of conflict with Iran and the Strait of Hormuz would certainly cause an immediate spike. However, such conflict neither has yet occurred nor frankly is inevitable. Tension yes, but it has been there for decades, but war has been avoided as it does not serve Tehran, Washington or Brussels. Further, war in the Gulf would cause global economic activity to collapse and petroleum demand would follow the fall. Iran’s cut-off of exports to Europe may cause greatest immediate disruptions. Speculation is the greatest spur for the spikes, and this time it is speculation about future speculation. The current environment has become a predatory speculator’s dream scenario – no war but enough panic so that along with actual fuel consumers pay for fear in their gas tank. Sure there is risk of oil being being plugged-up at the Strait of Hormuz, but at much more likely that globe will continue to experience more than adequate, perhaps soon excess supply. However, with no concern of regulatory or market discipline, little fear in hearts of speculators to continue driving prices up. Think this was major contributor to collapse of 2008 – will history repeat itself or can this time predatory capitalism be leashed before it bites into and then consumes economic recovery? READ – “Greed is Good – Abuse in Financial Markets Cause for Spiking Prices & Economic Instability” - diplomaticallyincorrect.org/films/blog_post/greed-is-good-abuses-in-financial-markets-cause-for-spiking-prices-economic-instability-by-ambassador-mo/35002 READ – “Financial Jungle – Can Anyone Leash the Predator?” - Financial Jungle – Can Anyone Leash the Predator?” diplomaticallyincorrect.org/films/blog_post/financial-jungle-can-anyone-leash-the-predator-by-ambassador-mo/27281 By Ambassador Muhamed Sacirbey – Follow @MuhamedSacirbey Facebook = Become a Fan at “Diplomatically Incorrect” Twitter – Follow us at DiplomaticallyX International Financial Crisis Channel - diplomaticallyincorrect.org/c/international-financial-crisis


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DiplomaticallyIncorrect

"Voice of the Global Citizen"- Diplomatically Incorrect (diplomaticallyincorrect.org) provide film and written reports on issues reflecting diplomatic discourse and the global citizen. Ambassador Muhamed Sacirbey (@MuhamedSacirbey) is former Foreign Minister Ambassador of Bosnia & Herzegovina at the United Nations. "Mo" is also signatory of the Rome Conference/Treaty establishing the International…

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