THE price of a barrel of oil has been over $80 for weeks and predictions are for $100 soon.
Repeat after me: Who the hell cares!
Since no consumer I know actually buys oil by the barrel, the real issue for the average American is how these crude prices translate into gasoline and heating oil costs.
The answer lately is, they don’t. It wasn’t too long ago that the price of crude and the price of the products it was made into moved in lockstep. We all hung on the daily reports showing that crude had surpassed another milestone.
And the higher a barrel of crude sold for the more you’d inevitably be paying to fill your car.
Not lately. Look at some recent numbers that the U.S. Energy Information Agency ran off for me.
The average price of unleaded gasoline last week was a little over $2.76 a gallon. That was when the price of crude oil was selling at $86.13 a barrel. (Yesterday it closed at $87.56.)
Now look at some times in the past when gasoline was similarly priced.
On Sept. 19, 2005 gasoline averaged $2.78 a gallon – and crude oil was “only” $67.39 a barrel.
On April 17, 2006 gasoline also was $2.78 a gallon – and crude oil was at $70.40 a barrel.
And this past April gasoline was selling for $2.80 a gallon – and crude was at $61.51 a barrel.
Conclusion: Either the refiners of gasoline are being very kind and are forgoing profits (not likely), or the market realizes that the last $10 to $20 a barrel in the price of oil is unwarranted fluff.
In fact, the last $40 or $50 in oil prices may be due to nothing more than the greed of Wall Street speculators.
Just last week OPEC’s Secretary General Abdalla Salem El-Badri showed his frustration when he said oil prices were being driven higher by speculators and not market conditions.
Speculation has increased in oil and other commodities in recent weeks because of economic events in the U.S.
Since the Federal Reserve made a surprise cut in its discount rate in August, for instance, the price of oil is up 30 percent.
That rate move stoked fears that the Fed would allow the dollar to fall even more dramatically than it already has and that it would permit higher-than-normal inflation.
Whether or not that’s true is for another column.
But the bottom line is that the Fed’s rate cut may have inadvertently boosted oil. If the price of energy used by consumers ends up going higher, then any positive impact of lower borrowing costs could be muted.
I’ve been using this column for years to point out the difference between real and speculative oil prices. Unfortunately, the goons on Wall Street who try to bully the markets were successful in making people think that the exorbitant price of a barrel of oil was real.
In the oil industry, they say Wall Street is trading in “paper barrels.” And it’s no more valid to correlate these paper barrels of oil to the price of gasoline than it is to gauge heating oil costs by the number of Britney Spears‘ arrests.
U.S. gasoline and oil stockpiles are down a bit from last year. But stocks are still at the upper end of their average.
Someday the speculators might get lucky again and have us believe that their paper oil prices should translate into more expensive gasoline.
But, hopefully, before that time comes we will develop an energy pol icy that will work. What should be included?
* For starters, auto makers should be required to offer half their models with energy-efficient hybrid gas/electric engines. And Washington should subsidize the move.
* Drill for domestic oil wherever it might exist. The bone to environmentalists in exchange for this will be reduced emissions from the wider conversion to hybrid cars.
* Encourage American companies to finance and refine oil exploration overseas. Africa has proven oil deposits and would be happy to have the industry.
* And, kick oil speculators in the teeth by raising the margin requirements on their trades.
It is time to wake up. john.crudele@nypost.com