Don’t even believe that gasoline prices are set by supply and demand…
They are set by hedge funds. Of course those hedge funds use global events to pump up the price, and if the market suddenly drops, those global hedge funds dump oil as fast as they can, so there is some correlation to events that shake people up……..
But, to control the price of oil, you need to control those who put money into these funds…..
And the fastest way to make them exit, is for them to lose money.
Here is a step by step description of how to drop gasoline prices…
First background facts.
Global demand per day, is 90 million barrels.
The US Strategic Petroleum Reserve is 727 million barrels..
The model for this scenario occurred 5/5/2011.
Brent Crude is selling for 117 a barrel today…..
Ok….
At ten o’clock sharp, the President announces he is authorizing the sale of 30 million barrels from the strategic Petroleum Reserve to exert downward pressure on the price of oil…. The EC is also releasing 30 million barrels, roughly 60 barrels total.
Those contracts come up for sale at $97 a barrel… The Strategic Reserves can afford to do this, because much of this oil was bought at prices under $60 a barrel.
Those get bought up quickly….
The Price of Brent crude plummets in minutes from $117 to a little over $97…. Suddenly Brent crude is cheaper than lower grade oil, so as money moves to Brent, lower grade prices plummet too…
Instantly all computers analyze the dropping price, and sell their stocks… The price begins to accelerate lower. Each automated sell orders gets generated as oil crashed through price points that traders had programed in advance into their supercomputers.
$95
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$92
Price of oil is now $25 below its price minutes before Obama spoke……
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$90
Margin calls start piling up… As you receive one, two, three, are following right behind it…. as computers see the price and on command, spit out the request….
The machine trading cuts out the white knuckles, the gasps of air, the flatulence, the human error, the wait-and-see-cause-I-still-don’t-believe-this-is-happening…… Instead, as programmed, automatic, abrupt price drops can quickly prompt these machines to unload a bullish long-position in oil, and build up a bearish short one instead…..
$89
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Wall Street traders stop and watch the board… Not knowing who, or what, or where the money is going. Just watching the price go, go, go .. down, down, down,….. All they do know, is every firm’s computer across the globe, is feeding into the frenzy….
$86
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In Texas, on oil refinery row, silence ensues as there is nothing which can be done until the market settles for a moment. The floor is covered with torn spreadsheets from the initial drop…..
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By 1:00 the smell of blood is all over Wall Street… Phone calls between friends at stockbrokers, hedge funds, oil suppliers all wondering who was going belly up first….
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Rumors abound as everyone wonders which major commodities funds are on the losing end of bullish oil bets, and which are getting forced by margin calls from brokers into dumping even more massive positions.
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Then came the word… London based Blue-Gold hedge fund was looking for a buyer… (They specialized in bullish bets on the oil market…)
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$73
It is now 2:00 just 4 hours after the announcement….
The US and European Petroleum Reserves begin buying up oil contracts amounting up to 30 million barrels each….
By 3:00, others begin buying oil at a bargain price…..
Hedge fund computers begin assessing their losses… Analysts are frantically calling whoever they know to get first reports on the damage.
Retailers begin setting their prices to match the new barrel price over $40 lower than the previous day…. People pulling up to the stations can’t believe their eyes… The gas that was $4.50 when they went to work that morning, was now only $2.88 per gallon….
Across America there was rejoicing…. Whole families are going out to celebrate!
We finally found a president who’d stand up to the fleecers and drainers of the American Way…. In one day, a little under $4 billion was cut from the daily cost of using the globe’s oil ….
Beaten on their own battlefield, they were…….
Now, that’s…. what I call a “good” president…..
(Oil hedge funds never again became a preferred method of speculation. The price of oil never again rose above $2.90)….
The End.
kavips 
4 comments
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February 22, 2012 at 7:50 am
Duffy
Let’s assume for a minute this is correct. It isn’t, but let’s go with it for a minute.
What possible explanation do you have for this administration not following this course of action? Do they simply not know what you know or is there another reason?
February 22, 2012 at 11:52 am
kavips
Timing.
February 22, 2012 at 2:42 pm
Duffy
So they are waiting until voters are heading to the polls before rescuing the economy? That would make him even more cynical and irresponsible than you believe your opponents to be.
Perhaps this is not a bug, but a feature: http://www.youtube.com/watch?v=HlTxGHn4sH4
February 22, 2012 at 7:20 pm
kavips
When we looked at cap and trade, the idea was that as rates rose, each person’s usage declined, meaning they wound up paying about the same.
The weatherization did not occur, and that, sort of shot out any impetus of Cap and Trade… It would then cost more.
Which is why, it is gone now…
But, had we weatherized America like we dreamed, and went all energy efficient utilities in every home, so the average household used half as many kilowatts, then it wouldn’t matter if we paid twice as much for each one. And, we would cut down man made carbon emissions, and… we would have a market for solar and wind, requiring fewer subsidies…..
of course, the economy ruined all that. (That video was made early in the campaign before Lehman went belly up.)