What is the relationship between what a gallon/litre of gasoline costs when you fill it up and the U.S. banks’ $700 billion bailout in 2007?
It’s not as complicated as one would believe.
The cost of crude oil in 2011 ranged between $80 and $100 U.S. a barrel. Yet, the consumption of petroleum products, specifically gasoline, dropped in the U.S. to the same levels as 1997. There is similar evidence the same occurred in Canada where we have more crude oil that we will ever need.
But the price of gasoline in 2011 rose by almost 50 cents a gallon (.27 cents a litre). So consumption goes down but prices went up.
It was not because supply caught up with demand or visa versa. It happened because relaxed regulations in the U.S. allowed the big banks to speculate in the oil futures market … very profitably.
Here’s how it works and is still working today.
The big boys including Goldman Sachs, Morgan Stanley, J.P. Morgan Chase, Duetshe Bank, Barclays, bought oil futures as speculation, spending millions to manipulate the market. These are the same banks that received some $700 billion of taxpayer’s money in 2007 to avert a financial meltdown. It was one of which they were principally responsible with the packaging of low-grade U.S. mortgages and selling them as securities to investors all over the world.
That happened under President’s George W. Bush’s watch. And we know the rest of the story. It became a major global financial disaster in which many countries are still trying to recover.
Now these same banks are engaging along with some multi-billionaires to manipulate the crude oil futures markets. The extra gasoline cost to ordinary citizens averaged $600 in 2011.
Can you now image the position of these modern-day robber barons are in with the threat of Middle East disruption of oil shipments, due to the Iranian/Israel confrontation?
This will play into the hands of these huge financial speculators who will drive the price of gasoline to more than $4.50 a gallon in the U.S. and $1.50 a litre in Canada.
How can this be when there are abundant supplies of crude oil and available refinery capacity?
Supply and demand has nothing to do with it.
You will pay more because the banking gnomes on Wall Street and in Europe will milk the situation to the hilt for personal gain.
Until our governments step in and introduce price controls on gasoline and other derivative products, North American consumers will, once again, be the saps who pay.
Oddly, the Republican Party in the U.S. fosters the myth that expanding oil supply will drop prices at the pump. As long as they and their adherents promote this myth, get ready for much higher gasoline prices in North America.
There are forces that are formidable to prevent fairness in the supply system. The American Petroleum Institute representing the major oil companies and the major banks involved, has spent millions lobbying to protect their interests and not the taxpayers.
Citizens should rise up and protest the terrible drain on their pocketbooks by voting with their feet during the primaries and the general election in the U.S. next November.
It’s your money.