Saturday, August 27, 2005

The truth behind gas prices

Gas prices are about $2.56 in Texas, up from $1.80 at the same time last year.

Bruce Hutton, professor of marketing at the University of Denver, said the high prices could spark even more angst than the frustrating long lines during the 1970s energy crisis because the current situation is far less clear-cut.

The 1970s crisis sparked from obvious oil shortages. But today, despite growing inventories, numerous factors are combining to drive up prices _ refinery problems, growing demand from China and energy traders worried over capacity tightness.

The bottom line is that it all falls back to Wall Street and "speculators". They're so busy freaking out that they bid up the price of oil futures, usually without cause. This costs us at the pump, provides the oil companies with larger profits, but mainly puts large returns in oil investors portfolios.

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