The “Eddie Murphy” rule applied to crude oil

On October 21, 2009, in his remarks at the OTC Derivatives Regulation, Futures Industry Association Expo in Chicago the Commodity Futures Trading Commission (CFTC), Chairman Gary Gensler proposed that hedge funds, financial firms or other investment funds not be exempted from clearing requirements and all standardized Over the Counter (OTC) products should be moved onto regulated exchanges or trade execution facilities.

Don’t be scared when you look at the prices you are paying at the pump right now for gasoline and diesel. This winter fuel prices both gasoline and diesel will reach the same low price levels as last year.

You will soon be paying under $2 per gallon again for gasoline and diesel fuel and crude oil will go back down into the 40's. So you can make plans for that trip to see the grandparents for the holidays as well as give the economy a much needed boost. Demand for gasoline in the United States typically falls after Labor Day due to the end of the vacation season. For the week ending September 4, 2009, demand for gasoline was at its lowest point since January 9, 2008, according to MasterCard Advisors LLC.

Currently diesel fuel is cheaper than gasoline in Canada and vice versa in the US. Canadian truckers, who were paying $1.45 per litre in June 2008, are now just paying 92.5 cents in the first week of September per the M.J. Ervin & Associates weekly petroleum prices survey. That’s a whopping 36% savings in 15 months.

We have had some dog days here in Terry, Montana this summer and the price of gasoline has been scorching upward right along with the heat. The spot market for gasoline and diesel prices dropped like a rock Monday, but Tuesday morning brought new hope and both of them are both back up. Gasoline is heading the pack but the price of crude oil is back down some more to $68.05 down $1.91 a barrel for the day.

For a further explanation on why gasoline prices are going up while we are still suffering from a recession we look toward the stalwart of all banking institutions, Bank of America (BAC), and its subsidiary Merrill Lynch.

Disclosure: The author does not have investments in any commodities or equities.

The October West Texas Intermediate Crude oil price was up $1.50 to $73.98 a barrel last Friday. We have not seen the price of crude oil hit that mark since last October. This current uptick was the result of the bearish Energy Information Administration - Department of Energy (DOE) and American Petroleum Institute (API) inventory reports published earlier in the week. Both reports reflected huge unanticipated draws for all products including crude oil for the week ending August 14, 2009.

The taxpayers of the US are the losers with Goldman Sachs (GS) employees the winners in this game called “Last Man Standing”. With most of their competitors being either bought out under duress or allowed to go bankrupt they have been left holding the bag. Even a leprechaun could not have been as lucky as to finding a bag so full of gold.

The bigger amount of money that has gone to Goldman has come through $12.9 billion from the AIG bailout that went straight to Goldman, its biggest counterpart; $28 billion worth of FDIC-backed guaranteed debt, meaning the FDIC put up a program last fall, and it said, “For banks that deal with consumers”—not banks that deal with multibillion-dollar companies or investors, but people—“we will provide guarantees for debt,” which means that those companies can raise debt to help consumers cheaply. Goldman said, “Alright, fine, we’ll take some of that.” And they took $28 billion worth of that, and they have up to $35 billion that they can take under the FDIC program that was never meant for a company like Goldman Sachs.

President Obama is being invited to spend some of his time in his own back yard to rub shoulders with the oil workers of Montana and North Dakota to check on their progress for increasing domestic crude oil production.

The President would be able to obtain greater insight on how to solve this country’s energy needs for the immediate future. Bret Smelser, owner of Border Steel and Recycling, who is the mayor of Sidney, Montana as well, would like to have a chance to speak to him directly about the local effort in making our nation energy independent. He is actively involved in his state’s effort about getting the message out on how to best develop the Bakken’s rich mineral deposits

You have heard of Goldman Sachs (GS) but may not know that it is the owner of the biggest casino in the world through its commodities-trading subsidiary J. Aron and Company. No, it does not own an actual casino but it is merely the stomping grounds for high dollar bettors in the world of commodities.

