Here we go Again!! Gas Prices On The Rise

According to www.newjerseygasprices.com the average state price for regular unleaded gas today is $2.406. Just last month the average price was $1.985. That is a an increase of 21.2%!

Laws of supply and demand suggest that oil prices should stay at lower levels because of the global economic slowdown and the severe decrease of oil demand. But why are they still going up? My view is that speculators are at it again. Speculators buy future contracts of oil based on their expectations of supply and demand. If speculators think that the economy will pick up a year from now, they will buy oil at today's price to sell it at a future day in hopes of a higher price and of course profits. Oil traders 9 times out of 10 never take possession of the oil and sell it sometime between the time they bought it and the time that the oil must be bought. Because oil is the world's most actively traded commodity, there will always by a buyer to sell to. Speculators will never be stuck with millions of barrels of oil.

Another contributor is OPEC. OPEC is an organization that is made up of 12 countries that provide over 40% of the oil to the world. OPEC controls how much oil is produced by the 12 member countries and they say whether to produce more oil or not. If there is increased demand, they have the authority to produce more oil and relieve prices. But of course they do not and make a killing on us.

Of course, just like mortgage back securities and prices, there are many factors that contribute. However in my eyes these are the biggest factors that contribute to oil prices. Speculators and OPEC.

If you or anyone you know is in need of mortgage financing, give me a call direct at 908 868 0686 or email me at erodriguez@arkmortgage.com