An Energy Insight
Many of the readership may have noticed a small reversal in the cost of gasoline, (or at least no increase), over the past several days and may be somewhat perplexed as to why. The intrigues of the energy industry are second only to, and often go hand in hand with, international politics. Yet, why the sudden falling prices at the pump, most especially since international politics and economic conditions remain unchanged? …saber-rattling in the Middle East continues unabated; the oil producing countries involved in the, so-called, Arab Spring of last year remain in chaos; Venezuela seems paralyzed as its cancer-ridden fearless leader, Chavez, remains unseen and unaccounted for over the past ten days or so; Israel is still making veiled threats against Iran, and vice-versa; peak oil, contrived or not, remains a player in the market; and so on. This apparent inconsistency may be mildly wondered at, though I suspect most people are relieved for the respite in seemingly unending gas pump increases. Yet, what does this say about the market and what does it bode for the future?
Let me state that this brief period of respite, and I emphasize brief, is a profit taking opportunity for domestic refineries here in the good ole’ U.S.A. They are taking advantage of the West Texas Index (WTI) for Crude Oil. There is an apparent blip in the market for West Texas Crude, but don’t break out the party hats just yet. When it comes to energy the US is no longer the center of the market, therefore, things like the WTI are really just local indicators rather than steering mechanisms for the world energy marker. In point of fact, the Brent Crude Index is the real barometer of the energy market. It is here that 80% if the world’s energy is traded. That said, it is true that by the law of supply and demand all energy players have some effect on the broader market, but its impact is relatively small and short-lived. What is actually happening is that the price of WT Crude has lessened somewhat over the past week and domestic refineries are taking advantage of this to buy the cheaper domestic production over imported. This will give them an opportunity to temporarily widen their profit margins. Thus, the cheaper production will have a leveling effect for a short period of time. The bad news in this situation is that the domestic refiners, that is, U.S.A. refiners are shipping this finished gasoline to the overseas markets further expanding their temporary windfall profit margins. It must be born in mind that these domestic refiners are generally owned or otherwise influenced by international energy companies and therefore, have no allegiance to the American consumer. Aside: (though it would be nice to imagine just how much prices at the pumps might fall if the domestically produced and refined crude were destined for the American market).
The reasons as to why WT Crude Prices moderated is still a mystery, but I think it may have something to do with the Iranian sanctions imposed by the UN, NATO, and other NWO (New World Order) giants. These sanctions are causing great hardships on the people of Iran; they are coping with the situation by marketing their crude production to emerging economies, like India and China. If overall world demand and therefore prices fall, even temporarily it increases the effect of the sanctions greatly affecting the Iranian economy and the Iranian people. The result is that the American gasoline consumer gets a short reprieve. Yee-ha!
Make no mistake; this will be only for a week or two at best until the market adjusts. SO for the Catholic Rural Solutions readership it is time to top-off those gas cans and gas tanks now before prices once again begin to creep up, though creep up is not the right phrase, but more properly …jump up. Remember, we have the peak driving season of summer upcoming and historically prices always rise on gas with families traveling more and lawns needing weekly mowing. So take advantage of the period and stock up. Needless to say …use prudence! Note emphasis! Keep no more than a couple or three 5 gallon containers on hand, and make sure to store these away from the house and garage in a shaded place. Storing 500 gallon tanks is a fool’s gamble because it presents a dangerous situation with potentially catastrophic results. Beside, gasoline does go bad; storage of large quantities may therefore, be a waste of money in the long run. Store only as much as you will use of a two –three – or four week period.
Below is a web citation that supports all the above and explains it better and in more detail:
Richard of Danbury, D.S.G.