Joe Public rant part 2

Good old conspiracy theory.

Oil means money - money means wealth and wealth means great power.

Have you ever wandered why the price of oil is so high? Besides our respective governments who push as much VAT/TVA and taxes on the the product they can get away with, you will find that it is the stock markets, oil companies and producers who deliberately inflate the prices to their best advantage.

Your friendly multi national oil company is in business to make big profits. Yes they do have to spend a lot on producing and finding oil but in doing so they make a hansom profit in the process. What they don't tell you or want to tell you is that they make a hell of a lot more money in percentage terms out of speculating in the price of oil than producing it. This is were they really cream of the profits and they don't have to invest millions and millions of $/£/euros/yen to do it. Here is one way they do it.

The big fish

They charter a big bulk oil carrier and fill it up with oil at the respective loading platform. We will use the Persian Gulf for out example. Due to the nature of buying and selling oil and the huge quantities and costs involved it is not the sort of thing that the little business man can do and finance. This is the domain of the the big boys and being one of the big boys in the market allows them certain privileges.

They charter a tanker to carry 1 million barrels of oil from the Gulf to America for example. First of all they do not have to pay all the costs for the charter of the ship up front. They do not physically remove money from their bank accounts and pay it in to the bank account of the owner of the oil before the oil is loaded and shipped. It is all done with letters of credit, bonds and agreements that have been set up before hand. You and I would not be allowed of the petrol station forecourt without paying for your oil or petrol but they are.

We now have a ship fully loaded with 1 million barrels of oil and for ease of counting we are going to set the purchase price of the oil at $10. So our oil company is in hock for $10 million dollars plus all the associated costs involved in a deal like this. You would think that the oil company would want the ship to travel as fast as it can go and deliver the oil so that it can be unloaded and sold so they can get their money back plus profits, sell the oil and pay of their debts. No they do not because they can make even more money by buying and selling the cargo many times over before the ship reaches it's destination.

Only tramps and horses

This is called 'Tramp Steaming' This is where the ship runs at a speed that is the best economical rate for the ship and the owners. Sometimes the speed is just barely enough to make steerage way. The owners keep their costs down and the horse trading begins. This is not something new as this practice has been going on since ships started plying their trade around the worlds oceans and seas. The advent of computers, satellite phones and the discovery of oil has just made it easy to make millions and millions in extra profits in seconds. I do have some knowledge of this practice as I used to be in the Merchant Navy and on several occasions we would be tramping a long and the cargo would be sold over and over again.

Vive la Revolution!

We had a cargo that was loaded in South Africa and was bound for Australia. This was the best news for the crew because Australia was the 'Land of Plenty' and we would be in for a good time if you know what I mean. After about 4 days of trudging along we found that the cargo was sold and we changed course for India. Not quite Australia but India was exciting prospects for a young man of sixteen. A few days later we got orders to change direction again and this time it was for Mozambique. Sadly this was Mozambique after the revolution and the place was a hell hole and not the millionaires playground it was before the revolution. I went there before the revolution and it was a paradise with palm tree lined sandy beaches but that's for another time perhaps!.

Meanwhile our oil carrier is trudging along and the deals start. The general public at large do not realise that many of the big oil companies have dealings rooms that work on the stock markets and they keep it as quiet as they can. The price of oil is then forced up by a mixture of false rumours of shortages, drop off in production when demand is high, wealing and dealing on the stock markets by the oil companies and others in a 'Pass The Parcel' type merry go round where no one wants to be left holding the baby. Every body makes a buck except the final end user who is fleeced at the petrol pumps.

Paying through the nose

Meanwhile the price of the oil goes up because they can buy and sell millions of dollars worth of oil in a split second without having to actually pay for the oil or avoid paying for the oil until the last minute. They then sell it when it goes up. Then they buy it all back again and hope the price rises again and so it can be sold again. This happens all the time and eventually when the ship finally reaches port the price of the oil is $20 a barrel. They then pay of their debts for the charter and rake in the millions of extra profits that has been made. Speculating on the stock market is nothing new but computers have just made it faster and quicker to make easy profits. Why else would they pay people millions in bonuses for dealing on the stock exchanges.

Pirates on land and sea

Don't forget they have just made a profit of $10 a barrel on transporting the crude oil. Now more horse trading goes on in the delivery to the refineries and the eventual delivery to the pumps. By the time the barrel of oil reaches the pump it might be worth $40 a barrel. Then the tax man steps in and the price goes up again. Everybody makes money except the poor end user who has to pay through the nose for a finished product.

As as far as I am concerned the stock markets and the greedy speculators are to blame and now that the credit crunch is hitting hard and stock markets and financial institutions are collapsing it beggars belief that they can go running to the Governments to bail out their 'House of Cards' that they have Built on Sand. Where were they when they were making millions and millions a year and paying them selves insulting bonuses for creating nothing? Nowhere to be seen was the answer but now the doodo has hit the fan they are all over the news begging for bail out by their Governments.

CEO's and executives crocodile tears

Took the fat rewards when creating nothing but false price rises and now begging for help to keep their fantasy world alive while decent folks loose their houses, jobs and pensions.

I know I have over simplified the prices and the work that goes into getting oil to the markets but then i did set the prices at $10 a barrel and we all know that was /is not any where near the price of oil over the last 2 years or more. How many billions of dollars have been made simply but forcing the price of oil up artificially? Answers on an extremely large post card please!

Be lucky.

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