Thursday, July 7, 2011
Right? Well.. No.
The oil is auctioned off. Like a commodity... which it is.
Recently various parties had bid on various quantities of oil, which ended up fetching an average bid of $107.20 per barrel. Did you know: Among the buyers besides the expected oil companies like ConocoPhillips, ExxonMobil and Hess, was JP Morgan, which purchased 1.5 million barrels. Barclay's Bank also purchased 200k barrels.
30mil. barrels x $107.20 = $3.216 Billion in US revenue.. I believe that's enough for another month or so of continued war
** For the full list, click on the pic below to expand to readable size.
Did you also know that as of 7/6/11, the price of oil per barrel was $97.42. That means all these oil companies and banks paid $10more per barrel than the trading price. Now why would that be? If the oil was released into the public today, it would constitute a loss in profit. Unless... Yep, you got it-- unless the oil is to be held onto until a crisis or speculators drive the price of oil high enough (maybe $140/barrel) that they can sell that extra oil off at a profit.
But still, why would the US Government do that? Why sell to mostly oil companies a product that they already acquire and sell? Simple- this is a 'hedge bet'.
The US is currently conducting military operations in 6 nations- Afghanistan, Iraq, Libya, Yemen, Pakistan and Somalia. It also knows that it doesn't take much for another crisis to occur which will cause oil to spike up. So the Administration, knowing that $5 gas will make people nuts, dramatically de-rail the so-called 'recovery' (and hurt re-election chances), use the oil from SPR to set up a hedge or temporary buffer against that magic $5 amount.
So the oil is sold at $107/barrel. The oil companies and banks keep it in tankers in the middle of the ocean and do nothing but go in circles. If/when oil spikes to a level which makes the $107/barrel oil profitable to sell to the public, the oil will be taken to the refineries, synthesized and then sent to your local gas station. You'll be paying probably $4.50- $4.75 for it but at least its not $5, right? As for the banks' oil holdings- they'll sell it to the oil companies once their allotments run out.
And if oil doesn't go up? Um, no, it will...
The everyday person can never catch a break.. Ever. He/she must always be profited off of.
Posted by Susquehanna at Thursday, July 07, 2011