Guest Book

Re gasoline prices: Inventory numbers were just released, as they are every Wednesday at this time. Oil down slightly, less than expected. Substantial increase in gasoline inventories, more than expected. Gasoline is a commodity, just like oil, natural gas, pork bellies, wheat, corn, and frozen concentrated orange juice. I use the movie "Trading Places" with Eddie Murphey and Dan Akroyd to help folks get it. The trading scenes were reasonably accurate. Major forces in the gasoline/oil market recently: 1) World economic growth, especially in China and India. 2) No refineries built in the US in 30 years. This situation has been somewhat ameliorated due to the modernization and expansion of some of the refineries rebuilt after Katrina and Rita. 3) Supply disruptions, due to strikes and terrorist activity in Nigeria and Venezuela. Coupled with tight markets caused by increased demand in China and India, even small disruptions can cause volatile price movements. You can add in the recent supply disruptions due to the partial closing of the Alaska pipeline by BP, now coming back online. 4) Filling the US petroleum reserve. Obvious increased demand here. Bush allowed some reserves to go to refiners after Katrina and Rita due to the inability to offload tankers in the Gulf because the offloading facilities were wrecked. The refiners were required to replace the oil at a later date, which they have done. If memory serves, Clinton did allow a small drawdown and a suspension of filling to fight increasing prices. 5)Noticable this year--demand stagnant. Probably due to a change in driving habits, vehicle buying habits (see problems at GM and Ford) due to market forces caused by higher prices. This logically would be a contributor to the increased inventory number just announced. 6) The markets took a while to recover from the run-up caused by George Soros and his hedge fund buddies around the world, primarily in Russia, before the last US presidential election. Soros brags openly about this, mainly in financial publications. He used his vast network to drive up prices worldwide to try to defeat Bush. The markets were just getting back toward normal from this when the hurricanes hit. 7) Hedge funds are major, major players in all commodity prices. Many took large long futures betting on more hurricanes. When these didn't materialize, they had to sell. Much like the Duke Brothers. Witness the recent demise of the Amarath fund. 8) Many traders and hedge funds also went long expecting sanctions to be imposed on Iran as the UN deadline approached. When this didn't materialize, positions had to be unwound. You can watch the wholesale price of gasoline and oil as it fluctuates daily, on CNBC, like I do. I have talked to people locally in the business--jobbers and retailers. From these talks, I know that retail price is derived from starting with the wholesale, adding 41-44 cents tax, depending on location in our county, add about 11 cents for the jobber, add 6-7 cents for the retailer. There's about a 10-day gap between wholesale price moves and when they show up at the pumps. You can derive similar info from asking around in your area. It helps me to buy more when prices are going up, less when they are going down. Right now, wholesale is $1.47/gallon. It has been in this range for awhile now, expect no major price movements in the next several days. I do this for a living, and must deal in reality.