“Earth provides enough to satisfy every man’s need, but not every man’s greed”
Mahatma Gandhi
Today marks one for the record books. Now it isn’t official just yet, but if you are an investor in Exxon Mobil then you are going to be very happy once you hear officially what their profit was in the 1st quarter of 2011. Market Watch estimates that their 1st quarter profit will be somewhere around 9.8 Billion USD, which is up 56% from this time last year. Now I shouldn’t say that it is a record as they have respectively reported profits of 14.83 and 11.68 Billion in two separate quarters in 2008. This must make you feel warm and fuzzy as you go to fill up your car. You should also know that today the very fancy and highly palatable Brent Crude was priced at around $128 USD.
Everyone is an expert when it comes to determining why the price of Oil rises. Is it the market speculators, the cartel known as OPEC, unrest in the Middle East and North Africa? If the world operated as simply as Adam Smith had hoped it would than it would be that increased demand and the reduced global supply is driving increased oil prices. These are still the fundamentals of economics and everything tends to come back to his rules at some point or other. However, for those of you that may think that it is the speculators that are driving these prices than you should spend some time researching what would make that sort of thing happen. I am not an economist and am not going to try to be on this post, but I will say this. Most investors these days participate in a pool or managed fund of some kind. Some of these funds can become quite large and with the amount of money being traded on a daily basis it is not hard to imagine one fund manager making a few key strokes on a computer that moves millions and billions of dollars into a market in a single transaction. These sorts of movements can trigger price changes on stocks and futures markets. But what is interesting is what is called the long position in the oil futures. Don’t ask me what the technical aspect of this means, but all you need to know is that roughly 40% of the money here is made up from the investing community and most importantly; most of this new money is coming from China. There is something wrong here and it is too big for any one of us to tackle on our own. As it stands today speculation on the oil futures market is unregulated and before we go and rein in the oil companies we should note that the only thing that is going to help us kick this ridiculous addiction to fossil fuels is when it is either gone or we start to supplement it with alternatives.
I am not quite ready to start introducing my ideas for a better future just yet, as I am trying to outline some of the issues first to help build my case. I will however put in a plug for Tom Rand who I met recently and who wrote this book called Kick the Fossil Fuel Habit. We should all be pushing for this type of change immediately.
Riel
rielism 