(image: eggstudio/flickr)

(image: eggstudio/flickr)

The other day I asked the question “Why is the U.S. still exporting petroleum products -such as gasoline- when the price for such products keeps going up domestically?”

Well, I thought it was because the CFTC still hadn’t put reasonable limits on how many positions a ‘speculator’ could hold in the futures market. Example: buy gasoline on the spot -actual market- for $2.90 and sell the futures contract for $3.60; if storage costs between now and when the futures contract calls for delivery is 30 cents, then that’s a nice 40 cent profit(almost 15 per cent ROI).

So I happened to come across a couple of articles today that somewhat answered my question and also noticed that Obama is in Florida talking about how he’s helped the situation and watching over the issue.

Which, as usual from Obama, is slick -Clinton has nothing on him- and without any real substance.

WikiLeaks: Saudis often warned U.S. about oil speculators:

“The Obama administration, the Bush administration before it and Congress have been slow to take steps to rein in speculators. On Tuesday, the Commodity Futures Trading Commission, a U.S. regulatory agency, charged a group of financial firms with manipulating the price of oil in 2008. But the commission hasn’t enacted a proposal to limit the percentage of oil contracts a financial company can hold, while Congress remains focused primarily on big oil companies, threatening in hearings last week to eliminate their tax breaks because of the $38 billion in first-quarter profits the top six U.S. companies earned.

The Saudis, however, have struck a steady theme for years that something should be done to curb the influence of banks and hedge funds that are speculating on the price of oil, according to diplomatic cables made available to McClatchy by the WikiLeaks website.

The cables show that the subject of speculation has been raised in working group meetings between U.S. and Saudi officials, in one-on-one meetings with American diplomats and at least once with President George W. Bush himself.”

So even if the second largest supplier of oil to the U.S. has been telling the government for years that speculators are subverting the market, nothing gets done.

At the same time that the price of gasoline is rising, the US oil industry is increasing its exports of gasoline, diesel, and jet fuel.

As one would expect, it’s all moans and groans from the American Petroleum Institute:

““First of all it is a very small amount,” says John Felmy, chief economist for the American Petroleum Institute (API), which lobbies for the oil industry in Washington. Mr. Felmy estimates exports represent 4 percent of total US gasoline production.

He says the exports are helping some in the refining industry stay in business since they have been buying expensive crude at the same time that domestic demand has been declining. “They are losing money on every gallon they sell and they can’t make it up on volume,” he says. “But people are willing to pay higher prices for gasoline on the international market.”

“Brockwell says gasoline exports, on a four week average, are now running 600,000 barrels a day compared to 200,000 barrels per day a year ago. He says this is the equivalent of three of the largest refineries in the US exporting most of their gasoline production.

“Instinctively, I understand the API not wanting the American public to know so much is exported and tied to high prices,” he says.

If the exports were not taking place, Ebinger at Brookings says it might be possible to argue the refiners would be flooding the market with gasoline which would reduce prices. “If people knew there was a surplus of gasoline, you might get some entrepreneurs in to sell it at lower prices to stimulate demand,” he says.

But, Brockwell says it’s showing up on the so-called “spot market” – the daily buying and selling of actual petroleum products – which he says is soaring. “If demand is so low, how can that be?”

So I have my answer which fits most large and multinational corporations (why Obama thinks it’s necessary to lower the corporate tax rate is simply unfathomable); it’s all about greed.

Oh, and BTW: Average stock held for 22 seconds (up from 20)

Could it all be any clearer?