Like a bad barker on television trying to sell another gadget, August contract light crude sold for $59.99 in morning trades. The prices edged its way back after oil prices dropped on rising inventories from the EIA last week.
The price of oil this time is strapped to the back of tropical storm Cindy as the storm makes its way to the Gulf Coast. The oil supply is stretched so tight even the slightest hint of an interruption in supply could kick the bulls in the backside and send the market climbing again.
Heating oil prices skyrocketed a nickel this morning to $1.79 a barrel. Most watchers figure this was from increase diesel demand. Gasoline was up to $1.72 a gallon after opening at $1.67 this morning.
Also playing into the mix is recent news suggesting Iran’s new president was also a hostage taker during the 1979 hostage crisis when the U.S. embassy was raided by a mob of college students back during the Carter administration.
Refineries also play into speculative fears as most refineries are pumping near capacity. Many feel these refineries are aging and susceptible to breakdowns that would severely hamper what most already consider a bottlenecked supply of oil in the U.S.
There’s also some speculation that once the U.S. is done in Iraq, they may head home via the Tehran highway and if that happens then the oil prices will skyrocket over $80 a barrel.
Finally, in all this mess, as oil prices continue to rocket, the oil companies are making record profits. Surprise. The oil companies make money from refineries as they run at record levels. They also manage to arrange imports so they can keep their foreign refineries running at capacity. Then there’re the insane prices of the oil on the exchange. The large oil corporations win all around as the situation continues with no apparent end in sight. Goldman Sachs has predicted the price cracking $100 a barrel and that means pump prices some where around the $5 mark or so and that’s in the U.S. which has traditionally cheap fuel. When’s the price going to come down? Ask oil companies.
John Stith is a staff writer for Murdok covering technology and business.
