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War paid for by oil profits

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posted on Nov, 22 2007 @ 11:06 PM
Since I have no proof of this and it is just a concept/idea I had while pumping gas, I thought I would post it in skunkworks.

Do you think that the rise in gasoline prices in the US is connected to the governments need to pay for the war in Iraq & Afghanistan?

The way I see it, war cost money and a lot of it. The government just doesn't have a bank roll in a safe somewhere. Spending must be approved by congress and resources for funding must be explained. How exactly, is the war on "terror" being financed? The most obvious result of this war that is tangible is the dramatic rise in US fuel costs, which seems to be connected to the strategic region in which the war is being fought.

One could say that they believe that it is lack of US refinery capacity, or instability in oil producing regions that are the cause for the escalating gas prices, but there is no conclusive proof that any of these are the cause of high prices when the demand for fuel has remained consistent and energy companies are recording record profits. There seems to be a missing link in the math, although I am not saying on record that I know what these numbers are.

What I feel is one of the reasons for the escalating fuel costs for the consumer is that the government is directly recouping war costs over an extended and undefined period by allowing high fuel prices. This may also be the reason for misappropriated and lost monies. The costs involved to finance the military operations scope and duration are known, but they feel for the short term, a few financial mistakes must be made to cover short term losses and make all the books balance. In the end, the higher energy price taxes will pay for all the war efforts for now and in the future. A military presence to protect strategic energy resources is now eternally tabbed to the consumer.

posted on Nov, 24 2007 @ 12:23 PM

The extreme rise in gasoline prices, over the last 10-15 years, is driven by market speculation. Gasoline is traded as a commodity, through the marketing of futures. It is also driven by a lack of supply and a lack of domestic storage capacity, for refined product.
There is a direct correlation to the ramp up of gasoline prices to the advent of speculative trading of gasoline futures in the commodities markets. There is market manipulation by larger market forces, ie brokerage houses.
10 years while doing research for a paper of alternative energy resources and technologies, I found an article by an oil industry analyst, and he had noticed that there was a movement by the refining industry to "lessen their inventory purden".
He found that during the mid nineties, refiners had started to remove storage capacity refineries were removing their large tank farms. At first they said that they were being updated or modernized to be complient with enviro rules or were old, which they were. When he surveyed these companies later on down the road, none of them had replaced any of the storage capacity they had removed.
He couldnt figure out why, since demand was increasing consistently. After speaking with some others in his field he pieced together the reasoning behind this strategy.
Gasoline or oil werent traded as commodities till the late 80's. Before the gasoline/oil futures market the price of gasoline/oil was directly connected to the prices of a barrel of oil set by opec. After the advent of speculative trading the prices of product and raw material were not nessecarliy related to the price paid to the initial producer, OPEC. The prices at the distributor level could flucuate wildly, as speculators manipulated the markets.
It worked like this an investor promises to buy "x" number gallons of gasoline at price "d". He wants to maximize his investment so he does not sell his "x" gallons of gasoline but sits on it till there is a undersupply situation. Then he can sell it for more than he paid and realize a profit.
The ripples in this pond flow both ways. By with holding supply of the refined product the speculator drives up prices at both ends. He drives up the price of the refined product because of a shortness of supply. And that ramp up of demand, due to shortness of supply, causes the price of the raw material to go up as well.
Now a refiner wants to be able to predict or control the profit level of the product that they are selling. When the price of the of the raw material was stable they new that there would be a predictable fluctuation in its price. They would be able to refine and hold onto large quantities of product , because they could average out the small fluctations in raw material prices.
Just as the price can rise the price can also drop, so a refiner doesnt want to have a whole bunch of gas sitting around that they paid more to make but can only sell it at a lower price. So by keep your storage capacity small you wont get stuck with product you paid more to manufacture.
A shortness of supply on the consumers end does not mean a shortness of production.
The actual producers of the raw material do not realize all of the profit of increased product prices. The price that you see for a barrel of oil are the prices paid to the commodities traders(middlemen), NOT TO THE ACTUAL PRODUCERS.
The wars have served to drive up the price of gasoline by inject all sorts of human emotions/ mostly fear in the markets.
As geo-political situations arise traders will "feel unceartainty" within the market. They will get nervous about whether the product can be delivered or production will be interupted. So will will not sell their futures but hold onto them, so as to maximaize their profit. This with holding of product further re-enforces the shortness of supply and drives the prices up even more.
And since the large energy comapnies have an administration favorable to their market philosophies they are not paying a larger share in taxes but are infact getting tax breaks.
And since the wars are driving up the profits of energy companies they are puting more money into the hands of "shareholder" , that increase in revanues is not being seen by the us government through the collection of taxes.
Intersting thing is that iraq is the 3rd or 4th largest oil producing nation, and if its supplies were brought into the free market they would suppress the prices paid to everyone. So its in everbody finacial interest to keep iraq destabilized. As long as iraq is destabilized Iran gets more for its oil, the saudis the russians, everybody. So it really doesnt payoff for anyone if Iraq is stabilized. The cost of the wars far outstrips the value of the products being aquirred.

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