Friday, March 2, 2012

Oil Speculation

A lot of chatter has abounded recently regarding the soaring prices of gasoline and barrels of oil on the mercantile exchange; with prices jumping nearly 10% alone in the shortest month of the year, many have reason to worry about what 2012 holds for us in terms of price stability and true reflection of supply and demand.

What's important to note is that oil speculators are raising the prices of oil artificially in comparison to what the demand for supply is, especially in the United States, in which the appetite for oil and gasoline consumption is still decreasing while prices are rising.

A few bloggers, including CNBC writer Rose Michelson, believe that if the President or congress were to step in and release some of the United States' stored oil reserves the price would fall almost immediately because it would take away some of the variables involved with the speculators' betting--they would no longer have Iran, Syria and supply disruptions to worry about, but would be looking at concrete numbers about consumption and would be forced to reduce their calls.

I agree; I think it's an important move to make, and soon, if it is to happen. Anything that can alleviate the stress most Americans feel on their wallets is going to add and quicken the pace of the fragile recovery and could stave off a period of stagnation and ennui in regards to investing in the market.

What do you think?

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