Crude Oil is on everyone’s lips these days and politicians across the globe are falling over themselves blaming just about everyone under the sun for the dramatic rises. Traders, producers, terrorists, refiners, OPEC, the Oil companies. Please. Pick a name, any name.
Of course the real reasons for such high price levels can be placed firmly back in the laps of those self same politicians who have always seen oil as a safe, risk free, source of extra revenue. Lacking the conviction to push through new refining capacity (the US and UK have not built a new refining plant for decades), in thrall to the Greens about searching for new sources from the wilder parts of the globe and, as with our very own Gordon Brown, adding such swinging taxes to extraction that companies simply ceased new exploration in many areas.
The oil companies can extract the oil, pay the local government its portion, ship it half way around the world (any idea what a super tanker costs?), refine it, pay for the forecourt and all the salaries of everyone concerned and then sell it for around 30p a litre. Somewhat less than the bottled water from a supermarket that basically flows out of the ground in its final form. When you hear that the tax on a litre of petrol is 75% it is educational to look at this the other way round. The tax on petrol is 300% of its finished product, in the pump on the forecourt, cost. Just to confirm, that is, Three Hundred Percent. No wonder OPEC appear somewhat bemused when they are blamed for the high cost of fuel. It is the breathtaking gall of it all that appalls this particular writer.
Ali Darling is under pressure to cancel the insignificant 2p ‘green tax’ rise due later this year. In reality he should be looking at trimming the massive 90p that he already takes.
German and US politicians are seriously debating disallowing open trading in crude oil futures. Wow, what an amazingly inept concept. Trying to stop the open market trading a product that you yourself do not control is just so pointless as to be laughable. When the boot was on the other foot and oil was down at $12 at least OPEC did not threaten to withhold supply and crude oil continued to be freely traded.
For the nasty, ruinous speculators who are interested, the crude oil spread betting market is now trading at around £140 per barrel with Capital Spreads and Financial Spreads.
I can see the fledgling futures exchange in Dubai praying to God that the West makes such a foolish move as it could be the death knell for the various commodity exchanges in NYMEX, NYBOT, ICE and EUREX as producers start to wonder ‘where one product gets restricted, so can another. What happens when another crucial commodity gets squeezed?’
Did no one see how the Sarbanes-Oxley Act of 2003 damaged New York as a financial centre?
Gold has rallied by over three times in the last few years but of course this just made everyone richer so it did not matter. Copper, platinum, corn etc all up big time but nobody blinks. This is obvious for two reasons. Firstly most of them are hidden costs making up just a small proportion of the price tag of a finished product and secondly none of them is taxed so highly as fuel and therefore does not put as much pressure on the government of the day to do something about it.
'High Crude Oil Prices', Feature by D. Jones, last update: 18-Jul-08
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Trying to stop the open market trading a product that you yourself do not control is just so pointless as to be laughable. When the boot was on the other foot and oil was down at $12 at least OPEC did not threaten to withhold supply and crude oil continued to be freely traded. For the nasty, ruinous speculators who are interested, the crude oil spread betting market is now trading at around £140 per barrel with FinancialSpreads.com
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