Gas price note

Gas is up to $2.50/gallon here. On 9/11 when there were gas lines with 1-to-2 hour waits at every gas station in the area, the prices hit $2.99/gallon and the Missouri Attorney General came out screeching “price gouging, price gouging”. Now, to be clear, I fully support the right of anybody to gouge anybody they can. That’s what makes America great. But the idea that it’s wrong for gas station owners to respond to an increase in demand with a price increase (exactly what we’d expect in a free market) but it’s somehow okay for futures traders to push prices up for no apparent reason whatsoever seems a bit off to me. The Strategic Petroleum Reserve is now at 699.8 million barrels with another .7 million scheduled for delivery. After that the Royalty-in-kind oil deliveries to the SPR of 1-200,000 barrels per day will be on the market. With the reserve full and private reserves, we have several months import protection, so if not only the Middle East but also Nigeria, Venezuela, Mexico, Canada, Russia, Norway, the North Sea and every other source of imported oil dried up overnight, we’d be months from needing gas prices in the $3/range to deal. The futures market is out of whack. Something has to give and my secret hope is that when it does these oil traders get burned bad.

More on oil on my site Financial Options including The Secret Way to Play Oil.

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