Supply & Demand

One day from Jubail to Al Khobar……………thoughts drifting

Riding down the highway
Heavy Metal Thunder
Looking for adventure
And whatever comes my way

Yeah yeah, enough of that shite. My little Honda Accord is out of gas, so I slide into a gas station and off the engine (mentally switching off the Harley as well).

Fill please, and 50 litres later, 20 Riyals. Whew, a bank breaker. The Saudi Riyal is linked to the US Dollar at a rate of $1 equal to 3.75 SR. That’s a whopping $5.33 to FILL the tank. Yep full as in brimming, from empty as in “damn I need gas quick”.

When oil reached $140 a barrel, I was amazed. Working in the oil industry and knowing the true cost of a barrel of oil, I wondered where the rest of the cost came from for the extra $135 each barrel was fetching.

Figure that all “goods”, which oil is, are comprised of a labour and materials cost on which the “honest” trader affixes his/her margin (read profit) to arrive at a price that the market should think is good value.

The costs never rose with any significance. Labour fluctuated about 10% over the period and machinery of extraction and refining has stayed pretty much stable.

Someone told me supply and demand was to blame. Demand far outstripped supply. And that’s what made it so expensive. Boo hoo. Put your hand up if you didn’t get your oil? Deafening silence there eh? EVERYONE got oil.

So a funny thing happened when financial markets crashed. Oil prices dropped to $45 a barrel. Excuse me? So supply now overwhelms demand? That’s a staggering 65% of prior heavy metal users who said “er, no thanks, don’t need ANY oil at the moment, but thanks for asking”. I wonder where these people live?

Keynesian economics and its fundamental use of supply/demand theory is of little use in manipulated markets.

The real question we should be asking is not what caused the price to fluctuate, but what have the oil companies done with all the money? Yes the Money honey.

This should be followed swiftly, before those who really have the money start flying out on corporate jets to “meetings”, with a “who the fuck, as in governments, allowed this manipulation to happen?”

When you start to add up all the bloated (no other word for it really) profits pirated from oil over the last 2 years, is it any surprise that some poor unfortunate who struggles to pay an over extended mortgage is blamed for a financial world crisis? Mortgage meltdowns?

Sure I believe it, just like Iraq had WMD and Iran is full of bogeymen.

Several things we should consider in order to remain civilisations:

We are societies not economies.

Corporations should be banned outright, they have no purpose to be, other than to add cost to your labour and consolidate this “extra value” into the hands of a very small number of people. Just because you “own” stock doesn’t mean it has value or that you get to say how the corporation conducts itself.

Energy in all its forms needs to be taken away from corporations and put back into the hands of democratically elected governments. Get off your ass, take an ACTIVE political stance.

The same amount of money that was in circulation is still in circulation. Credit Crunch? What a giggle.

If you think a CEO is a hero and worth more money than the janitor, ask yourself the same question when the toilets need cleaning.

The only thing in this world that has true value is YOU. Everything between YOU and a buyer adds zero real value.

Piracy is still punishable by death in most places.