Spiraling Gasoline Prices are Impoverishing Americans
By Prof Michel Chossudovsky
October 08, 2012
The hike in gasoline prices is mechanism which impoverishes millions of people.
Gasoline Prices have skyrocketed overnight in California, with prices at the pump exceeding $5 a gallon. In Los Angeles “average prices for regular on Sunday in the L.A. metro area were $4.696, up 3.5 cents overnight, and premium was going for an average $4.893″
The increase in gasoline prices contributes to compressing purchasing power and the real income of households. It has a devastating impact on suburban households. It compresses the levels of household consumption.
The hikes in fuel and gasoline prices across the US (and Worldwide) contribute to precipitating small and medium sized businesses into bankruptcy.
Crude Oil and Commodity Prices
The rise in gas prices is the result of a manipulation in the oil and energy markets. The speculative onslaught has pushed the barrel for crude oil to more than 90 dollars a barrel
This movement in the price of crude oil on the New York mercantile exchange bears no relationship to the costs of producing oil. The spiraling price of crude oil is not the result of a shortage of oil. It is estimated that the cost of a barrel of oil in the Middle East does not exceed 15 dollars. The costs of a barrel of oil extracted from the tar sands of Alberta, Canada, is of the order of $30.
The price of crude oil is hovering around $100 a barrel. This market price is largely the result of the speculative onslaught. They are the result of speculative trade in index funds, futures and options on major commodity markets including the London ICE, the New York and Chicago mercantile exchanges.
According to Business Insider: the price of West Texas Intermediate crude oil, which “has been used as the principal price benchmark” at which producers sell to refiners, is no longer relevant. WTI hinges upon oil futures contracts on the New York mercantile exchange:.
And most analysts agree it [WTI] is now irrelevant to gas prices.
Instead, Brent prices — which is sourced to prices received by refiners in Europe’s North Sea — has become the new standard.
“Mainstream consumers should probably be paying more attention to Brent prices, at least in the near-term (1-3 years),” Morningstar commodities analyst David McColl recently told us by email. (Business Insider)