Oil prices

Published Wednesday May 14th, 2008

NEW YORK - Oil prices shot to a new record near US$127 a barrel yesterday on concerns that Iran may consider cutting crude oil production. Gas prices, meanwhile, rose to a new record over US$3.73 a gallon yesterday, and their advance shows little sign of slowing with the U.S. Memorial Day weekend, the traditional start of the summer driving season, just 10 days away.

Light, sweet crude for June delivery rose as high as a record $126.98 a barrel in midday trading on the New York Mercantile Exchange Tuesday before retreating to settle up $1.57 at $125.80.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill., said traders reacted to news reports that Iran's government is considering cutting crude oil production. James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and OptionSellers.com, said the news quickly made its way around trading floors.

In later news reports, Iranian officials denied that production cuts were imminent, but said a reduction has been discussed. Cordier doubts Iran will actually cut oil production. The nation's economy is in bad shape, Cordier said: "They need all the petrodollars they can get."

At the pump, meanwhile, the national average price of a gallon of regular gas rose 1.4 cents overnight to a record $3.732, according to a survey of stations by AAA and the Oil Price Information Service. Prices have now risen to the level at which the Energy Department forecasts they'll peak in June, on a monthly average basis; that means prices may still go higher, but their average will peak at around $3.73.

Many analysts have predicted prices will surge much higher, and may breach the psychologically important $4 level on a national basis within the next couple of months. Prices are already that high in many parts of the country.

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We have to beat these corporate pimps and stop buying gas from the two larges oil companies Esso and Shell. Irving and others will profit in the early stages, but eventually the larger companies will drop there oil prices and this will start a price war. It would take a chain reaction of people to do this. This isn't impossible. We the little folk need to gang up and stop these people from playing us like puppets.

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Anonymous Reader on 14/05/08, 7:03:40 AM ADT

It has nothing to do with how much gas we buy or don't buy. It has to do with the "perception" that our oil supplies are dwindling, which causes commodities traders to freak out and drive up prices worldwide. I am convinced that oil companies intentionally hint at reduced production or below average forecasts for this very reason. They likely have no intention of reducing production, but the mere possibility that they might drives up the prices, which puts more money in their pockets.

The only real solution to price volatility is to take oil and gas off the mercantile exchange and create a worldwide price regulation policy. This is never going to happen, but it's wishful thinking. Unfortunately governments don't run the world, oil companies do. This is not conspiracy theory, it's the sad truth.

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