Monday, September 22, 2008

Oil Up Over $15 A Barrel During Monday Commodity Trading

Oil prices were up over $15 a barrel on Monday's volatile commodity trading markets. As late as last week, oil prices dipped well below the $100 a barrel mark largely due a confidence fall among all stocks and commodities due to an investor loss of faith in nearly all markets except gold last week. At one point last week, an awful lot of persons were nearly tempted to pull all their cash out of stocks, bonds and banks and stuff their assets under a mattress. Things were just that bad. Then the surprise news of the bipartisan efforts to rescue the economy and bail out some select troubled industries such as Fannie Mae, Freddie Mac and insurance giant AIG emerged.

While the Republicans have grabbed on to the "oil drilling" issue for this election, it is mainly only to neutralize any Democratic advantage on this issue. The fact of the matter is that OPEC controls both the world output levels as well keeps the prices high. And although oil has been far harder to access since about 1977, where even in Saudi Arabia the giant Ghawar oil field requires millions of barrels of seawater to be pumped in each day to raise the oil level to the surface. Many other world oil wells have witnessed lower output levels over the years since 1977. But at the same time there has to really be little real interest among American oil companies to want to actually see oil prices dip much below that $4 level or to spend nearly 10 years and a lot of cash on a process on getting permits, oil exploration, building new drilling sites and new refineries to harness new oil supplies in the U.S. territory when plenty of oil can still be bought on world commodity markets from close neighbors such as Canada or Mexico.

The fact of the matter is that oil prices which includes home heating oil are just starting to rise again, largely due to role of oil market speculation that really has little to do with actual supply levels. Homeowners are going to see higher heating prices than last Winter and motorists will likely soon see gas prices as high as ever soon again. Commodity market speculation more than any variable is driving the price of oil.