To the Readers' Forum:
Every time there is a spike in the price of gasoline, pundits and those who rely on pundits to shape their opinions, try to put a political spin on the causes. Thus, the current spike in gasoline prices is being blamed on President Obama. You can also hear the blame game being played out in the Republican primary elections. The president; really?
Does the president sit on the oil board that sets the price of oil? If you pay attention, any spike in the price of oil and refined fuels is based on pure speculation among traders. "They," whoever they are, dictate the price of oil, and there is as much oil available now as when it was far cheaper. In simple terms, big oil is a monopoly. My proof is to ask: When was the last time an oil company competed for your business? And, why does a future price of oil, that won't be extracted or refined for months, cause current fuel prices to rise? Because, absent price controls, there is nothing you can do about it.
Does the president decide what the profit margin between crude and refined oil products should be? I recently read that the 2011 price of domestic, "West Texas Intermediate" oil was $28 per barrel cheaper than international, "Brent" oil, yet WTI refiners did not sell their product for less than that based on international oil. Refiners pocket huge profit windfalls for every dollar difference between grades of crude.
Does the President decide how much oil is turned into gasoline and diesel fuel by refiners? I also read that suppliers have responded to a broadly weaker, yes weaker demand for gasoline by permanently shutting 19 refineries. Normally, excess supply should drive prices down, but refiners manipulate supply to keep prices and, therefore, profits up. So, even with an actual oil glut, the industry conspires to serve itself.
Certainly, the president can allow for more drilling and more pipelines, but those have no real effect on the problem at hand. We don't need more glut at a time when we should reduce demand. President Obama has done what he can to reduce demand by raise mileage standards and promoting alternative fuels. Unfortunately, absent competition, or more government intervention, and with our current state of near addictive dependence on oil fuels, the oil industry has us over a barrel, literally.
So, blame the president; really?
Paul L. Demler
Jamestown