Oklahoma City_Gas prices may have fallen in Lawton, but talk of even higher crude oil prices continues to circulate. Some politicians have been blaming record high gas prices on oil speculation. But what does that mean, and how does it affect us at the pump?
Simply put, oil speculators look into the future to determine how much oil will be available, and that determines today's prices. If speculators predict a decline in available oil, they will drive up current prices. However, if more oil were made available through a proposal such as off-shore drilling, it may promise lower prices in the future and cause speculators to reduce prices. Basically, it's all about taking bets.
The United States uses 86.7 million barrels of oil per day, and the problem is that we're only producing 85 barrels per day. Now, our reserves are dwindling. "Gradually we've been seeing world stocks decrease," says Bruce Bell of Edrio Oil Company. "They've been decreasing here in the United States. We're below the 300 million barrel mark, which is kind of considered the safe level of stocks to keep things stable."
Oil speculators saw our supply depleting, and placed bets that the price for a barrel of oil would increase in a few months, or a few years - suddenly bringing the price of gas to $4 per gallon this summer. "I think we're in a crisis," says Bell. "I think the people that have to drive 30 miles to get to work everyday will tell you that it's a crisis for them. It's time for the government to act, It's time for the politics to go away."
Just as quickly as the price of oil skyrocketed, prices began to fall last week. Bell says the drop is because Americans fought back against oil speculators. Drivers didn't respond to the push for higher prices by paying at the pump - they simply stopped driving. "They pushed it down because we've seen a reduction in travel with gasoline," says Bell. "We've seen that now in a year-over-year basis - we're off 3.7%, I think."Bell says one of the oil speculating companies recently declared bankruptcy because they made a $2 million bet that oil prices
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