Gasoline As Utility
Hardly anything happened today. Very boring.
Stocks moved absolutely sideways. Bonds continued their sideways move too, as did the Euro.
Oil and gasoline stood out as the big moves about to smash through their all time highs. Are you sick and tired of paying those high gasoline prices, and being ripped off by the big oil companies?? I am.
Gold continued its move upward and got above $925, and out of my “Buy with both hands” signal. It’s now just a good buy.
In the news today….
WaMu is getting a $5B cash injection from a private investment company. It looks like this is the way forward for all banks. They all need cash, and they are raising it one way or another.
Those big, bad oil companies….
I did a little research on gasoline production, and found out the following. Refineries can be categorized as big and little. My personal break point is 100,000 barrels of oil per day production rate. Anything less than 100,000 is small, and anything bigger than 100,000 is big. Some refineries process 300,000 – 600,000 barrels per day.
Well, independent producers own the “small”refineries. Oil companies own the “large” refineries. Here is the rub!!!! A “large” refinery is owned by a group of oil companies – hardly ever do you see just one oil company owning a refinery. What does this mean?? It means that oil companies are talking to each other about how much output a refinery – and the majority of refineries – are producing. Does this sound like collusion to you???? Well, maybe. It could be, and it might not be. It depends on what is in the heart of the managers…..
There is no doubt that “greed” driven by bonuses is in the “heart” of the managers. So, all the big, bad oil companies get together and set how much production is needed to drive the price of gasoline “through the roof.” Are you currently seeing that roof when you drive into your local gas station??? I sure do.
Since gasoline prices are set in the “futures” market, and we all know that speculators “own” any futures market, gasoline prices can easily be increased by slowing down the “supply” side of the demand/supply equation. And, that’s exactly what’s happening. This is immoral in my mind. Oil companies own the entire supply chain from exploring/drilling to refinery to gas stations.
I strongly believe that gasoline should be considered a “utility” and controlled just like any other “utility”; by a state controlled commission. While government interference in free enterprise is anathema to my beliefs, when I think oil companies are taking advantage of their position, that is exactly when “government” should step in.
Here are today’s numbers:
Dow Jones 30 Industrial – 12,612 (Up 3 points)
10 Year Treasury Bond – 3.56% (Up 0.08%)
Euro – $1.5712
Gold – $927 (Up $14) - it’s now less of a bargain to purchase, but probably a pretty good buy anyway.
Oil – $109.09 (Up $2.86)
Gasoline – $2.78 (Up $0.03) - Are you ready to protest like the truck drivers???? How much is too much???
