When in doubt, just waste taxpayer's money. In a purely politically inspired move, the FTC launched yet another wasteful investigation into whether or not that oil companies, traders and refiners have tried to manipulate energy prices. The real reason for this investigation coming at the urging of Democratic Maria Cantwell is to try to create a smoke screen for the failed energy policies of the Obama Administration. The Administration should be known as the anti-energy administration. You see the President believes the future of energy is in wind power and solar and other expensive inefficient fuels. He has shown his disdain for the oil industry and has decided to sacrifice jobs in his endeavor to get us off of oil and onto the fuel sources of his heaviest political backers. Every policy by this administration has had the goal of making oil and gas more expensive and push us towards the fuel of the future at the expense of every working American at the gas pump.
According to the Wall Street Journal the FTC, "plans to review how refinery operators decided to shut some equipment for maintenance, which sometimes leads to higher gasoline and diesel prices, among other matters." Well maybe I can save them some time. Refiners have to do maintenance and they usually do it at a time when demand is weakest, the "shoulder season". At the same time every spring because of EPA regulations refiners are forced to create boutique blends of gasoline. You see the government mandates shortages of supply in the name of cleaner air. In an article by Ben German, "The FTC letter notes federal data showing that as of early May, refiners' margins - or the difference in value between their products and crude oil prices - had increased by more than 90 percent since the beginning of the year, yet refiners were using only about 82 percent of their capacity, a reduction from the same period last year." Well part of the reason margins have gone up is that last year refiners in many cases were losing money and while refinery runs have fallen, the truth is that gasoline production has risen and refiners have actually become more efficient. In fact if it were not for some refinery problems caused by flaring, floods and storm related power outages, US refiners were producing gasoline at a record pace. At the same time due to the Presidents war in Libya, gasoline imports in the US have been way down into New York harbor.
Not to mention the President's health care bill and inability to cut government spending that has reduced the value of the dollar and has even inspired the Chinese to diversify away from the dollar. In fact in today's Financial Times, "China began diversifying away from the US dollar in earnest in the first four months of this year, most likely by buying far more European government debt than US dollar assets, according to estimates from Standard Chartered Bank. China's foreign exchange reserves expanded by around $200bn in the first four months of the year, with three-quarters of the new inflow invested abroad in non-US dollar assets, the bank estimated." "For over six years, Beijing has continued to accumulate US government debt even as officials insisted they wanted to reduce the weighting of US dollar assets in foreign exchange reserves.
Between December 2007 and March this year, China's foreign exchange reserves doubled to $3,044bn and over that time most analysts believe the proportion of US dollar assets remained relatively steady at between 60 and 70 per cent of the total. Beijing, however, routes purchases through custodian banks and overseas financial centers, such as London and Hong Kong, to disguise its offshore dealings." "Standard Chartered compared China's inflow of new foreign exchange reserves to net purchases of US government debt by buyers in China, Hong Kong and London. These purchases fell dramatically in the first four months of this year to $46bn - equivalent to just 24 percent of the $196bn in foreign exchange that China accumulated over the same period."
Sugar futures have soared due to fears that the US will take away some of the ethanol credits from corn farmers. Sugar of course is a more efficient input for ethanol so some US exports might have less of an advantage when trying to compete!
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