Thursday, January 21, 2016

The barrel is worth more than the oil

The price of crude oil dropped below $28 a barrel this week. That meant that the metal oil barrel cost more than the oil.

Some barrels can be cleaned and used again. I couldn’t determine how many barrels are used only once to transport oil.

The astounding decline in the market price of crude since summer 2014 has many causes, including shrinking demand and increasing supply.

Of course, the drop from $115 a barrel is partly—perhaps significantly—the result of speculators who drove the price up and then let it fall for reasons that have nothing to do with economics or market forces.

At $115 a barrel, oil was selling for 3 or 4 times as much as it cost to get it out of the ground.
Just wacky. We need sensible regulation of financial speculators who can distort the price of the world’s most important commodity.

Copyright © Richard Carl Subber 2016 All rights reserved.

No comments:

Post a Comment