For what feels like the hundredth time in recent memory, Gas prices have exceeded $3 bucks a gallon in San Francisco again (which is weird, cause I see fewer cars on the road)
Across the country demand for petroleum is down 2.4 percent. In addition, petroleum refineries have cut back monthly oil production to its lowest rate since 1992. I may have been asleep for most of Freshman Economics, but I do recall overhearing (through the haze of the dream fog of course) of a certain governing principle called Supply and Demand. So whats behind oil’s demandless price surge–the investors.
Investors are buying oil futures like they are umbrellas in a monsoon. The culprits claim that we are living in bull market times. They foresee a gradual upswing in the economy, and want to be prepared for the surge. Further, they want to use oil as a hedge against the weak dollar.
I’m going to take the easy metaphor and say that there’s some serious “shit” going on in this “bull market”
Fortunately, there is a new sheriff in town–Gary Gensler, chairman of the Commodity Futures Tradition Commission. Gensler has suggested putting hard limits on the number of oil contracts an oil investor can hold. Refreshing, considering the last time rampant oil prices were a hot button issue, when oil soared at over $145 a barrel, the CFTC wouldn’t take calls regarding increased regulation.