Recent astonishing debates about the responsibility of the President of the United States Barack Obama -- on the recent increase of the price of a gallon at or above 4 dollars -- seem to ignite some presidential candidates. It is simply not true.
The price of a gallon at the pump is fixed by the oil companies. They collectively have the responsibility for this type of oil product that they refine and distribute. The increase in one week between 15 and 25 cents to the gallon came as a shock to the country. Oil companies stand to increase their profits by an equivalent margin.
"And this month, speculators are betting heavily not only on crude oil, but particularly gasoline. Indeed, economist Ed Yardeni calculates that speculators currently have established futures positions that total an astonishing 43.8% of U.S. inventories of gasoline -- a record." writes Suzanne McGee in the Fiscal Times this week. Yes, they are back. Despite the fact that the Commodities Futures Trading actually sued speculators in 2011 considered guilty of manipulating the price of oil, they continue to actively trade oil and gasoline.
But what is behind all that is not just speculation. Two powerful trends are behind the price increases and the speculation.
The first one is the economic recovery: As modest as it is, it does provide clear signs of growth and an increased demand for oil products. If indeed it should consolidate, the U.S. recovery will inevitably be accompanied by higher prices of oil.
The second one is Iran: European countries have agreed not to purchase oil from Iran, and the noises made by Israel that they might militarily intervene with a U.S. backing and bomb Tehran's nuclear sites, are enough to make everybody nervous. This one is of our own willing. Whether it is or not politically motivated and executed, the current situation can only exacerbate the oil prices and those who purchase today at $108 a barrel are looking forward to reselling it at... $200 if indeed Israel attacks Iran. Interestingly enough, the role that the United States intends to play in this situation does not seem to emerge as a disagreement between Republicans and Democrats. Who would dare to antagonize the Jewish electorate?
Last but not least, let's not forget that the reserves of natural gas of the United States protect the country from an energy crisis: This is not the case in japan or Europe.
It is hard to believe that, as powerful as he is, the President of the United States -- whoever he or she might be -- is influencing the price of oil. Let's look at those who really fuel that increase: They are not at the White House, but more likely in Texas!
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