I received an interesting open letter from the executives of many of the leading airlines in the US, making a plea for action on Oil Speculation. They provided data that confirms what intuition would suggest.
Clearly the very weak US dollar is having a big impact on the cost of fuel in the US and on the cost of crude oil since it is dollar based. At the same time commodity speculation is having a huge impact.
In the letter from the airlines they state that 20 years ago, speculators made up 21% of the purchases of crude oil. Today this number has grown to 66%. Crude Oil futures are bought and sold many times before the oil is ever delivered to the company that actually refines the oil. Each time it is sold the price goes up.
Industry experts estimate that this is adding $30 to $60 to the cost of a barrel of crude oil; this means a 20-40% increase in the price. All of this speculation is adding no value other than making a lot of money for a few Fat Cats.
For more information check out the following web site: http://capwiz.com/sosnow/issues/alert/?alertid=11571321.
I am getting so skeptical about the world financiers that now when I see concern about Iran’s missile launches I am convinced that it is the Fat Cats finding ways to extend the demand for the futures that they purchased.
If it wasn’t for the serious impact this is having on the global economy it would be fun to watch as the really big Fat Cats screw the smaller Fat Cats by selling them higher priced futures just before the bottom falls out of the market. Is it coincidental that the Iran Missile speculation comes out days after the price of crude drops to $136 a barrel?
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