Tuesday, February 10, 2015 – 09:15 a.m.
Oil price gouging returns again.
The price of crude oil, West Texas Intermediate and Brent, has been increasing over the past two weeks.
Combine the rise in crude with a national refinery strike and we now have a new excuse to raise retail gas prices. So far prices have increased roughly 20 cents per gallon from the recent low.
The rise in crude is perplexing. Daily price fluctuations seem to show traders desperately attempting to push the price higher, squeezing out the short trade. But the manipulation can’t last for long.
Crude oil inventories have been increasing over the past three weeks.
According to the Energy Information Administration (EIA) crude oil inventories have increased by 25 million barrels over the past three weeks. That’s a very large number.
The refinery strike would cause the inventories to climb even further, since a large portion of the oil isn’t being turned into gas or other distillates.
California is in an uproar ever since Tesoro decided to close one of its large refineries, in Martinez, under the guise of “We don’t have enough personnel to safely operate it”. A absolutely greedy move designed to prop up wholesale gas prices. After all, if there’s any state that’s used to being raped, it’s the Golden State.
Combine the above refinery shenanigans with the switch to the so-called “Summer-blend” gas and we have the ingredients to hose California driver’s some more.
The rise in oil prices can’t last if inventories continue to climb. At some point producers will have to rent tankers just to store the surplus.
Maybe we can store some of the oil glut in California’s empty lakes and reservoirs.
A growing number of analysts are predicting another price drop-off in crude. At this point that looks like a pretty good bet.