There are no slot machines or other gaming devices anywhere around its sumptuous offices at 85 Broad Street in New York before you start planning to make reservations to fly in on your private plane, be met by a private limousine with a chauffeur, check into your luxury suite and hit the tables. Better yet, it is set up and is connected to every major commodities exchange around the world.

The price of crude oil has been hovering around $70 a barrel for the last week; meanwhile gasoline pump prices in the U.S. and Canada are down by about a nickel a gallon or 1 cent per liter during that same time. The average price for a gallon of gasoline is $2.63 today per the AAA fuel gauge report. Montana’s gasoline prices are averaging $2.71, barely nudging down from the price a week ago.

If there seems to be no correlation between the two, it is because U.S. and Canadian refineries are just now running crude oil they purchased earlier this year. The typical shelf time in shipping from the well to the refinery is about six weeks and crude oil in the tank at the refineries is still at around $40 a barrel. So who do we blame? The greedy oil companies, those evil Wall Street speculators or is it just plain simple Gasoline Marketing 101?

Nationally the average price for regular unleaded gasoline is $2.658, down about 3 cents per gallon from a week ago. Montana's gasoline prices have leveled off at $2.72 with California staying high at $3.01 per gallon. Hawaii gets the prize for the highest cost for gasoline at $3.09 per gallon in the AAA fuelgauge.report. The gasoline spot market price meanwhile has dropped by 20 cents per gallon in the last two weeks but retail pump prices have not reacted in kind and are not expected to drop much more before the end of next week.

Pump prices have barely budged with the spot market gasoline and diesel prices going down another 2-3 cents per gallon at the end of this week. The August WTI crude oil price decreased $1.07 to just above $69.16 a barrel on Friday

April showers may bring May flowers but this year it also brought forth a spring time renewal for oil refiner’s profits. This was in the form of increased demand for gasoline after dismal first quarter results in 2009. But now the June swoon has come too soon and the oil companies are looking forward to those summer breezes peeking just around the corner.

I was waxing somewhat poetic while reading a flood of news reports this week about gasoline prices in the U.S. and Canada dropping for the first time in over seven weeks. The average price for gasoline in both countries has dropped a whopping seven tenth of a cent of a gallon or liter this week. Motorists have been practically been dancing in the streets celebrating their new found fortune according to on the spot media reports from many parts of the country. Some are even quoting some experts about gasoline prices having peaked and to be going down for the remainder of this year.

It seems that the U.S. and Canadian motoring public learn much about the cause of the wild gas price gyrations from television and radio.

Crude oil prices are usually made out to be the culprit and blamed by the media for the gas price roller coaster rides. But they are not the only factor in the current round of fuel price spikes. Today gas prices tend to influence and support crude oil prices. That opinion runs counter to the conventional view that crude oil drives gasoline prices.

Dateline: Terry, Montana

The July WTI crude oil price is a basic no change, down 21 cents to $61.46 a barrel. The spot market gasoline price was up 1 cent per gallon and diesel no change on Wednesday morning. The average price for regular unleaded gasoline is $2.421 per gallon in the U.S. with the West Coast at $2.667 per gallon.

This week’s DOE inventory statistics came in way over expectations for crude oil stocks rising almost 4 million barrels, twice the number predicted by industry analysts. For the time being, we've got plenty of crude oil on hand but will it continue to be enough for the future?

Finished product prices have remained flat and crude oil prices on the Nymex remained unchanged. In plain language, that means while crude oil prices meander up and down, gasoline and diesel prices are staying firm due to the expected increase in summer demand.

The May WTI crude oil price is up 35 cents to $50.33 a barrel as of the close Friday. On the US West Coast the wholesale spot market price for gasoline and diesel went up 2 cents per gallon in concert with crude oil.

It's another day - same old story in the petroleum markets.

On April 3, 2009 the West Texas Intermediate (WTI) crude oil price dropped to $52.51 a barrel, down 13 cents from the day before, but almost the same price as a week ago. Investors were driven to the commodities market this week by weakening of the US dollar.