It's time to stand up and be heard

Dated: 10/19/07

On Wednesday, crude oil continued its surge to a record high of $89 a barrel. Some analysts still claim it's demand that is driving crude, while pointing the finger at China and now at Turkey since it's gathering more and more troops on the Iraq boarder. Not only are they not complaining, but they are predicting that the crude price could shoot past $100 per barrel.

It's just preconditioning. There are no valid reasons for crude to be reaching these levels, but people, the prices dropped for a while and you stopped complaining. If you don't continue to be heard, prices will continue to rise. I believe the $89 a barrel price is arbitrary and not backed up by market fundamentals. The crude oil price could just as easily be in the $60 range.

Keep in mind that although the price of crude is $89 a barrel, the rack price and pump price is actually lower than when crude was in the $60 range. So I'll say it again — the fundamentals are not supporting the price.

So far, the price at the pumps has not reflected the crude oil price surge. But it's now starting to show some impact on the rack price, which has been inching up over the past week. Fill your tanks quickly, because in all likelihood, the price at the pump will probably follow and I am not trying to precondition you.

For the past couple years the oil companies, from the majors all the way down to the local suppliers, have been enjoying excessive, record-breaking margins. This past month though, the margins have greatly dwindled at all levels, except for margins derived from crude oil.

Let's follow the money here; although margins are lower at most levels, major oil companies are still raking it in at the crude price level. Keep in mind that Exxon Mobil, BP and Shell are among the largest oil companies in the world, and Chevron is one of the largest in the U.S. Each of these companies has vast supplies of oil, and much of that oil is domestic. They are making record profits selling you, the American public, your own oil.

This country functions best when the public gets involved and stays involved. It's really time to focus here before it is too late. The fact that Europe pays $5 to $6 a gallon for fuel is not a reason for us to expect the same. Conserve where you can, keep your vehicles tuned, use good additives which increase mileage and stand up and be counted. The American public still uses the bulk of the fuel in the world, and that alone should give us some pull.

This column is not here just to bust on the local suppliers and tell all the secrets. It's also to let you know the facts about what is happening in the market, good or bad, and just who I think is the problem or the hero of the week.